Exam 14: Capacity And Consent

Larson put his home on the market for sale.His good friend Bill came to look at the home for possible purchase or rental.Bill noticed a crack in the ceiling and inquired about it to Larson.Larson said that there had been a water leakage problem in the area but it had been fixed two years ago and had not leaked since.Bill made a written offer on the house which was accepted in writing by Larson the next day.On the day prior to closing,Bill went to make a final inspection.Bill observed water leaking through another crack in a ceiling of the house and in the garage.The next day,Bill informed the real estate agent that he was rescinding the contract because of the leaks.Larson subsequently rented the property to another party.A couple of months later,Larson filed a suit seeking a court order to make Bill purchase the house or in the alternative for money damages.Bill defended by claiming that Larson either defrauded him or there was a mutual mistake and asked for the return of his earnest money and/or damages for fraud.The trial court found there was no evidence to find fraud on the part of Larson because the roof had been previously fixed and the two parties had been good friends.What is the appropriate remedy when a court concludes that there has been a mutual mistake of material fact?

Marty,a 16-year-old,contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle.He agreed to make monthly payments until the purchase price plus interest were paid in full.It is three years later and Marty has not disaffirmed the contract and has made regular payments on the cycle since turning 18.Which of the following is correct?

Pushy Pat,a persuasive salesman,talked Nice Nancy into purchasing something she didn't really need or want.Nice Nancy may rescind the contract because of undue influence.

All states allow the remedy of rescinding a contract for the sale of goods while still allowing the remedy of suing for damages.

Peter,a minor,purchased a car from ACME Motors.Using a fake ID,he misrepresented his age to be 18.The contract is fully executed.Which of the following is correct?

Contract rescission can sometimes be based upon a unilateral mistake.

After her 18th birthday Lora may,by words or action,ratify a contract she made during the previous year.

Discuss two types of misrepresentation and how they differ.List the three things a party must show to rescind a contract based on misrepresentation.

Marty,a 16-year-old,contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle.Marty agrees to make monthly payments until the purchase price plus interest are paid in full.Which of the following is correct?

In the case of Sepulveda v.Aviles,the New York Supreme Court,Appellate Division,found evidence of undue influence in:

Which of the following is most likely to constitute fraud?

Fraudulent,but not innocent,misrepresentation permits the injured party to rescind a contract.

Deborah purchased a boat from Sun 'N Surf Marine.She later learned that the salesman had made misrepresentations to induce her to make the purchase.Under UCC Section 2-721,Deborah can rescind the contract:

Larson entered Forrester's Auto Mart to purchase a used car.Larson found a vehicle with a sales price of $11,000.After Forrester answered all of Larson's questions,Forrester and Larson agreed to a sale.As Larson was leaving to get the money to pay for the car,Forrester told Larson that Robert Redford formerly owned the car.Larson later learned that Robert Redford had never owned the car.If Larson seeks to rescind the deal based on Forrester's statement,Larson will:

Frank suffers from a mental impairment due to a brain injury from a airplane accident.He contracts with Glena to purchase her dining room furniture.A month later,he tries to void the contract.If he is unable to return the furniture,a court will not rescind the agreement unless Frank can show that Glena acted in bad faith.

Vince has begun forgetting things and is becoming very difficult to get along with.He is 85,has been ill,and is very fond of his housekeeper Annie.He gives a deed to Annie for all of his real property.At Vince's death,his children,who got only his photograph albums according to the will,ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children.The probable result will be:

Which of the following is NOT a true statement about fraud?

Jeff was a subcontractor,bidding on a contract for ACE Corp.,the general contractor.When adding up the total of materials and labor,Jeff's secretary mistakenly moved the decimal point one place,ending up with a bid of $3500 rather than $35,000.ACE Corp.accepted Jeff's bid,mostly because all the other bids were over $30,000.When Jeff learned of the mistake,he tells ACE Corp.that he cannot do the job for $3500.If ACE Corp.sues to enforce this contract,what is the most likely result?

If a minor can cancel a contract,it can be done at any time during minority or within a reasonable time after reaching majority.

Generally,a seller has no duty to disclose facts.However,there is a duty to disclose information or facts if the disclosure is necessary to: