BUS 277 CH. 17

Mary and Jason discuss the fact that a new teacher is being hired for business law at their school. Jason mentions that he does not yet have a book, and Mary agreed to sell Jason a used business law book for $30 for the upcoming semester. When the new semester begins, the new business law teacher announces that a new custom business law text will be used that is only available in the campus bookstore. Jason wants a refund. Which of the following is Mary's best defense? A. That Jason knew of the change of teacher and bore the risk of mistake. B. That only a unilateral mistake was involved on Jason's behalf because Mary was aware of the change and that, therefore, Jason is not entitled to a discharge. C. That a mutual mistake was involved and that Jason is, therefore, not entitled to a refund. D. That she did not commit fraud and that, therefore, Jason is not entitled to rescission.

A

Which of the following is true regarding the effect of an innocent misrepresentation on a contract? A. It permits the party that was misled by the false statement to rescind the contract, but damages are not available. B. It permits the party who made the false statement to rescind the contract. C. It permits either the party that was misled by the false statement or the party who made the false statement to rescind the contract. D. The contract is automatically void and of no effect, and the party who was misled may recover damages.

A

Which of the following occurs when a party threatens to file a criminal lawsuit unless consent is given to the terms of a contract? A. Duress B. Undue influence C. Coercion D. Criminal influence

A

A[n] ______ is a false representation of a material fact that is consciously false and intended to mislead the other party. A. Negligent misrepresentation B. Fraudulent misrepresentation C. Scienter misrepresentation D. Acknowledged misrepresentation

B

A[n] ______ misrepresentation results from a false statement about a fact material to an agreement that the person making the statement believed to be true. A. Wrongful B. Innocent C. False D. Misleading

B

A[n] ______ mistake is a mistake that is shared by both parties to an agreement. A. Unclear B. Mutual C. Unilateral D. Clear

B

Jen wanted to buy Monique's land to breed small pet pigs and assumed the neighbors would love the pigs. She told Monique she wanted land with a river on it, but did not mention the pigs. Monique assured Jen a spring ran through one corner of the property. After entering into the contract, a land survey discovered that the spring was not on the property, but was on a neighbor's property. Jen was also surprised when she received a petition from the surrounding landowners objecting to the presence of pigs and threatening to sue for nuisance. Assuming that Monique made an innocent misrepresentation regarding the spring running through the corner of the farm with no reason to believe that this item was incorrect, which of the following is true, considering only the lack of a spring issue, if Jen does not want to go through with the sale? A) Jen may rescind the contract and recover compensatory damages. B) Jen may rescind the contract, but she may not recover damages. C) Jen may sue for damages, but she may not rescind the contract. D) Jen has no remedy based on an innocent misrepresentation based on the theory that she should have checked more closely before entering into the contract.

B

When a contract is voidable, it may be ______. A. Chargeable B. Rescinded C. Destroyed D. Uncharged

B

Which of the following refers to an intentional failure to provide pertinent information about a projected contract? A. Concealment B. Nondisclosure C. Negligence D. Scienter

B

Which of the following refers to special relationships in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person? A. Fraudulent misrepresentation B. Undue influence C. Pressing dominance D. Relationship dominance

B

A[n] ______ mistake is the result of an error by one party about a material fact. A. Unclear B. Mutual C. Unilateral D. Clear

C

Although there are some exceptions, a[n] ______ mistake does not generally void a contract. A. Unclear B. Mutual C. Unilateral D. Clear

C

Jen wanted to buy Monique's land to breed small pet pigs and assumed the neighbors would love the pigs. She told Monique she wanted land with a river on it, but did not mention the pigs. Monique assured Jen a spring ran through one corner of the property. After entering into the contract, a land survey discovered that the spring was not on the property, but was on a neighbor's property. Jen was also surprised when she received a petition from the surrounding landowners objecting to the presence of pigs and threatening to sue for nuisance. Assuming that Monique made a fraudulent misrepresentation regarding the spring running through the corner of the farm knowing the statement was not correct, which of the following is true, considering only the lack of a spring issue, if Jen does not want to go through with the sale? A) Jen may rescind the contract and recover compensatory damages. B) Jen may rescind the contract, but she may not recover damages. C) Jen may rescind the contract, or she may keep the contract and sue for damages. D) Jen must allow Monique an opportunity to cure, or fix, the problem; and in the event that is not done, she may not rescind the contract although she can sue for damages.

