Deck 14: Voluntary Consent

Question 1

For a party to a contract to receive relief from either a unilateral or a bilateral mistake,the mistake must involve a material fact.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

Intent to deceive is an element of fraud.

Answer 3

True

Question 4

When both parties to a contract are mistaken about the same material fact,the contract cannot be rescinded.

Question 5

If a contractor's bid contains a mistake in addition when totaling the estimated costs,the contract may not be enforceable.

Question 6

A party to a contract can choose to carry it out even if he or she did not genuinely agree to the terms.

Question 7

A price quotation with a mathematical mistake in the adding of a number of figures will never render a contract unenforceable.

Question 8

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

Question 9

The identity of one of the parties to a contract is an example of a material fact.

Question 10

A mistake of fact cannot be unilateral.

Question 11

A mistake of value warrants contract rescission.

Question 12

Voluntary consent may be lacking because of misrepresentation but not because of a mistake.

Question 13

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

Question 14

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

Question 15

A unilateral mistake always gives the mistaken party a right to relief from the contract.

Question 16

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

Question 17

A seller's attempt to conceal a fact that is material to a contract can give rise to an action for fraud.

Question 18

Misrepresentation of law ordinarily entitles a party to relief from a contract.

Question 19

A material fact is a fact that a reasonable person would consider important when determining his or her course of action.

Question 20

All mistakes of fact are material.

Question 21

Because fraud actions necessarily involve wrongful conduct,courts may award punitive damages.

Question 22

Dwight believes that a new phone to be sold by Ear Candy Corporation will become the most widely bought and used phone in the global market. Dwight enters into a contract to buy 500 shares of Ear Candy stock,anticipating an increase in its value. If the price of the stock does not rise,Dwight can recover

A)nothing.
B)the amount of the purchase price.
C)the amount of the purchase price plus the expected increase.
D)the amount of the purchase price plus the unexpected decrease.

Question 23

A contract entered into under undue influence is voidable.

Question 24

A threat to exercise a legal right,such as the right to sue someone,ordinarily constitutes duress.

Question 25

Misrepresentation cannot occur by silence.

Question 26

The element of justifiable reliance requires the misrepresentation to be the sole factor in inducing the deceived party to enter into the contract.

Question 27

Reliance on a misrepresentation is justified if the misrepresentation is an obviously extravagant statement.

Question 28

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

Question 29

Misrepresentation of a material fact is an element of fraud.

Question 30

Duress is a defense to the enforcement of a contract,but not a ground for rescission of a contract.

Question 31

Carlos and Alvaro contract for the sale of five hundred head of Carlos's cattle for $95 per head. Unknown to either party,an unforeseen storm has struck the herd and many of the cattle have died. Alvaro is

A)entitled to recover the value of the lost cattle.
B)not required to pay due to the mutual mistake.
C)not required to pay due to the unilateral mistake.
D)required to pay because he assumed the risk the cattle might die.

Question 32

Misrepresentation of a material fact can occur by words or action.

Question 33

At an auction for the first time,Darcy 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,Darcy is

A)liable on the bid.
B)not liable on the bid because Darcy overestimated the value of the item.
C)not liable on the bid because the auctioneer overstated the value of the item.
D)not liable on the bid because this was Darcy's first auction

Question 34

Reformation occurs when a court alters the terms of a contract to reflect the true intent of the parties.

Question 35

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

Question 36

Even when a naïve purchaser relies on an opinion from an expert,the innocent party is not entitled to rescission or reformation of a contract.

Question 37

Shelby wants to sell his Bobcat Skidsteer for $21,000. He e-mails Dave and offers to sell Dave the Bobcat. Due to a typo,Shelby tells Dave that he wants $20,100 for the Bobcat. Dave accepts the offer and pays Shelby $20,100. Shelby is

A)not bound by the contract due to a unilateral mistake.
B)not bound by the contract due to a bilateral mistake.
C)not bound by the contract due to a mistake of value.
D)bound by the contract.

