Deck 14: Voluntary Consent

Question 1

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.

Answer 1

True

Question 2

Misrepresentation can result from negligence on the part of the misrepresenter.

Answer 2

True

Question 3

The elements of misrepresentation are ordinarily given as misrepresentation of a material fact justifiably relied on to the detriment of the person relying.

Answer 3

True

Question 4

The courts generally infer an intent to deceive from the fact that the defendant knowingly made a misstatement to a plaintiff who was likely to rely on it.

Question 5

Those who discover that they have been the victim of misrepresentation, fraud, duress, undue influence, or mistake must act promptly to rescind or disaffirm their contracts.

Question 6

The idea that a contract is a voluntary agreement between the parties is the basis of contract law.

Question 7

Which of the following is true of misrepresentation in contracts?

A) A mere untrue assertion is sufficient for proving misrepresentation.
B) Misrepresentation cannot result from an honest mistake or negligence.
C) Statements of opinion serve as a basis for rescission.
D) A victim has to show detriment from misrepresentation to cancel a contract.

Question 8

Duress exists only when the parties had some confidential relationship at the time of the contract.

Question 9

The term mistake 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.

Question 10

Even a mere untrue assertion is sufficient to prove misrepresentation.

Question 11

Which of the following statements is true of justifiable reliance?

A) Misrepresentation of public facts amounts to justifiable reliance.
B) It cannot lead to rescission of a contract if the complaining party was aware of the truth.
C) There should not be any causal connection between a misrepresentation and the complaining party's entry into the contract.
D) It is an important element of unilateral mistakes.

Question 12

"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.

Question 13

Which of the following statements is considered an actionable misrepresentation?

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

Question 14

Fraud is negligent misrepresentation.

Question 15

Mutual mistake is always a basis for granting rescission of the contract at the request of either party.

Question 16

Even if the facts and circumstances surrounding a case indicate that the parties reached an agreement, that agreement must be voluntary to be enforceable.

Question 17

Taking action to conceal a fact indicates scienter.

Question 18

The courts do not allow a person who claims to have been victimized by a misrepresentation to cancel the contract unless he or she can show some detriment as a result of the misrepresentation.

Question 19

Contracts entered into as a result of misrepresentation, fraud, and certain kinds of mistake are void.

Question 20

Will wants to sell a car to Timothy. Will tries to convince Timothy that it is a good buy. Will lies by telling him that the car has 10 months of free service left in order to convince him to buy it. The car actually has only 2 months of service left. Which of the following is true in this scenario?

A) Will is guilty of fraud.
B) Will is not guilty of fraud because he did not have commercial interests behind the lie.
C) It is a case of mutual misunderstanding.
D) Will cannot be tried by the court because the defendant's motivation is not known.

Question 21

Which of the following best defines scienter?

A) It refers to the sales talk that people make while trying to convince a person to sign a contract.
B) It refers to the mental state of the defendant.
C) It pertains to an actionable misrepresentation that concerns a present or past fact.
D) It is a causal connection between a misrepresentation and the complaining party's entry into the contract.

Question 22

Which of the following is best associated with "caveat emptor"?

A) Scienter
B) Fraud by silence
C) Fraud in the execution
D) Undue influence

Question 23

A misrepresentation knowingly made with an intent to deceive is known as _____.

A) indemnification
B) caveat emptor
C) scienter
D) arbitration

Question 24

Which of the following is true of the difference between fraud and misrepresentation?

A) There is no requirement of materiality in fraud cases, whereas misrepresentation requires materiality.
B) Unlike misrepresentation, the injured party in fraud cases has the additional option of suing in tort for 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 25

In case of duress, there is no voluntary consent if:

A) either party rescinds at any time.
B) there is a confidential relationship between the parties.
C) the plaintiff's free will was overcome.
D) a material fact has been intentionally misrepresented.

Question 26

Gilles tampers with the odometer of a car he is trying to sell. In order to convince the buyer that the car has run fewer miles than it actually has, he manually sets the odometer to the numbers of miles he wants displayed. In this scenario, Gilles is guilty of _____.

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

Question 27

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

A) Blackhawk only exercised superior bargaining powers and therefore is not at fault.
B) Under modern contract law, Blackhawk's threat to cause Greeneye economic harm could be considered duress and the contract may be considered voidable.
C) Blackhawk's threat could not be considered duress because they had a legal right to seek a higher price for its goods.
D) Under modern contract law, Blackhawk's threat to cause Greeneye economic harm may be unintentional tort, but not duress.

Question 28

Most of the cases in which undue influence is charged 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) longtime advisors of elderly or sick people, who are alleged to have gotten the victim to make gifts/sales at unfair prices.

Question 29

Which of the following is the meaning of the term "caveat emptor"?

