Exam 13: Mistakes and Other Contract Defects

Katie and Linda enter into a contract for Katie to buy Linda's house in which there are several terms that are subject to more than one reasonable interpretation.If Katie and Linda attach materially different meanings to a term

May is a stockbroker.Due to May's statements,Nora believes that the price of OK Goods,Inc.(OKGI),a widely traded stock,is going to in?crease sub?stantially.Nora buys 500 shares of OKGI at $10 per share,but the price soon drops to $2.Nora can successfully recover

Scienter exists in which of the following cases?

All parties to a contract have a duty to disclose all facts that might be of interest to the other parties,even if they are not expressly asked to do so.

A deceived person must have a justifiable reason for relying on a misrepresentation.

A fact is objective and verifiable.

Misrepresentation of an opinion is an element of fraud.

Pete,an accountant,convinces his client Kasey to invest her savings in a nonexistent social-networking Web site.When Kasey learns the truth,she can

Misrepresentation can occur through conduct.

Multi Investments,Inc.,offers to buy Nano Toy Corporation.On May 1,Nano provides copies of its financial statements for the pre?vious year,showing an inventory of $10 million.On May 15,Nano discovers that the previous year's inventory is overstated by $5 million,but does not inform Multi.On June 1,Multi,relying on the fi?nancial statements,buys Nano.On June 10,the buyer discovers the inven?tory over?statement.Can Multi succeed in a suit against Nano for fraud?

If the subject matter of a contract turns out to be more valuable than one of the parties believed it would be,that party can rescind the contract.

Forcing someone to enter into a contract through fear created by threats is undue influence.

Punitive damages are meant to reward the defendant.

Words or terms in contracts that are subject to more than one reasonable interpretation can lead to bilateral mistakes.

Fact Pattern 13-1 (Questions 5-6 apply) Moore Properties,Inc.,offers in writing to sell to Lawn Acres Development Corporation a certain half-acre of land for "$112,000." After Lawn Acres signs the offer in acceptance and returns it,Moore discovers that the price should have been stated as "$121,000." -Refer to Fact Pattern 13-1.The effect of Moore's misstatement of the price will most likely fall on

Misrepresentation of a material fact can occur through words alone.

A seller's failure to disclose a serious defect about a product for sale may give rise to an action for fraud.

Olin,an art instructor,convinces Pia,who has no artistic ability,that Pia has considerable talent and induces Pia to pay Olin $10,000 for art lessons.When Pia realizes the truth,she files a suit against Olin.Pia is most likely to recover on the basis of

A price quotation with a mistake in the adding of a number of fig?ures will never render a contract unenforceable.

All mistakes of fact are material.