Exam 15: Mistakes, Fraud, and Voluntary Consent

Gene sells a trail bike to Hollis without disclosing that the odome?ter, which reads 10,000 miles, was disconnected 90,000 miles ago. Gene is most likely liable for

Byron agrees to sell to Charity, for $1,500, a remote parcel of land. They be?lieve the land to be worthless, but beneath it is a gold mine. Byron can

Fact Pattern 15-B2 (Questions B3-B4 apply) Organic Farms Company contracts to buy two tracts of land from Prime Bottomland, Inc. Both parties believe that the two tracts are adjacent, but in fact they are not. Prime Bottomland is still willing to sell the land, but under these circumstances the deal would adversely affect Organic Farms. -Refer to Fact Pattern 15-B2. Because of the parties' belief about the adjacency of the property, their contract is

Fact Pattern 15-B1 (Questions B1-B2 apply) Digital Storage, Inc., offers to sell provide cloud-computing services to Entrepreneur Enterprises, Inc., but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Entrepreneur Enterprises accepts the written offer. -Refer to Fact Pattern 15-B1. Digital Storage's best defense against enforcement of the contract is that Entrepreneur Enterprises knew

An innocent party can rescind a fraudulent contract and be restored to his or her original position.

Misrepresentation of a material fact cannot occur through conduct alone.

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

At an auction for the first time, Dulcinea bids on a one-hundred-year-old Edison-brand phonograph, believing that it is worth more than the price asked. When the item proves to be less valuable, Dulcinea is

Ray buys a rural vineyard from Sergio, who claims that it would be a prime site for a housing subdivision. Ray later learns that the law does not permit the land to be used for housing. Ray may

An innocent party does not need to suffer an injury to collect damages as a result of a misrepresentation.

Any party who does not receive what he or she considers a fair bargain can argue mistake.

Fact Pattern 15-B3 (Questions B14-B15 apply) In selling a commercial building, Birdie tells Colt that the property has a certain capacity, making it suitable for a nightclub. Birdie knows nothing about the capacity of the building, but it is not as she specifies. Colt buys the building. -Refer to Fact Pattern 15-B3. Under these circumstances, Colt's best course of action is most likely to

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.

Courts typically set aside contracts because a party did not volunteer pertinent information.

Generally, a unilateral mistake affords the mistaken party a right to relief from the contract.

Camille, a tennis pro, convinces Dante, who has no athletic ability, that he has considerable skill and induces him to pay Camille $1,000 for tennis lessons. When Dante realizes the truth, he files a suit against Camille. Dante is most likely to recover on the basis of

Fact Pattern 15-B3 (Questions B14-B15 apply) In selling a commercial building, Birdie tells Colt that the property has a certain capacity, making it suitable for a nightclub. Birdie knows nothing about the capacity of the building, but it is not as she specifies. Colt buys the building. -Refer to Fact Pattern 15-B3. On learning the truth, Colt confronts Birdie, who says she was not trying to fool him-she was only trying to make a sale. This is

Mona is induced by her guardian Newt to sign a contract to invest her student loan funds in Overseas Bank through Newt's investment firm. Unknown to Mona, Newt realizes ongoing commissions from the investment. Most likely, Mona may

Kari, a real estate agent, assures Linc that a certain parcel of commercial property fronts on the most highly trafficked street in Metro City. Linc buys the property and then discovers that the street has no more traffic than any other in its vicinity. Linc is most likely a victim of

Floramaria is an elderly woman who lives with her niece Galaxy. Floramaria is depend?ent on Galaxy for support. Galaxy advises Floramaria to "invest" in Galaxy's "profes?sional gambling" venture, or Galaxy will no longer support her. Floramaria liq?uidates her other investments and signs a contract with Galaxy, to whom Floramaria gives the funds. Can Floramaria set aside this contract?