Deck 14: Voluntary Consent

Question 1

"One who waits too long to complain has indicated satisfaction with the agreement despite the initial lack of true consent" is the idea behind the doctrine of:

A)ratification.
B)forbearance.
C)rescission.
D)emancipation.

Answer 1

A
Explanation: The person who waits for an unreasonable time after discovery to complain may be held to have ratified the contract and may lose the power to rescind.

Question 2

Which of the following is an element of fraud?

A)Opinion
B)Undue influence
C)Duress
D)Scienter

Answer 2

D
Explanation: To prove fraud,one must prove all the elements of misrepresentation plus two additional elements: that the misrepresentation was (1)knowingly made with the (2)intent to deceive (technically called scienter).

Question 3

Undue influence renders a contract voidable and is a ground for rescission.

Answer 3

True

Question 4

Courts will often allow a party to avoid responsibility when the party has made a promise carelessly.

Question 5

A person who discovers that he is a victim of fraud has an indefinite amount of time to report his grievance.

Question 6

A person who claims to have been victimized by a misrepresentation may cancel the contract only if he/she can show some detriment as a result of the misrepresentation.

Question 7

The basic idea of misrepresentation is that one of the parties to a contract created in the mind of the other party a mistaken impression about an important fact or facts concerning the subject of the contract.

Question 8

The victim of a fraud may be able to recover punitive damages.

Question 9

Misrepresentation cannot result from an honest mistake.

Question 10

A mutual mistake is always a ground for rescission of the contract at the request of either party.

Question 11

Statements of opinion serve as a basis for rescission.

Question 12

Which of the following statements is true for justifiable reliance?

A)Misrepresentation of public facts amounts to justifiable reliance.
B)It cannot lead to rescission of a contract if the victim was aware of the truth.
C)It can lead to rescission of a contract if there is no connection between a misrepresentation and the complaining party's entry into the contract.
D)It is an important element of unilateral mistake.

Question 13

The intent to deceive is also known as capacity.

Question 14

When entering into a contract,parties are expected to exercise reasonable judgment.

Question 15

A negligent unilateral mistake is always a ground for rescission.

Question 16

The subject of misrepresentation must be:

A)a statement about the future.
B)a statement that amounts to puffing.
C)a knowable fact.
D)a statement of opinion.

Question 17

A contract entered into involuntarily is enforceable if present in writing.

Question 18

The elements of fraud are the same as the elements for the tort of deceit.

Question 19

A contract is voidable even if duress and undue influence are both exerted much later after the contract has been entered into.

Question 20

Intentional misrepresentation:

A)is otherwise known as duress.
B)requires that the misrepresentation be made by using a threat.
C)is the only element needed to prove fraud.
D)requires intent to deceive.

Question 21

Jimmy J sells Mary an old station wagon and tells her that it is in excellent condition,although he did not bother to check out the statement of the previous owner that the car was idling fast and backfiring a lot.Under these circumstances,Mary could probably contest the agreement on the grounds of:

A)mutual mistake.
B)duress.
C)fraud.
D)misrepresentation.

Question 22

Which of the following is a remedy for fraud?

A)Rescission of the contract by the buyer.
B)Disaffirming the contract and then suing in tort for damages resulting from the fraud.
C)Ratification of the contract by the buyer.
D)Restitutionary damages.

Question 23

In the sale of real estate:

A)many courts are holding that sellers have a duty to disclose defects that seriously undermine the value of the home.
B)the Truth in Lending Act puts the burden on the buyer to discover defects.
C)the doctrine of caveat emptor applies without exception.
D)courts are increasingly protecting developers,sellers,and their agents.

Question 24

Which of the following statements is true for duress?

A)The reason behind the idea of duress is that mistake may prevent the "meeting of the minds" required by contract law.
B)The basic idea behind duress is to protect the old,the timid,and the physically or mentally weak from those who gain their confidence and attempt to take advantage of them.
C)The term duress is used in contract law to describe the situation in which one or both of the parties to an agreement acted under an untrue belief about the existence or nonexistence of a material fact.
D)Generally,the threat of a well-founded civil suit is not duress.

