12-LENB-ASSENT-T/F

9) Scienter is a required element of innocent misrepresentation.

FALSE Explanation: An innocent misrepresentation is a false statement about a fact material to an agreement that the person who made the statement believed to be true. The person who made the false statement had no knowledge of the falsity of the claim. We say the person lacked scienter.

14) Nondisclosure involves the active hiding of the truth about a material fact pertaining to a contract.

FALSE Explanation: Concealment involves the active hiding of the truth about a material fact pertaining to a contract. Nondisclosure is different because it involves the failure to provide pertinent information about the projected contract.

5) Generally, a unilateral mistake makes a contract void.

FALSE Explanation: Generally, a unilateral mistake does not make a contract void. Courts are hesitant to interfere with a contract when one of the parties has a correct understanding of the material facts of the agreement.

2) Major obstacles to genuine assent include mistake and misrepresentation, but not undue influence or duress.

FALSE Explanation: Major obstacles to genuine assent include mistake, misrepresentation, undue influence, and duress. Difficulty: 1 Easy

19) In the Philippines, if consent is given through mistake, violence, intimidation, undue influence, or fraud, contracts are valid until they are annulled, and there is no time limitation on the protected party to obtain an annulment.

FALSE Explanation: The law in the Philippines is somewhat unusual in the way it limits the time for rescinding a contract. In the Philippines, if consent is given through mistake, violence, intimidation, undue influence, or fraud, contracts are valid until they are annulled. The period within which to annul such a contract is four years. In cases of intimidation, violence, or undue influence, the time period is measured from the time the defect in the assent ceases. In cases of mistake or fraud, it is measured from the time of the discovery of the defect.

17) Undue influence is a situation in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person.

TRUE Explanation: Undue influence is a situation in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person. The persuasive efforts of the dominant person must have interfered with the ability of the weaker person to make his or her own decision. When people are bargaining with their attorney, doctor, guardian, relative, or anyone else in a relationship involving a high degree of trust, they can be persuaded by unusual pressures unique to that relationship.

10) Fraudulent misrepresentation is intentional misrepresentation.

TRUE Explanation: A fraudulent misrepresentation is a false representation of a material fact that is consciously false and is intended to mislead the other party. Fraudulent misrepresentation is intentional misrepresentation. Here, scienter is clear. The party making the misrepresentation either knows or believes that the factual claim is false or knows that there is no basis for the assertion.

8) A misrepresentation is an untruthful assertion by one of the parties about a material fact.

TRUE Explanation: A misrepresentation is an untruthful assertion by one of the parties about a material fact. One party said something that prevented the parties from having the mental agreement necessary for a legal contract. The parties only appeared to agree, so their contract lacked legal assent.

18) Duress is found when one party is forced into an agreement by the wrongful act of another.

TRUE Explanation: Duress is a much more visible and active interference with free will than is undue influence. Duress is found when one party is forced into an agreement by the wrongful act of another. One way to establish duress is when one party threatens physical harm or extortion to gain consent to a contract.

3) European courts permit contract rescission for a mistake of value when the mistake involves more than 50 percent of the value at the time of the contract.

TRUE Explanation: European courts agree with the reluctance of American courts to interfere with a contract just because the value of the item in question has changed since the agreement. When they make the contract, the parties are assumed to have accepted that the value might change later. However, European courts permit contract rescission for a mistake of value when the mistake involves more than 50 percent of the value at the time of the contract.

13) With negligent misrepresentation, even though there was no actual intent to deceive, the party making the false statement is treated in contract law as if the intent were present.

TRUE Explanation: Even though negligent misrepresentation involves no actual intent to deceive, the party making the false statement is treated in contract law as if the intent were present. The impact of negligent misrepresentation is identical to that of fraudulent misrepresentation, and the injured party can sue for damages.

7) For a mutual mistake to interfere with legal consent, it must involve a basic assumption about the subject matter of the contract.

TRUE Explanation: For a mutual mistake to interfere with legal consent, it must involve a basic assumption about the subject matter of the contract. It must also have a material effect on the agreement, and an adverse effect on a party that did not agree to bear the risk of mistake at the time of the agreement.

11) In terms of the elements of fraudulent misrepresentation, there must have been justifiable reliance on the false statement by the innocent party to the agreement.

TRUE Explanation: Fraudulent misrepresentation has three elements: a) a false statement about a past or existing fact that is material to the contract; b) intent to deceive; and c) justifiable reliance on the false statement by the innocent party to the agreement.

12) A negligent misrepresentation results when the party making the statement would have known the truth about the fact had he used reasonable care to discover or reveal it.

TRUE Explanation: In some contract negotiations, one party makes a statement of material fact that he thinks is true, but he is negligent in making the assertion. Such a negligent misrepresentation results when the party making the statement would have known the truth about the fact had he used reasonable care to discover or reveal it.

4) Mistakes in contract law do not result from untrue statements made by one party to the contract.

TRUE Explanation: Mistakes in contract law do not result from untrue statements made by one party to the contract; instead, a mistake results from an erroneous belief about the facts of a contract at the time the contract is concluded.

16) Today, nondisclosure is especially likely to provide the basis for rescission when one party has information about a basic assumption of the deal that is unavailable to the other party.

TRUE Explanation: Today, nondisclosure is especially likely to provide the basis for rescission when one party has information about a basic assumption of the deal that is unavailable to the other party. As a result of this logic, sellers have a special duty to disclose because they know more about the structural makeup of the item being purchased.

15) Until recently, courts have been hesitant to use nondisclosure as a basis for rescinding a contract.

TRUE Explanation: Until recently, courts have been hesitant to use nondisclosure as a basis for rescinding a contract because it is a passive form of misleading conduct. Under ordinary situations associated with a legal bargain, it is not the obligation of one party to bring up any and all facts he or she might possess. Each individual is, to a large extent, treated as a reasonable decision-maker.

1) When a contract is voidable, it may be rescinded.

TRUE Explanation: When a contract is voidable, it may be rescinded, or canceled.

6) When both parties to a contract are mistaken about either a current or a past material fact, either party can choose to rescind the contract.

TRUE Explanation: When both parties to a contract are mistaken about either a current or a past material fact, either party can choose to rescind the contract. Rescinding such a contract is fair because any agreement between the parties was an illusion: An ambiguity in some key fact prevented the parties from being in actual agreement.