Question 38

To recover for fraud,a plaintiff must be twenty-one or more years of age.

Question 39

In selling a 300-acre farm to Rural Land Investments,Inc.,Simone tells Rural's representative that the land "will be worth twice as much by next year." This is

A)adhesion.
B)fraud.
C)mistake.
D)opinion.

Question 40

Scienterclearly exists if a party knows a fact is not as stated.

Question 41

Winona enters into a contract with Peyton to buy Peyton's land based on Peyton's assertion that the land is legally open to development. After the sale,Winona learns what Peyton knew previously-only a small section of the land can be built on. A local law prohibits construction on the rest of the property. Winona can

A)not avoid the contract because persons are assumed to know the law.
B)avoid the contract due to a mutual mistake.
C)avoid the contract due to a mistake in value.
D)avoid the contract due to fraud.

Question 42

County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from James to Kate,the furnished information is mistaken.
Refer to Fact Pattern 14-3. The contract between James and Kate that includes the mistake may be rescinded

A)if the mistake involves a material fact.
B)if the mistake involves any fact.
C)if the mistake is one of value or quality.
D)under no circumstances.

Question 43

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

A)undue influence.
B)fraud.
C)mistake.
D)nothing.

Question 44

Garth owns two all-terrain vehicles (ATVs),worth $1,000 and $500,re-spec-tively. Helen agrees to buy "Garth's ATV" for $750. Garth believes,in good faith,that he is selling the $500 ATV. Helen believes,in good faith,that she is buying the $1,000 ATV. In this situation

A)Garth is entitled to $750 for the $500 ATV.
B)Helen is entitled to the $1,000 ATV for $750.
C)Helen must buy both ATVs for $1,500.
D)there is no contract.

Question 45

Hank,a salesperson for Ideal Autos,promises Jennie a certain car will give her a "smooth ride." Hank offers a test drive,which Jennie de-clines. She buys the car but soon realizes its suspension is in poor condi-tion. Jennie

A)can rescind the contract on the ground of fraud.
B)can rescind the contract on the ground of misrepresentation.
C)can rescind the contract on the ground of mistake.
D)was not defrauded.

Question 46

Lewis,an employee of Silos,Inc.,makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently,Silos's bid is significantly low.
Refer to Fact Pattern 14-2. Any contract with AgriCo-op that includes the mistake may be rescinded

A)if the error was made inadvertently and without gross negligence.
B)if the error was made intentionally or negligently.
C)if the error was made intelligently but distractedly.
D)under no circumstances.

Question 47

Lewis,an employee of Silos,Inc.,makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently,Silos's bid is significantly low.
Refer to Fact Pattern 14-2. Any contract with AgriCo-op that includes the mistake may be rescinded

A)if AgriCo-op knew or should have known of the mistake.
B)if Lewis's supervisor did not know of the mistake.
C)if Silos knew or should have known of the mistake.
D)under no circumstances.

Question 48

Nora enters into a contract with Oceanic Transport,Inc.,to insure and ship a painting from Paris to New York City for a certain price. But Oceanic makes a mistake in adding the costs,which results in a contract price that is $1,000 less than the true cost. Most likely,a court would

A)allow the parties to rescind the contract.
B)award damages to Nora for the mistake.
C)award damages to Oceanic for the mistake.
D)enforce the contract as is.

Question 49

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 Enterprisesaccepts the written offer.
Refer to Fact Pattern 14-1. Entrepreneur Enterprises'best argument in favor of enforcement of the contract is that

A)a bilateral mistake does not afford relief from a contract.
B)a mistake of value does not afford relief from a contract.
C)a unilateral mistake does not afford relief from a contract.
D)the price was below the prices of comparable devices.

Question 50

Kyle,an accountant,convinces his client Lucille to sign a contract to invest her savings in 2Gether,a nonexistent social-networking Web site. There is clear and convincing evidence that Lucille did not act out of her free will. This is

A)duress.
B)fraud.
C)unconscionability.
D)undue influence.