Question 25

On the first day of class,Jane's history professor passes around a blank sheet of paper claiming that she had not yet received the official class roster.All 21 students in the room sign it.That night,she types on the bottom of the roster sheet,"We,the above-signed parties,hereby promise to pay to the order of professor,$50,000 on demand." A month later,when the class pools their money and buys a winning lottery ticket worth $100,000,the professor presents the instrument and demands her money.Which of the following statements is true?

A)The professor is guilty of a misrepresentation because she knowingly said it was a roster sheet,not a potential negotiable instrument.
B)The professor is guilty of undue influence because she induced the students to sign the sheet by virtue of her superior position as the professor.
C)The professor is guilty of a fraud in the execution because she took advantage of her students' trust in her and intentionally said it was a roster sheet.
D)The professor is guilty of causing economic duress because she could have had any student who failed to sign the sheet removed from the class with tuition and other monetary implications arising; so students were forced to sign.

Question 26

To prove a case of duress,modern courts require evidence of:

A)only physical injury.
B)only a wrongful threat.
C)both threat and injury.
D)statements amounting to puffery.

Question 27

One difference between fraud and misrepresentation is that:

A)there is no requirement of materiality in fraud cases.
B)in fraud cases,the injured party has the additional option of suing in a tort action for the resulting damages.
C)misrepresentation requires knowledge of the falsity of the misstatement,but fraud doesn't.
D)false statements of opinion can be fraud,but not misrepresentation.

Question 28

All the elements of misrepresentation,and the fact that the misrepresentation was knowingly made with the intent to deceive,have to be established to prove _____.

A)scienter
B)duress
C)fraud
D)unilateral mistake

Question 29

Bully Corporation contracted to sell Wimp Corporation materials,that Wimp needed to fulfill a contract it had with a third party.Knowing that Wimp was in desperate need of the materials,Bully called Wimp the day before delivery was due and threatened to withhold delivery unless Wimp agreed to pay a higher price.Because Wimp could not get the materials elsewhere and would suffer a huge financial loss without them,it agreed to pay the higher price.Wimp later asserts that its promise to pay the higher price is unenforceable because it was the product of duress.Which of the following is a true statement with regards to this situation?

A)If the court agrees that Wimp's promise to pay the higher price was the product of undue influence,the contract will be ruled to be void.
B)Under modern contract law,Bully's threat to cause Wimp economic harm could be considered duress and the contract may be considered to be voidable.
C)Bully's threat could not be considered duress because Bully had a legal right to seek a higher price for its goods.
D)Under modern contract law,Bully's threat to cause Wimp economic harm may be undue influence but not fraud.

Question 30

The heirs of Mavis,a victim of Alzheimer's,found on her death that she had sold her house to her lawyer for $50,000,a week before her death.The market value of the house at the time of the sale was $500,000.These heirs may attempt to have the sale set aside,arguing that it was the product of:

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

Question 31

"Caveat emptor" is the basic principle of:

A)scienter.
B)fraud by silence.
C)fraud in the execution.
D)undue influence.

Question 32

If Gilles tampers with the odometer of a car he is trying to sell,he is guilty of:

A)fraud with intent to deceive.
B)fraud by silence.
C)duress.
D)caveat emptor.

Question 33

The difference between duress and undue influence is:

A)their remedy.
B)the interference with a party's ability to resist entering into an agreement.
C)the relationship between the parties at the time of the contract.
D)the type of threat used.

Question 34

In a duress,there is no voluntary consent if:

A)either party can rescind.
B)there is a confidential relationship between the parties.
C)the plaintiff's free will has been overcome.
D)the mistaken party is able to rescind under certain conditions.

Question 35

Most cases charged with undue influence involve:

A)force or threat of injury resulting in economic damages.
B)misstatements about the content or legal effect of something usually contained in a form or preprinted contract.
C)unilateral or mutual mistakes resulting in serious injustice.
D)long-time advisers of elderly/sick people,who are alleged to have gotten the victim to make gifts/sales at unfair prices.

Question 36

Which of the following is an example of scienter?

A)A party to a contract disclosing to the other party all the material facts he/she knows about the subject of the contract.
B)Plaintiff knowingly making a misstatement to a defendant who was likely to rely on it.
C)Defendant admitting that he made a false statement with the intent to deceive.
D)Plaintiff taking action to reveal a misstatement.

