Exam 14: Mistakes, Fraud, and Voluntary Consent

Fact Pattern 14-A1 Dina, an employee of Eagle Industries, is injured in a work-related accident. Based on the diagnosis of Frank, a doctor, Dina accepts $50,000 from Eagle and waives the right to future claims. Frank's diagnosis later proves to have been wrong. -Refer to Fact Pattern 14-A1. Dina may, according to the deci?sion in Case 14.1, Roberts v. Century Contractors, Inc.,

Ben sells a sport utility vehicle to Cody without disclosing that the odome?ter, which reads 40,000 miles, was disconnected 80,000 miles ago. Ben is liable for

Economic need is always sufficient to constitute duress.

Fact Pattern 14-B3 Pete, the owner of Quality Orchards, contracts to sell fruit to Ripe Produce, Inc. When Pete refuses to per?form, Ripe Produce files a suit to enforce the contract. -Refer to Fact Pattern 14-B3. To defend successfully on the ground of un?con?scionability, Pete must show that enforcement of the contract would be

If the parties to a contract attach materially different meanings to a con?tract term, the contract cannot be rescinded.

Olin 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

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

An adhesion contract can occur in a one-sided transaction in which one party has substantially superior bargaining power.

Fact Pattern 14-A3 Flo enters into a contract under Gail's threats. Later, Flo refuses to perform, claiming that she acted under duress. -Refer to Fact Pattern 14-A3. Flo sues to rescind the contract. Gail claims that duress is a defense to enforcement of a contract, not a ground for re?scission. The court will probably rule in favor of

Misrepresentation of a material fact is an element of fraud.

Misrepresentation of a material fact cannot occur through words alone.

An innocent misrepresentation is not a basis for rescinding a contract.

Fact Pattern 14-A3 Flo enters into a contract under Gail's threats. Later, Flo refuses to perform, claiming that she acted under duress. -Refer to Fact Pattern 14-A3. Gail sues to enforce the contract. To be guilty of duress, Gail must have threatened

A statement of opinion is generally subject to a claim of fraud.

Fact Pattern 14-A1 Dina, an employee of Eagle Industries, is injured in a work-related accident. Based on the diagnosis of Frank, a doctor, Dina accepts $50,000 from Eagle and waives the right to future claims. Frank's diagnosis later proves to have been wrong. -Refer to Fact Pattern 14-A1. According to the reasoning of the court in Case 14.1, Roberts v. Century Contractors, Inc., Frank's misdiagnosis is, in terms of its impact on Dina's agreement with Eagle,

A contract entered into under undue influence is voidable.

Fact Pattern 14-A2 Moore Properties, Inc., offers in writing to sell to New Development Corporation a certain half-acre of land for "$112,000." After New Development signs the offer in acceptance and returns it, Moore discovers that the price should have been stated as "$121,000." -Refer to Fact Pattern 14-A2. The effect of Moore's misstatement of the price will most likely fall on

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

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

In selling software to Payroll Services Corporation, Ray tells Payroll's purchas?ing agent that the software is "almost human." This is