BL Ch. 12

In the context of contract law, which of the following is true about the action of courts when there is a unilateral mistake in a contract?

Courts are hesitant to interfere with the contract when one of the parties has a correct understanding of the material facts of the agreement.

In the context of contract law, which of the following is an accurate statement regarding the legal implications of a unilateral mistake?

In general, a unilateral mistake does not void a contract.

Suppose an operator of a weight scale certifies the weight of a good that is for sale. However, the accuracy of the scale used to weigh the good has not been checked in more than four years, even though the weight scale operator could have easily checked the accuracy of the scale. The scale gave an improper weight measurement that resulted in many problems with the shipping and sale of the product. The above scenario is an example of what?

Negligent misrepresentation

A unilateral contract may be rescinded if:

The mistake was caused by a clerical error that did not result from gross negligence.

Suppose you entered into a contract to clean someone's pool. Then, both you and the pool owner discovered that the pool water has produced toxic levels of chlorine over time. As a result, you cannot clean the pool without first decontaminating it. This change in knowledge about the toxicity levels of the pool is considered a material fact in the agreement. Can you rescind the contract?

Yes, this seems like a mutual mistake

In the context of contract law, ______ is an erroneous belief about the facts of a contract at the time the contract is concluded.

a mistake

Which of the following is a major obstacle to genuine assent in contracts?

a mistake

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

a negligent misrepresentation

Under which of the following circumstances will a court find nondisclosure in a contract as having the same legal affect as an actual false assertion?

a relationship of trust exists between the parties to the contract

Legal assent is ________ when a legal mistake occurs.

absent

In the context of contract law, ______ is a false statement about a fact material to an agreement that the person who made the statement believed to be true

an innocent misrepresentation

When legal assent to a contract is present both parties to a contract are ________ to have freedom to enter into the contract

assumed

A seller removes 20,000 miles from a car odometer before selling the car to a buyer. This is known as ______

concealment

In the context of contract law, ______ involves the active hiding of the truth about a material fact in a contract

concealment

In the context of a contract, ______ is found when one party in the contract was forced into the agreement by the wrongful act of another.

duress

Which of the following is a much more visible and active inference with free will than undue influence?

duress

When both parties are mistaken about a current or past material fact, __________

either can choose to rescind the contract

__________ by any party as part of a contract is a basis for rescission

fraud

In the context of contract law, misrepresentation is an untruthful assertion by one of the parties about a(n) ______ fact.

material

The courts insist that there must be a _________ of the minds for there be a valid contract between the parties

meeting

In the context of contract law, ______ is an untruthful assertion by one of the parties about a material fact.

misrepresentation

The effect of both _____________ and ____________ is that the victim can either rescind the contract or keep the contract and sue for damages.

negligent misrepresentation; fraudulent misrepresentation

The failure to provide pertinent information about a projected contract is known as _____

nondisclosure

When a contract is voidable, it may be ______, or canceled

rescinded

Which of the following terms refers to a voidable contract that has been canceled?

rescinded

When an innocent misrepresentation occurs, the person who made the false statement had no knowledge of the falsity of the claim. This means the person lacked ______.

scienter

______ assumes that the persuasive efforts of the dominant person must have interfered with the ability of the weaker person to make his or her own decision.

undue influence

In the context of contract formation, a ______ mistake is an error by one party about a material fact pertaining to the contract

unilateral

Which of the following are the two types of mistakes related to contract formation and enforcement?

unilateral and mutual

A(n) ___________ is the result of an error by one party about a material fact. If both parties to a contract are mistaken about a material fact, either can opt to rescind it. This is known as a(n) __________

unilateral mistake; mutual mistake

elements of fraudulent misrepresentation

- Justifiable reliance on the false statement by the innocent party. - A false statement about a material fact of the contract. - Intent to deceive.

For a mutual mistake to interfere with legal consent, it must involve...

- a basic assumption about the subject matter of the contract - an adverse effect on a party that did not agree to bear the risk of mistake at the time of the agreement - a material effect on the agreement

Which of the following conditions would permit a court to invalidate a contract on grounds of unilateral mistake?

1. One party entered into the contract as a result of economic duress. 2. The mistake was so serious that the contract is unconscionable.

Understand that a court _______ void a contract for a mutual mistake of both parties

will not

All but which of the following circumstances would trigger a successful request for contract rescission on the basis of duress?

One party is mistaken about a material fact pertaining to the contract.

On rare occasions, rescission is permitted for unilateral mistakes. Which of the following scenarios is an example of when rescission might be available for a unilateral mistake?

One party made a mistake about a material fact, and the other party had reason to know about the mistake.

Identify a true statement about rescinding a contract due to a mutual mistake.

Rescinding a contract due to a mutual mistake is fair because an ambiguity in some key fact prevented the parties from being in actual agreement.

In the context of contract law, which of the following is true about an innocent misrepresentation?

It is a false statement about a fact material to an agreement that the person who made the statement believed to be true.

If a seller actively hides an important fact about the product he or she is selling, then the contract for the sale could be rescinded on which of the following grounds?

Fraudulent misrepresentation

Which of the following is true when there is a mutual mistake in a contract?

When both parties to a contract are mistaken about either a current or a past material fact, only the offeror can rescind the contract.

On the streets of New York, a man sells you a pocket watch for $20. He says all the watch needs is a new battery and it will be just like new and work perfectly. You buy a new battery for the watch, but the watch still does not work. The man selling the watch knew that the watch would not work, even with a new battery, but he told you it would anyway. The above scenario is an example of what?

Fraudulent misrepresentation

All but which of the following circumstances would trigger a successful request for contract rescission on grounds of duress?

One party realizes after the contract is formed that the agreement is a "bad bargain."

Under which of the following circumstances will courts find nondisclosure in a contract as having the same legal effect as an actual false assertion?

There is a failure to correct an assertion of fact no longer true in light of events that have occurred since the agreement was initially formed.

All but which of the following is an accurate statement regarding the responsibilities of the injured party in a contract when a false assertion has been made by the other party?

The injured party will always prevail in a claim against the party who made the false assertion, as a false assertion results in strict liability.