Question 1

A contract induced by threatening to bring a civil suit against an individual is prohibited:

Accepted Answer

A)  if the threat is an abuse of process. 
B)  if the suit is to recover a debt, whether the debt is valid or in controversy. 
C)  under no circumstances. 
D)  Two answers are correct. 
A)  if the threat is an abuse of process. 
B)  if the suit is to recover a debt, whether the debt is valid or in controversy. 
C)  under no circumstances. 
D)  Two answers are correct. A

Question 2

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

Accepted Answer

Fraud in the inducement requires proof of a false representation of a fact that is material and made with knowledge of its falsity and the intention to deceive and that was justifiably relied on. Fraud in the execution requires a misrepresentation that defrauds a person as to the nature of the contract so that he is unaware of entering into it.

Question 3

Define undue influence and name some of the relationships that would be affected.

Accepted Answer

Undue influence is the unfair persuasion of a person by a party generally in a dominant position based upon a confidential relationship. Some of the relationships that would be affected would include: guardian-ward, trustee-beneficiary, principal-agent, spouses to one another, parent-child, attorney-client, physician-patient, and clergy-parishioner.

Question 4

Which of the following results in a void contract?

Accepted Answer

A)  Duress by improper threat. 
B)  Duress by physical force. 
C)  Undue influence on a party. 
D)  Fraud in the inducement. 
E)  Duress by physical force and also undue influence on a party. 
A)  Duress by improper threat. 
B)  Duress by physical force. 
C)  Undue influence on a party. 
D)  Fraud in the inducement. 
E)  Duress by physical force and also undue influence on a party.

Question 5

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."

Accepted Answer

a. This is a statement of opinion becaus

Question 6

A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for breach of contract. The court found:

Accepted Answer

A)  the seller was in breach and must pay damages. 
B)  the seller was guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain the goods. 
C)  no contract existed due to mistake in meaning of terms. 
D)  none of these. 
A)  the seller was in breach and must pay damages. 
B)  the seller was guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain the goods. 
C)  no contract existed due to mistake in meaning of terms. 
D)  none of these.

Question 7

Scienter is a legal term which means:

Accepted Answer

A)  that a buyer has justifiably relied upon the seller's representation. 
B)  that the seller had knowledge that his statements were false and the statements were made with the intention to deceive. 
C)  sales puffery. 
D)  All of these. 
A)  that a buyer has justifiably relied upon the seller's representation. 
B)  that the seller had knowledge that his statements were false and the statements were made with the intention to deceive. 
C)  sales puffery. 
D)  All of these.

Question 8

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?

Accepted Answer

a. The first is called physical duress a

Question 9

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

Accepted Answer

A)  Actual knowledge. 
B)  Lack of belief in the statement's truthfulness. 
C)  Reckless indifference as to a statement's truthfulness. 
D)  All of these meet the requirement. 
A)  Actual knowledge. 
B)  Lack of belief in the statement's truthfulness. 
C)  Reckless indifference as to a statement's truthfulness. 
D)  All of these meet the requirement.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Ralph sold a motel to Steve by stating that he had paid $250,000 for it and that his net average annual profit from the business has been $40,000. In reality he paid $100,000 for the motel and has earned a net average annual profit of only $30,000. Steve made no attempt to verify the statements until after the transaction was completed. In this case:

Accepted Answer

A)  Ralph has committed fraudulent misrepresentation. 
B)  Steve is bound by the contract, because he failed to verify the statements which were made to him. 
C)  Ralph has used economic duress to compel the sale. 
D)  All of these. 
A)  Ralph has committed fraudulent misrepresentation. 
B)  Steve is bound by the contract, because he failed to verify the statements which were made to him. 
C)  Ralph has used economic duress to compel the sale. 
D)  All of these.

Question 12

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:

Accepted Answer

A)  duress. 
B)  undue influence. 
C)  fraud in the inducement. 
D)  fraud in the execution. 
A)  duress. 
B)  undue influence. 
C)  fraud in the inducement. 
D)  fraud in the execution.

Question 13

Under the Restatement, if the parties to a contract attach materially different meanings to their manifestations and neither party knows or has reason to know the meaning attached by the other:

Accepted Answer

A)  and neither party is to blame, there is no contract at all. 
B)  and both parties are to blame, there is no contract at all. 
C)  and one party is to blame, that party will be held responsible, but the contract is not void. 
D)  All of these. 
A)  and neither party is to blame, there is no contract at all. 
B)  and both parties are to blame, there is no contract at all. 
C)  and one party is to blame, that party will be held responsible, but the contract is not void. 
D)  All of these.

Question 14

Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  a salesperson and customer. 
B)  business partners. 
C)  a contractor and a homeowner seeking bids on repairing a roof. 
D)  a seller of real property and a potential buyer who knows the property has greater value than the seller realizes. 
A)  a salesperson and customer. 
B)  business partners. 
C)  a contractor and a homeowner seeking bids on repairing a roof. 
D)  a seller of real property and a potential buyer who knows the property has greater value than the seller realizes.

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

Define and discuss the concept of materiality in relation to misrepresentation

Accepted Answer

A misrepresentation is material if it wo

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

The test for duress is objective and the act constituting duress must be a tort or a crime in order to be wrongful.

Accepted Answer

A) True 
 B)False

Exam 11: Conduct Invalidating Assent

A contract induced by threatening to bring a civil suit against an individual is prohibited:

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

Define undue influence and name some of the relationships that would be affected.

Which of the following results in a void contract?

Scienter is a legal term which means:

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?

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

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

Under the Restatement, if the parties to a contract attach materially different meanings to their manifestations and neither party knows or has reason to know the meaning attached by the other:

Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.

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

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.

Define and discuss the concept of materiality in relation to misrepresentation

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.

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.

The test for duress is objective and the act constituting duress must be a tort or a crime in order to be wrongful.

Introduction to Law

Business Ethics

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

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

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 Wills

Filters