Exam 11: Conduct Invalidating Assent

Which of the following would be considered to be a misrepresentation of a material fact for purposes of establishing fraud in the inducement?

An arm's length transaction is one in which:

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.

A famous decision involving mistake in the meaning of contractual terms is Raffles v.Wichelhaus , a case involving two ships with the same name which were confused by the two parties.Neither party was at fault, and the court held that no contract existed.

The Third Restatement of Torts: Liability for Economic Harm provides that a false statement of opinion results in liability only if (1) the parties are in a fiduciary or confidential relationship or (2) the perpetrator of the fraud holds himself out as having expertise or other knowledge not accessible to the defrauded party.

By holding a knife to his back, Ed compelled Sean to sign a contract advantageous to Ed.This contract was entered under:

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 accepts and sells the farm to Betty.Al later realizes that the land was worth more than $160,000.Al can have the contract avoided based upon fraud.

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?

Generally, whether or not the parties deal at arm's length does not affect whether silence alone amounts to fraud.

Scienter is the element of fraud that requires that the misrepresentation must have been known by the one making it to be false and must have been made with an intent to deceive.

A voluntary choice of perfectly legitimate alternatives may in some instances constitute economic duress.

Fraud in the execution is a fairly common occurrence and involves defrauding a person as to the very nature of the contract.

A voidable contract results when the contract arises from:

Harry was told that he had to pay $50 for filing his claim in small claims court.He did.If the fee is really $40, he cannot recover the $10 because it is a unilateral mistake of fact.

Which of the following is NOT an element of fraud?

Identify whether the following statements could result in actionable fraud and why or why not. a.A statement by an art dealer to a potential buyer, "I think this painting is underpriced because the artist is now gaining national recognition." b.A vacuum cleaner salesperson's statement, "This machine is the best available for the cost." c.A city councilman's statement to a fellow councilman that, "If we vote for that action, the resulting consolidation will be illegal."

What elements need to be proved to establish each type of fraud?

Ty threatened to have Lisa's father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car.Lisa cannot avoid the contract based on duress since the threat was toward Lisa's father rather than Lisa herself.

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

Which of the following results in a void contract?