Exam 11: Conduct Invalidating Assent

Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store. Bob can avoid his contract with Matt because of fraudulent misrepresentation.

Which of the following, if any, are requisites for fraud in the inducement?

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

For rescission to be available as a remedy for a false statement, a misrepresentation must have been made with scienter.

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.

Sam wants to sell his golden retriever to Al. Sam tells Al that the dog is three years old and that he will point, back, and retrieve. Al relies on these statements and purchases the bird dog. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). The buyer has most probably been a victim of:

Physical compulsion and improper threats are the two basic types of duress.

Which of the following is NOT an element of fraud?

The law requires that to form a valid contract the agreement must be voluntary and knowing.

Predictions, opinions, and promissory statements ordinarily do not constitute bases of fraud.

To obtain relief for negligent or innocent misrepresentation, the elements of fraud must be present but the misrepresentation need not be material.

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Bob wasn't sure as to the nature of the stone, but told Albert 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 sales contract:

James threatens to hit Kenneth in the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $400 for his saw. Because of the threat, Kenneth signs the contract.

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

Hal holds a gun to Irving's head and tells him to sign the contract. Irving signs the contract, because he fears for his personal safety. The contract is void, because it was entered into under duress.

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.

The law would most likely impose a duty of disclosure in a transaction between:

A voidable contract results when the contract arises from:

a. What are the two types of duress and what is the effect of each on the contract involved? b. Give an example of each type of duress. c. Who does the law intend to protect by reason of the defense of duress? Why does the law protect this type of person?

In the case of Rea v. Paulson , the court found no undue influence because the party in the dominant position had insisted that the weaker party seek independent advice about deeding her house.