Question 1

Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false statements made by the promisor.

Accepted Answer

A) True 
 B)False  False

Question 2

Mark, a civil engineer, entered into a contract with David. As per the contract, Mark agreed to design and build a house for David for a specified fee. Mark provided David with an estimation of the total cost and the contract was mutually agreed upon. However, during construction, when Mark increased the price stating a miscalculation on his part, David refused to pay the amount. This scenario is an example of a _____ mistake.

Accepted Answer

A)  mutual 
B)  collective 
C)  collateral 
D)  unilateral 
A)  mutual 
B)  collective 
C)  collateral 
D)  unilateral D

Question 3

When a mistake occurs, the parties may specify a different outcome in their contract, irrespective of what the law provides.

Accepted Answer

A) True 
 B)False  True

Question 4

When can a person rescind a contract? In order to rescind, what are the four steps one must undertake after returning what one received under a contract?

Accepted Answer

If a contract is voidable, one might ele

Question 5

Failure to disclose information when there is duty to do so is known as passive fraud.

Accepted Answer

A) True 
 B)False

Question 6

Allen enters into a contract with Joe to sell his car. However by mistake, he undervalues his car. Though the actual value of the car is $6000, he sells it to Joe for $3000. During the purchase, Joe is aware of the actual value but does not communicate this fact to Allen. Which of the following is likely to be true in such a scenario?

Accepted Answer

A)  Allen is entitled to compensation through a court of law. 
B)  Allen is entitled to cancel the contract because he was not aware of the actual value. 
C)  Joe is entitled to keep the car because the contract is valid. 
D)  Joe must pay the difference to Allen in order to validate the purchase. 
A)  Allen is entitled to compensation through a court of law. 
B)  Allen is entitled to cancel the contract because he was not aware of the actual value. 
C)  Joe is entitled to keep the car because the contract is valid. 
D)  Joe must pay the difference to Allen in order to validate the purchase.

Question 7

A contract is void if parties to a contract are mutually mistaken about their expectations.

Accepted Answer

A) True 
 B)False

Question 8

James orally entered into a contract to sell 100 tonnes of cotton to Bryan for a price of $1000 per ton. Both parties subsequently signed a written contract. However, the written contract mistakenly stated the price of cotton as $1100 per ton. While signing, Bryan failed to notice this mistake. Which of the following contract terms will govern in such a scenario?

Accepted Answer

A)  Both parties must consider the contract null because a mutual mistake has occurred. 
B)  Bryan can hold James responsible for the error and cancel the contract. 
C)  James can nullify the contract stating Bryan's mistake of not noticing the error. 
D)  Both parties must carry on with the contract as agreed orally. 
A)  Both parties must consider the contract null because a mutual mistake has occurred. 
B)  Bryan can hold James responsible for the error and cancel the contract. 
C)  James can nullify the contract stating Bryan's mistake of not noticing the error. 
D)  Both parties must carry on with the contract as agreed orally.

Question 9

A false statement made in the belief that it is true is known as innocent misrepresentation.

Accepted Answer

A) True 
 B)False

Question 10

Economic duress occurs when:

Accepted Answer

A)  one party offers a hard bargain and takes advantage of the other's urgent need to make a contract. 
B)  a person agrees to a contract merely because of difficult financial circumstances that are not the fault of the other party. 
C)  a person threatens to harm another person financially in order to get an agreement. 
D)  one party makes a threat of violence and the other agrees to contract to avoid injury. 
A)  one party offers a hard bargain and takes advantage of the other's urgent need to make a contract. 
B)  a person agrees to a contract merely because of difficult financial circumstances that are not the fault of the other party. 
C)  a person threatens to harm another person financially in order to get an agreement. 
D)  one party makes a threat of violence and the other agrees to contract to avoid injury.

Question 11

Which of the following statements is true of fraud in the inducement?

Accepted Answer

A)  It occurs when a party intends to make a contract based on a false statement of terms. 
B)  It refers to a defrauded party not signing a contract if the nature of writing cannot be understood. 
C)  It refers to a party forced to sign a contract under duress. 
D)  It takes place when a party unintentionally signs a contract after being misguided by another. 
A)  It occurs when a party intends to make a contract based on a false statement of terms. 
B)  It refers to a defrauded party not signing a contract if the nature of writing cannot be understood. 
C)  It refers to a party forced to sign a contract under duress. 
D)  It takes place when a party unintentionally signs a contract after being misguided by another.

Question 12

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

Accepted Answer

A) True 
 B)False

Question 13

_____ is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

Accepted Answer

A)  Passive fraud 
B)  Duress 
C)  Misrepresentation 
D)  Undue Influence 
A)  Passive fraud 
B)  Duress 
C)  Misrepresentation 
D)  Undue Influence

Question 14

A false statement made in the belief that it is true is known as innocent misrepresentation.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true regarding parties who make mutual mistakes of law?

Accepted Answer

A)  The contract becomes null and nonbinding on the parties. 
B)  One of the parties can annul the contract stating that it is a mistake of law. 
C)  The parties are expected to have knowledge of the law when making the contract. 
D)  Both parties can claim relief and compensation through a court of law. 
A)  The contract becomes null and nonbinding on the parties. 
B)  One of the parties can annul the contract stating that it is a mistake of law. 
C)  The parties are expected to have knowledge of the law when making the contract. 
D)  Both parties can claim relief and compensation through a court of law.

Question 16

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

Accepted Answer

A) True 
 B)False

Question 17

Mistakes such as duress and undue influence render contracts void.

Accepted Answer

A) True 
 B)False

Question 18

If an unilateral mistake regarding price results arise from misunderstanding an oral quotation of the price, the contract is invalid.

Accepted Answer

A) True 
 B)False

Question 19

As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of undue influence?

Accepted Answer

A)  It occurs when one party threatens to cause physical harm to another. 
B)  It refers to one party injuring another financially to influence him to enter into a contract. 
C)  It takes place between people who are not known to each another. 
D)  It refers to a person in a special relationship causing another's action contrary to free will. 
A)  It occurs when one party threatens to cause physical harm to another. 
B)  It refers to one party injuring another financially to influence him to enter into a contract. 
C)  It takes place between people who are not known to each another. 
D)  It refers to a person in a special relationship causing another's action contrary to free will.

Exam 9: Defective Agreements

Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false statements made by the promisor.

When a mistake occurs, the parties may specify a different outcome in their contract, irrespective of what the law provides.

When can a person rescind a contract? In order to rescind, what are the four steps one must undertake after returning what one received under a contract?

Failure to disclose information when there is duty to do so is known as passive fraud.

A contract is void if parties to a contract are mutually mistaken about their expectations.

A false statement made in the belief that it is true is known as innocent misrepresentation.

Economic duress occurs when:

Which of the following statements is true of fraud in the inducement?

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

_____ is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

A false statement made in the belief that it is true is known as innocent misrepresentation.

Which of the following is true regarding parties who make mutual mistakes of law?

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

Mistakes such as duress and undue influence render contracts void.

If an unilateral mistake regarding price results arise from misunderstanding an oral quotation of the price, the contract is invalid.

As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

Which of the following is true of undue influence?

Introduction to Law

Courts and Court Procedure

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Consideration

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Con

Warranties, Product Liability, and Cons

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties and Holders in Due Course

Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Labor Legislation

Introduction to Business Organization

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corpora

Principles of Insurance

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills, Inheritances, and Trusts

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