C

Which of the following involves a promise to buy or sell that the courts will require the parties to obey? A. Bilateral assent B. Legal affirmance C. Legal assent D. Contractual affirmance

C

Which of the following was the result on appeal in the Case Opener involving the claim that Michael Jordan owed $5 million based on his agreement to pay the plaintiff's mother on the premise that he was the father although it was later determined that the child was not his? A. That the agreement to pay $5 million could be rescinded based on a mutual mistake of fact. B. That the agreement to pay $5 million could be rescinded based on the mother's fraud. C. That the agreement to pay $5 million could be rescinded based on either a mutual mistake of fact or based on the mother's fraud. D. That the agreement to pay $5 million could not be rescinded because Jordan was aware of a question about his parentage.

C

Dalynda and Phillip have a contract that Phillip will play at Dalynda's opening night reception. The night of the concert, Phillip refuses to go on stage unless Dalynda agrees to pay an additional $5,000 for him to perform. This is known as ________. A) fraudulent duress B) manipulative duress C) intentional duress D) economic duress

D

George offers to sell Penelope a ring that George found in his yard. He and Penelope look at the ring and decide that they are not sure what it is, probably just a shiny stone. Penelope pays George $10 for the ring. The ring turns out to be a diamond worth much more than $10. George wants the ring back, and Penelope refuses. What is the most likely result? A. The ring will be returned to George because of mutual mistake. B. The ring will be returned to George because of unilateral mistake. C. The ring will remain with Penelope unless George can establish that he was negligent in not recognizing the ring's true value. D. The ring will remain with Penelope because the parties contracted on the assumption that they did not know the value of the ring.

D

Jen wanted to buy Monique's land to breed small pet pigs and assumed the neighbors would love the pigs. She told Monique she wanted land with a river on it, but did not mention the pigs. Monique assured Jen a spring ran through one corner of the property. After entering into the contract, a land survey discovered that the spring was not on the property, but was on a neighbor's property. Jen was also surprised when she received a petition from the surrounding landowners objecting to the presence of pigs and threatening to sue for nuisance. Which statement would be the result if Jen attempts to rescind the contract and recover damages only on the basis of the neighbors' objection to a pig farm? A) Jen may rescind the contract and recover damages because Monique made an implied misrepresentation. B) Jen may rescind the contract but may not recover damages because Monique made an implied misrepresentation. C) Jen may rescind the contract but may not recover damages because she, Jen, made a unilateral mistake. D) Jen may not rescind the contract nor may she recover damages because she, Jen, made a unilateral mistake.

D

Which of the following is true regarding the elements that must be satisfied in order for a mutual mistake to interfere with legal consent? A. The required elements are: (1) a basic assumption about the subject matter of the contract, and (2) an admission by one of the parties that a misrepresentation occurred. B. The required elements are: (1) a basic assumption about the subject matter of the contract, and (2) a material effect on the agreement. C. The required elements are: (1) a basic assumption about the subject matter of the contract, and (2) an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement. D. The required elements are: (1) a basic assumption about the subject matter of the contract, (2) an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement, and (3) a material effect on the agreement.

D

Without legal assent a contract may be ____. A. Unmarketable B. Void C. Illegal D. Voidable

D

________________ is when one party threatens another party with physical harm or extortion to gain consent to a contract.

Duress

A mistake of fact is an erroneous belief about the facts of the contract at the time the contract is made

T

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.

T

For fraudulent misrepresentation to be the basis for a contract rescission, the statement of fact need not be an actual assertion.

T

Scienter is present when the party accused of making the fraudulent assertion believed that the assertion was false or made the claim without any regard for whether it was true or false.

T

Undue influence refers to those special relationships in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person and interfere with that person's ability to make his or her own decision.

T