A) Let the buyer beware
B) The parties' duty of care
C) Justifiable reliance
D) Remedy for fraud

Question 30

Which of the following statements is true for duress?

A) The reason behind the idea of duress is that mistakes 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) The courts have generally held that the threat of a well-founded civil suit is not duress.

Question 31

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

A) a victim of misrepresentation can sue for punitive damages, whereas a victim of fraud cannot.
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 cannot rescind the contract.

Question 32

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

A) undue influence
B) duress
C) unintentional tort
D) scienter

Question 33

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

A) undue influence
B) duress
C) fraud
D) a unilateral mistake

Question 34

Which of the following is true about contracts that pertain to sales of real estate?

A) The seller gets the benefit of caveat emptor whenever a lack of information dispute arises.
B) The Truth in Lending Act puts the burden on the buyer to discover defects and holds that fraud by silence should be looked out for by the buyers.
C) Many courts today recognize that caveat emptor produces unfair results.
D) Courts nowadays are increasingly protecting developers, sellers, and their agents.

Question 35

Jimmy sells an old station wagon to Mary and tells her that it is in excellent condition. He did not bother to verify the statement of the previous owner that the car was making strange noises. Under these circumstances, Mary could best contest the agreement on the grounds of _____.

A) mutual mistake
B) duress
C) fraud
D) unintentional tort

Question 36

Phil buys a laptop from Mark for $1,000. Mark knew that the laptop had hardware problems. However, he told Phil that it was in excellent condition. In this scenario, which of the following is most likely to be true?

A) Mark does not owe Phil anything because it was Phil's duty to check if Mark was lying.
B) Mark can dismiss any fraud accusations because it was a case of mutual misunderstanding.
C) Phil can sue for the difference between purchase price and true value of the laptop with hardware problems.
D) Phil can recover 20 percent of the repair costs on the condition that he returns the laptop to Mike.

Question 37

After Julie's death, her children discovered that she had sold her house a week prior to her death to her niece, Yolanda, for $50,000. Julie lived the last ten years of her life in Yolanda's house, under her care. The market value of the house at the time of the sale was $500,000. Julie's children may attempt to have the sale set aside, arguing that it was the product of _____.

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

Question 38

A key point of differentiation between duress and undue influence lies in the:

A) net worth of the contract in question.
B) time at which the contract was signed.
C) relationship between the parties at the time of the contract.
D) type of property in question.

Question 39

_____ involves misstatements about the content or legal effect of something usually contained in a form or preprinted contract.

A) Fraud in the execution
B) Undue influence
C) Mutual mistake
D) Unintentional tort

Question 40

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

A) the plaintiff to drive a hard bargain.
B) that the threat be a wrongful one.
C) a contract to be more beneficial to one of the parties.
D) statements that amount to puffery.

Question 41

Simon 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 of $5 million. Simon quickly withdrew this amount from his account and put it into a Swiss bank account. Can Fido rescind its payment of $5 million to Simon on the grounds of mistake?

A) No, because Simon and Fido made a mutual mistake.
B) Yes, because even though Fido was at fault, Simon 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 Simon's account.
D) Yes, because Fido was a victim of fraud by execution.

Question 42

A _____ is one where both parties involved in a contract are under a mistaken belief about a material fact.

A) state of duress
B) state of undue influence
C) mutual mistake
D) unilateral mistake

Question 43

Discuss whether silence can constitute fraud.

Question 44

An auction house puts a painting up for sale, which they think to be Pablo Picasso's "Acrobat and Young Harlequin." A Japanese businessman purchases the painting for $50 million. The businessman appraises the painting for insurance purposes and discovers that it is a clever fake that is worth only a few thousand dollars. Which of the following statements is true of the scenario?

A) The buyer cannot rescind because he 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 45

Which of the following is true about unilateral mistakes?

A) The court does not grant rescission even if the mistaken party is slightly negligent.
B) The court will grant relief even if the person's own negligence is the cause of his or her mistake.
C) The plaintiff needs to promptly notify the defendant when a mistake is discovered.
D) The basic rule is that it is grounds for rescission only if both parties to the agreement are acting under a mistaken belief.

Question 46

Explain the remedy for lack of consent, and who can assert it.

Question 47

Explain undue influence.

Question 48

What is "fraud in the execution?"

Question 49

Discuss the need for "real consent" as it relates to the creation and enforcement of a contract.

Question 50

Harry owns a Cadillac and a Porsche. Ryan has always wanted a Porsche and knows Harry owns one. Harry decides to sell his Cadillac and buy a BMW. A mutual friend of Ryan and Harry tells Ryan, "Harry's selling his car." Thinking Harry is selling the Porsche (he does not know he also has a Cadillac), Ryan calls Harry and says, "I'll give you $9,500 for your car." Harry, thinking Ryan 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