Question 51

County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from James to Kate,the furnished information is mistaken.
Refer to Fact Pattern 14-3. If James and Kate are both ignorant of the mistake,it is

A)a bilateral mistake.
B)a fraudulent misrepresentation.
C)a unilateral mistake.
D)unconscionable.

Question 52

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 Danterealizes the truth,he files a suit against Camille. Danteis most likely to recover on the basis of

A)opinion.
B)fraud.
C)unconscionability.
D)none of the choices.

Question 53

County Title Company processes information furnished by others to transfer title to real estate from a seller to a buyer. In performing this task for a sale of land from James to Kate,the furnished information is mistaken.
Refer to Fact Pattern 14-3. The contract between James and Kate that includes the mistake may be rescinded

A)if the mistake concerns a basic assumption on which the contract was made.
B)if the mistake concerns a term in the contract that is subject to only one reasonable interpretation.
C)if the mistake represents a true "meeting of the minds."
D)under no circumstances.

Question 54

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

A)opinion.
B)fraud.
C)mistake.
D)nothing.

Question 55

Garland induces Jules to enter into a contract for the purchase of a Chef's Burger House restaurant. Garland knowingly misrepresents a number of material features about the restaurant and the business. When Jules discovers the truth,he can

A)not rescind the contract because Jules assumed the risk that the bargain would prove to be different from what he thought.
B)rescind the contract on the basis of fraud.
C)rescind the contract on the basis of mistake.
D)rescind the contract on the basis of undue influence.

Question 56

Used Car Lot's salesperson Vic offers to sell Will,who is twenty years of age,a car about which Vic intentionally misrepresents its past use and repairs. In reliance on the misrepresentations,Will buys the car. To prove fraud in this transaction,Will does not have to show that

A)Vic intentionally deceived Will.
B)Vic misrepresented several material facts.
C)Will is under twenty-one years of age.
D)Will justifiably relied on Vic's misrepresentations.

Question 57

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 Enterprisesaccepts the written offer.
Refer to Fact Pattern 14-1. Digital Storage'sbest defense against enforcement of the contract is that Entrepreneur Enterprisesknew

A)a bilateral mistake supports the cancellation of a contract.
B)a mistake of value supports the cancellation of a contract.
C)a unilateral mistake supports the cancellation of a contract.
D)the price was below the prices of comparable devices.

Question 58

Lewis,an employee of Silos,Inc.,makes a substantial mathematical error in totaling the estimated costs for a project for which AgriCo-op is seeking bids. Consequently,Silos's bid is significantly low.
Refer to Fact Pattern 14-2. Any contract with AgriCo-op that includes the mistake may be rescinded

A)if the mistake involves a material fact.
B)if the mistake involves any fact.
C)if the mistake is one of value or quality.
D)under no circumstances.

Question 59

Phoebe enters into a contract with Everest for a guided tour of Whitewater Canyon. Everest acts as though he is an experienced,knowledgeable guide,when in reality he has never been in the canyon. Phoebe is most likely a victim of

A)undue influence.
B)fraud.
C)mistake.
D)nothing.

Question 60

Dixon agrees to sell to Elmore,for $1,500,a remote parcel of land. They believe the land to be worthless,but beneath it is a shale rock containing oil. A court would

A)not rescind the contract.
B)rescind the contract on the basis of fraud.
C)rescind the contract on the basis of mistake.
D)rescind the contract on the basis of undue influence.

Question 61

Raylene,who is Seth's guardian,convinces him to buy a certain parcel of land from Trevor at a greatly inflated price. Raylene may be liable for

A)duress.
B)fraud.
C)mistake.
D)undue influence.

Question 62

In selling a commercial building,Birdie tells Colt that theproperty 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 14-4. 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

A)a mistake of value.
B)a valid defense to a charge of fraud.
C)misrepresentation.
D)unconscionable.

