Exam 11: Conduct Invalidating Assent

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Steven has a typed copy of a contract, which he would like to have Thomas sign.Thomas, who needs glasses to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is a "standard" contract for this type of situation.Is the contract which Thomas signed binding upon him?

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Question 1

Correct Answer:

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Define "mistake," "mutual mistake," and "unilateral mistake." Explain how the law treats mutual and unilateral mistakes.

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Question 2

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A mistake is a belief that is not in accord with the facts.Mutual mistake occurs when both parties are mistaken as to the same set of facts, and unilateral mistake occurs when only one of the parties is mistaken.If a mutual mistake relates to a basic assumption on which a contract is formed and it has a material effect on the agreed exchange, it is voidable by the adversely affected party unless that party bears the risk of the mistake.Courts are hesitant to grant relief for a unilateral mistake even if it relates to a basic assumption on which the party entered into the contract and it has a material effect on the agreed exchange.

Jill contracted to purchase Kevin's automobile under the belief that she could sell it at a profit to Linda, but after Jill bought the car, she found out that Linda isn't interested in buying it.Jill:

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Question 3

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Tommy's parents died in a plane crash and he went to live with his guardian, Aunt Rose.Rose had a very small house and did not have a separate bedroom and bath for 12-year-old Tommy.She and Tommy decided to use some of his inheritance to pay for an addition to the house.He had some shares of stock transferred into Rose's name so that she could sell them when the money was due to be paid.The stock transfers are:

(Multiple Choice)

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Question 4

Marjorie has been cared for by her family physician for 35 years.She decides to assume the mortgage on his new clinic.The contract is automatically invalid because of undue influence.

(True/False)

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Question 5

Nonfraudulent representation is made without scienter.

(True/False)

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Question 6

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County.Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed.

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Question 7

Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence?

(Multiple Choice)

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Question 8

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor.If, because of the threat, Kenneth signs the contract:

(Multiple Choice)

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Question 9

When both parties misunderstand the same set of facts relating to a basic assumption on which a contract is made, it is termed:

(Multiple Choice)

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Question 10

Which of the following can meet the scienter requirement to establish fraud in the inducement?

(Multiple Choice)

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Question 11

A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation.She signed a promissory note at a high but not illegal rate of interest.What result?

(Multiple Choice)

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Question 12

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation.Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz.Bob then offered to buy the stone for $25 and Albert agreed.Later Albert found out the stone was an uncut diamond worth about $700.The sale:

(Multiple Choice)

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Question 13

If a confidential relationship exists between parties to a contract, the law presumes that undue influence exists if it appears that the dominant party has gained at the other party's expense, but the presumption can be rebutted by evidence that it was not exercised.

(True/False)

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Question 14

Al owns a farm that he believes is worth $150,000.Betty knows that there is oil under the farm and offers Al $160,000 for it.Al is suspicious and asks her why she wants to buy the place.She says she would like to live in the country.Al then asks her if she thinks there might be valuable minerals under the land.Betty laughs and says she doubts that very much, so Al sells her the farm for $160,000.Al later realizes that the land was worth more than he was paid.Betty's statement to Al was a misrepresentation requisite for fraud.

(True/False)

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Question 15

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time.He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius.He later learns the violin is an imitation, although it is such a good imitation that even the dealer thought it was authentic.In this case:

(Multiple Choice)

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Question 16

An arm's-length transaction is one in which the parties owe each other special duties.

(True/False)

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Question 17

There are two distinct types of fraud.

(True/False)

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Question 18

To sustain a case of fraud in the inducement, the injured party must prove that he actually relied upon the false representation.

(True/False)

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Question 19

If untrue, which of the following would probably be considered a misrepresentation of a material fact?

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Question 20

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Exam 11: Conduct Invalidating Assent

Define "mistake," "mutual mistake," and "unilateral mistake." Explain how the law treats mutual and unilateral mistakes.

Jill contracted to purchase Kevin's automobile under the belief that she could sell it at a profit to Linda, but after Jill bought the car, she found out that Linda isn't interested in buying it.Jill:

Marjorie has been cared for by her family physician for 35 years.She decides to assume the mortgage on his new clinic.The contract is automatically invalid because of undue influence.

Nonfraudulent representation is made without scienter.

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County.Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed.

Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence?

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor.If, because of the threat, Kenneth signs the contract:

When both parties misunderstand the same set of facts relating to a basic assumption on which a contract is made, it is termed:

Which of the following can meet the scienter requirement to establish fraud in the inducement?

A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation.She signed a promissory note at a high but not illegal rate of interest.What result?

If a confidential relationship exists between parties to a contract, the law presumes that undue influence exists if it appears that the dominant party has gained at the other party's expense, but the presumption can be rebutted by evidence that it was not exercised.

An arm's-length transaction is one in which the parties owe each other special duties.

There are two distinct types of fraud.

To sustain a case of fraud in the inducement, the injured party must prove that he actually relied upon the false representation.

If untrue, which of the following would probably be considered a misrepresentation of a material fact?

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.

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