Unit 4: Chapters 12, 13, 14

True

A party injured by fraud in a contract for the sale of goods can both rescind the contract and sue for damages.

Everything that person has given the other party

A person who rescinds a contract is entitled to the return of what?

False

A promise not to sue another party is not consideration, because the promise does not convey any legal value to the other party.

False

A promissory estoppel cannot be applied in the case of the absence of a binding consideration.

promises to pay debts barred by bankruptcy discharge.

A reaffirmation promise has to be made prior to the date of the bankruptcy discharge and gives the debtor the right to revoke his promise within 30 days after it becomes enforceable. This is the requirement of:

Beth must pay $4,000.

Beth has just turned 17 years of age. She entered into a contract with ABC Corp. for the purchase of a used car, with full payment due in 30 days. The purchase price was $5,000. This car is necessary for Beth to use as transportation to her job, which she needs in order to pay tuition at the university where she is a freshman. Beth's parents have refused to help her pay for college. Three days later Beth changes her mind; she now wants to return the car because she has learned that it is worth only $4,000. $4,000 is in fact the reasonable value of this car. If Beth does not pay, and the seller sues, the outcome of this lawsuit will be that:

True

Capacity is the ability to enter into legal obligations.

True

Concealment involves the active hiding of a fact, whereas nondisclosure is the failure to volunteer information.

True

Consideration is what distinguishes enforceable agreements from gratuitous promises.

voidable.

Contracts that are induced by misrepresentation are considered:

is supported by consideration.

Daniel owes Casey a debt, the amount of which is subject to a good faith dispute. The parties agree to settle the debt, with Daniel promising to pay Casey $15,000 and Casey promising to release Daniel on a $25,000 debt. The settlement agreement:

False

Emancipation is a formal agreement in writing to terminate a parent's right to control a child and receive services from him.

False

Generally, if there is a good faith dispute over a matter, a person's threat to file a lawsuit to resolve that dispute is considered to be improper.

Yes, because James is concealing the termite infestation from Mikhael.

James has entered into a contract to sell his house to Mikhael. James knows that the house has a bad termite infestation that significantly reduces the value of the house. However, the topic of termites never came up and James did not volunteer any information about the termites. Mikhael is not aware of the termite problem. Under the law of most states, has legal misrepresentation occurred here?

Past Consideration

Mr. Blue gave Mr. Green $1000 to help his family out. Later Mr. Blue entered into a sales contract with Mr. Green and wanted the consideration to be in part the $1000. What is the term for the $1000?

True

Mr. Blue gave his favorite nephew Jim Jr, who is a mechanic, $1000 in January. Later that year he needed his car repaired. In the sales contract Mr. Blue indicated that the amount owed should be deducted from the money already paid. A court will find that Mr. Blue failed to give proper consideration for the contract.

True

Ordinarily, an item is not considered to be a necessary if a parent or guardian already supplies the minor with similar items.

Pat can disaffirm the contract, and he must return the coat.

Pat is a rich boy whose parents supply him with every conceivable necessity of life. While still a minor, Pat buys a coat on credit from a men's store for $5,000. After wearing the coat for a while, Pat decides that it bores him and that he would like to disaffirm. Which of the following is most likely to be true? Assume that Pat is still a minor.

True

Ratification makes a contract valid from its inception.

that the party making the misrepresentation had actual or constructive knowledge that it was false.

The primary distinction between an action based on innocent misrepresentation and an action based on common law fraud is that, in the former, a party need not allege and prove:

True

The threat to institute a criminal prosecution against another party in order to force that party into a contract is almost always duress.

True

The traditional rule is that, when the consideration given by the adult party under a minor's contract has been lost, stolen, or dissipated, the minor can disaffirm without compensating the adult for the loss in any way.

False

Unlike the UCC, the CISG requires new consideration to modify a contract.

Ratification

What is the term for affirming a contract and surrendering the right to avoid a contract made while being a minor?

True

When one of the parties offers a disproportionately small amount of money in settlement of a debt and refuses to pay more, it is a form of economic duress.

There are no formal requirements for it.

Which of the following characterizes emancipation?

A minor's right to disaffirm is valid in such a case.

Which of the following characterizes the traditional rule regarding a minor who misrepresents his/her age?

Modification requires "mere agreement" on the part of those involved.

Which of the following is true of preexisting contractual duties and their modification under the UCC?

"This crane will lift a 10,000-pound load."

Which of the following statements, if false, is most likely to create liability for fraud or misrepresentation?

It does not pertain to the present exchange.

Why is past consideration not a consideration in a present promise?