Question 63

Morris threatens physical harm to force Barb to contract to pay him for protecting her store-Barb's Baubles-against vandalism and destruction. Barb may

A)rescind the contract or refuse to comply with its terms.
B)do nothing once she has agreed to pay.
C)recover from her insurer for the cost.
D)recover from the local police for their failure to protect her store.

Question 64

Dumont threatens physical harm to force Eddie to sell his business,Citywide Vending,Inc.,to Dumont for a below-market price. This is

A)duress.
B)fraud.
C)unconscionability.
D)undue influence.

Question 65

In selling a commercial building,Birdie tells Colt that theproperty 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 14-4. Under these circumstances,Colt's best course of action is most likely to

A)scam Birdie.
B)induce Birdie to give him the commission on her next sale.
C)recover damages or rescind the contract to buy the building.
D)sabotage Birdie's career with bad publicity.

Question 66

Creighton applies to BigData Corporation for a position as a software engineer. Creighton has no training in computers or programming and no background as an engineer. After Creighton is hired,BigData learns the truth. BigData can

A)not rescind the contract.
B)rescind the contract on the basis of fraud.
C)rescind the contract on the basis of mistake.
D)rescind the contract on the basis of unconscionability.

Question 67

Drake enters into a contract with Eve,who claims to have access to a stock-trading algorithm that will multiply an investment many times over. When the results do not match this promise,Drake learns that Eve does not have access to any unique software and files a suit against her,alleging fraud. Proof of an injury is required to

A)recover damages.
B)rescind the contract.
C)undo Eve's influence.
D)punish the defendant.

Question 68

In a bike shop,Barrie,who is not knowledgeable about bikes,overhears Cullen say,"This bike could win any race!" Barrie buys the bike,but does not win any races with it. Cullen's statement is

A)a mistake.
B)fraudulent.
C)an opinion.
D)an attempt at undue influence.

Question 69

Health Source,Inc.,offers to buy Medico Equipment & Supplies Corporation. On June 1,Medico gives Health Source copies of Medico's financial statements for the pre-vious year. The statements show an inventory of $10 million. On June 15,Medico discovers that the previous year's inventory is overstated by $500,000,but does not inform Health Source. On July 1,Health Source,relying on the fi-nancial statements,buys Medico. On July 10,Health Source discovers the inven-tory over-statement. Can Health Source succeed in a suit against Medico? On what basis?

Question 70

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

A)not rescind the contract.
B)rescind the contract on the basis of undue influence.
C)rescind the contract on the basis of mistake.
D)rescind the contract on the basis of unconscionability.

Question 71

The elements of an action for fraud are (1)the misrepresentation of a material fact,(2)the intent to deceive,and (3)the innocent party's justifiable reli-ance on the misrepresentation. Ordinarily,no party to a contract has a duty to come forward and disclose facts. Each party is responsible for the use of common sense and normal business sense in negotiating a con-tract. An action for fraud can be based on a failure to disclose material facts when there is a certain relationship between the parties such as be-tween part-ners in a partnership or when a party could not reasonably discover a fact known to the other party. An action may also be maintained if,as here,a party that misstates a material fact later learns of the misstate-ment but does not disclose it to the other party.This is misrepresentation by conduct.
Here,by providing finan-cial statements,Medico made certain representations. Those representa-tions were false,how-ever,as Medico learned. Medico's knowledge of the over-stated inventory and failure to disclose this to Health Source indicated intent to deceive. Health Source's reli-ance on Medico's statements was reasonable and justifiable.
Nero is an elderly man who lives with his nephew Mervyn. Nero is depend-ent on Mervyn for support. Mervyn advises Nero to "invest" in Mervyn's "profes-sional gambling" venture,or Mervyn will no longer support him. Nero liq-uidates his other investments and signs a contract with Mervyn,to whom Nero gives the funds. Can Nero set aside this contract?

Question 72

Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraud

A)if Mark is unaware of the fact and the failure.
B)if the amount of consideration received is grossly inadequate.
C)if the fact concerns a serious defect known to Mark and unlikely to be known by Nancy.
D)under any circumstances.