Question 37

Scienter:

A)involves misstatements about the content of something contained in a form.
B)refers to the mental state of the defendant.
C)pertains to an actionable misrepresentation that concerns a present or past fact.
D)is a causal connection between a misrepresentation and the complaining party's entry into the contract.

Question 38

The practical difference between the remedies for misrepresentation and fraud is that:

A)a victim of misrepresentation can only sue for punitive damages.
B)a victim of fraud can sue for punitive damages as well as for damages from the tort of deceit.
C)a victim of fraud cannot sue for punitive damages.
D)a victim of misrepresentation can only rescind the contract.

Question 39

When Steve convinces Tom to buy a pre-owned car from him while withholding the fact that the car has a mechanical problem,it indicates:

A)undue influence.
B)duress.
C)mutual mistake.
D)scienter.

Question 40

Today,many courts recognize which of the following about the doctrine of "caveat emptor"?

A)That it is a necessary step to prevent a contract from being created.
B)That it enables the seller to rescind a contract.
C)That it often produces unfair results.
D)That it is wholly the duty of the buyer to be aware of all material facts about the subject of the contract.

Question 41

Harry owns a Cadillac and a Porsche.Bob has always wanted a Porsche and knows Harry owns one.Harry decides to sell his Cadillac and buy a BMW.A mutual friend of Bob and Harry tells Bob,"Harry's selling his car." Thinking Harry is selling the Porsche (he does not know he also has a Cadillac),Bob calls Harry and says,"I'll give you $9,500 for your car." Harry,thinking Bob is talking about the Cadillac,says,"You've got a deal." On what grounds is the above agreement open for rescission?

A)Mutual mistake
B)Fraud
C)Misrepresentation
D)Unilateral mistake

Question 42

Sargent put $5,000 worth of stocks and bonds into an asset management account at Fido Investments.One month later,his account statement indicated that he had a balance in his account of $5 million.Sargent quickly withdrew this amount from his account and put it into a Swiss bank account.Can Fido rescind its payment of $5 million to Sargent on the grounds of mistake?

A)No,because Sargent had given value consideration.
B)Yes,because even though Fido was at fault,Sargent was well aware of Fido's mistake in crediting the extra amount to his account.
C)No,because Fido should have exercised reasonable care while crediting the amount to Sargent's account.
D)Yes,because Fido stands to suffer huge material loss without the rescission.

Question 43

An auction house puts a painting up for sale,which it believed to be and represented as Pablo Picasso's "Acrobat and Young Harlequin." An anonymous Japanese buyer,also believing it to be Picasso's original work,bought it for $50 million.Sometime later the buyer had the painting appraised for insurance purposes,and the appraiser discovered that it was a forgery worth only a few thousand dollars.Can the buyer rescind the contract? If so,on what basis?

A)The buyer cannot rescind because his mistake was negligent; he should have investigated the authenticity of the work before bidding on it.
B)The buyer can rescind on the basis of unilateral mistake.
C)The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting.
D)The buyer can rescind on the basis of mutual mistake.

Question 44

When might a court grant relief for a unilateral mistake even if it is negligent?

Question 45

Mutual mistakes may arise:

A)only when parties unintentionally use terms in their contract that are ambiguous.
B)only when parties are mistaken about the subject matter of their agreement.
C)when parties intentionally use terms in their contracts that are ambiguous which leads to mistaken notions regarding the subject matter of the agreement.
D)when there is unintentional usage of ambiguous terms in the agreement and when the matter of the agreement is not properly understood by either party.

Question 46

There is no voluntary consent in a mutual mistake if:

A)there is a confidential relationship.
B)the mistaken party is able to rescind under certain conditions.
C)the plaintiff is induced to make an unfavorable agreement.
D)there is untrue belief by both parties about a material fact.

Question 47

Why do courts require justifiable reliance in misrepresentation and fraud?

Question 48

How do cases of mistake differ from fraud and misrepresentation?

Question 49

Williams bought a house from Smith.He was not told before the sale that a woman and her four children had been murdered there 10 years ago.He learnt about this from a neighbor after the sale.Williams sued Smith and his real estate agent,seeking to rescind the sale.Can he rescind the contract?

Question 50

Explain the difference between duress and undue influence.