Question 1

A misrepresentation is material if:

Accepted Answer

A)  it would likely induce a reasonable person to enter into a transaction. 
B)  the maker does not know it would likely induce the other party to enter into the transaction. 
C)  it is made knowingly. 
D)  it misrepresents a transaction's value by more than 20%.

Question 2

Which of the following is NOT an element of fraud?

Accepted Answer

A)  Material misrepresentation. 
B)  Competent parties. 
C)  Knowledge of falsity. 
D)  Justifiable reliance.

Question 3

Which of the following can meet the scienter requirement to establish fraud in the inducement?

Accepted Answer

A)  Actual knowledge. 
B)  Lack of belief in the statement's truthfulness. 
C)  Reckless indifference as to a statement's truthfulness. 
D)  All of these meet the requirement.

Question 4

Fraud in the execution is a fairly common occurrence and involves defrauding a person as to the very nature of the contract.

Accepted Answer

A) True 
 B)False

Question 5

Ty threatened to have Lisa's father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward Lisa's father rather than Lisa herself.

Accepted Answer

A) True 
 B)False

Question 6

To sustain a case of fraud in the inducement, the injured party must prove that he actually relied upon the false representation.

Accepted Answer

A) True 
 B)False

Question 7

a. Name two types of nonfradulent misrepresentation and define each one. 
b. What remedies may be available for nonfraudulent misrepresentation?

Accepted Answer

The answer of a. Name two types of nonfradulent misrepresentation...

Question 8

Tom tries to sell his Aston-Martin to Victoria for $12,000. Tom tells Victoria, "I paid $12,000 for the car in 1978 and it's worth twice that today." Tom really paid $8,000 for the car in 1978. If Victoria buys the car, basing her decision on Tom's statement, which of the following correctly states the situation?

Accepted Answer

A)  Tom's statements amount to puffing only. 
B)  Tom's statements provide grounds to set the contract aside. 
C)  Tom's statements are actionable only if intentional. 
D)  Tom's statements amount to fraud in the execution.

Question 9

The law will carefully scrutinize contracts between a trustee and a beneficiary of the trust, to make sure there was no undue influence by the trustee.

Accepted Answer

A) True 
 B)False

Question 10

Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.

Accepted Answer

A) True 
 B)False

Question 11

Attorney Geraldine advises her client, Rick, to enter a contract, which ultimately would have benefited Geraldine but not Rick. The test of whether the contract, if entered, is voidable based on undue influence is whether Geraldine's advice would have dominated the thinking of an ordinary, reasonable person rather than whether it dominated Rick's mind or emotions.

Accepted Answer

A) True 
 B)False

Question 12

Silence may constitute fraud if the transaction involves a person with fiduciary duty to the other party.

Accepted Answer

A) True 
 B)False

Question 13

By holding a knife to his back, Ed compelled Sean to sign a contract advantageous to Ed. This contract was entered under:

Accepted Answer

A)  physical duress. 
B)  improper threats. 
C)  undue influence. 
D)  false representation.

Question 14

Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is a "standard" contract for this type of situation. Is the contract which Thomas signed binding upon him?

Accepted Answer

A)  No, because he did not read it. 
B)  No, because he entered into it based upon fraud in the execution. 
C)  Yes, because he has made a unilateral mistake of law. 
D)  Yes, because he was negligent in not ascertaining its contents.

Question 15

If the act or threat would affect a person of average strength and intelligence, then and only then will the act constitute duress.

Accepted Answer

A) True 
 B)False

Question 16

Which of these statements about duress is accurate?

Accepted Answer

A)  It always renders a contract void. 
B)  Duress by improper threats or acts is more common than physical duress. 
C)  The wrongful act must be either a crime or a tort in order to be considered wrongful. 
D)  An improper threat can be duress even if the victim has a reasonable alternative to agreeing.

Question 17

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed. In this case:

Accepted Answer

A)  there is a mistake of law, which in some states is treated no differently than a mistake of fact. In such states, since this mistake relates to a basic assumption on which the parties made their contract and it has a material effect on their agreement, the contract is voidable. 
B)  since everyone should know the law, Stewart is liable to Will for any losses he may incur. 
C)  Stewart is obligated to buy land elsewhere and have the complex constructed on property zoned for apartments. 
D)  Will is liable to Stewart since Will is a contractor.

Question 18

A voluntary choice of perfectly legitimate alternatives may in some instances constitute economic duress.

Accepted Answer

A) True 
 B)False

Question 19

For a misrepresentation to be material, it must be likely to induce a reasonable person to manifest assent or the maker must know that it would be likely to induce the recipient to do so.

Accepted Answer

A) True 
 B)False

Question 20

A contract induced by threatening to bring a civil suit against an individual is prohibited:

Accepted Answer

A)  if the threat is an abuse of process. 
B)  if the suit is to recover a debt, whether the debt is valid or in controversy. 
C)  under no circumstances. 
D)  under any circumstances.

Exam 11: Conduct Invalidating Assent

A misrepresentation is material if:

Which of the following is NOT an element of fraud?

Which of the following can meet the scienter requirement to establish fraud in the inducement?

Fraud in the execution is a fairly common occurrence and involves defrauding a person as to the very nature of the contract.

Ty threatened to have Lisa's father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward Lisa's father rather than Lisa herself.

To sustain a case of fraud in the inducement, the injured party must prove that he actually relied upon the false representation.

a. Name two types of nonfradulent misrepresentation and define each one. b. What remedies may be available for nonfraudulent misrepresentation?

The law will carefully scrutinize contracts between a trustee and a beneficiary of the trust, to make sure there was no undue influence by the trustee.

Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.

Silence may constitute fraud if the transaction involves a person with fiduciary duty to the other party.

By holding a knife to his back, Ed compelled Sean to sign a contract advantageous to Ed. This contract was entered under:

If the act or threat would affect a person of average strength and intelligence, then and only then will the act constitute duress.

Which of these statements about duress is accurate?

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed. In this case:

A voluntary choice of perfectly legitimate alternatives may in some instances constitute economic duress.

For a misrepresentation to be material, it must be likely to induce a reasonable person to manifest assent or the maker must know that it would be likely to induce the recipient to do so.

A contract induced by threatening to bring a civil suit against an individual is prohibited: