BLAW 3201 LSU FRY Chapter 11 "Study Guide"

Which of the following would be considered to be a misrepresentation of a material fact for purposes of establishing fraud in the inducement?

"This car has a new radiator."

If untrue, which of the following would probably be considered a misrepresentation of a material fact?

"This car has new brakes."

Actionable fraud would be likely to be based on falsity of:

A realtor's statement that, "The contractor used 25-year warranted shingles on the roof."

Which of the following is NOT an element of fraud?

Competent parties

Contracts induced by threats of _____ are voidable, regardless of whether the coerced party has committed an unlawful act.

Criminal prosecution

Which of the following results in a void, rather than voidable, agreement?

Fraud in the execution

An intentional misrepresentation of a material fact made with knowledge of the falsity and intention to deceive and which a party justifiably relies upon to his detriment in known as:

Fraud in the inducement

Sam wants to sell his Golden Retriever to Jordan. Sam tells Jordan that the dog is three years old and that he will point, back, and retrieve. Although the dog is three years old and will point at birds he will not back (honor another dog's point). Jordan relies on these statements and purchases the bird dog. The buyer has most probably been a victim of.

Fraud in the inducement

The remedies of damages and rescission are available for:

Fraudulent misrepresentation, Negligent misrepresentation, Innocent misrepresentation (All of the above type of answer)

A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation. She signed a promissory note at a high but not illegal rate of interest. What is the result?

It is valid because the threat to bring a civil suit to collect money owed is permissable.

A misrepresentation is material if:

It would likely induce a reasonable person to enter into a transaction, The maker knows it would likely induce the other party to enter into the transaction. (Both "blank" and "blank" type of answer)

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. Because of the threat, Kenneth signs the contract.

James has committed physical duress against Kenneth

When both parties misunderstand the same set of facts relating to a basic assumption on which a contract is made it is termed:

Mutual mistake

A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for breach of contract.

No contract exists due to mutual mistake of fact as to the existence or identity of the subject matter of the contract

A fiduciary is a:

Person who owes a duty of trust, confidence, and loyalty to another

Tommy's parents died in a plane crash and hw went to live with his guardian, Aunt Rose. Rose had a very small house and did not have a separate bedroom and bath for 12 year old Tommy. She and Tommy decided to use some of his inheritance to pay for an addition to the house. He had some shares of stock transferred into Rose's name so that she could sell them when the money was due to be paid. The stock transfers are:

Presumed voidable unless Rose can show no unfair advantage was taken.

Ralph sold a motel to Steve by stating that he paid $250,000 for it and that his net average annual profit from the business has been $40,000. In reality he paid $100,000 for the motel and has earned a net average annual profit of only $30,000. Steve made no attempt to verify the statements until after the transaction was completed.

Ralph has committed fraudulent misrepresentation, The contract is voidable at Steve's option (Both "blank" and "blank" type of answer)

Eliza was an antique expert. She went to a tea party at Grandma Jones' house and saw a magnificent Queen Anne table out on the back porch. She asked Grandma about it and was told it was in the way so they were going to store it in the barn. Eliza offered to buy it from her for $200. The next week, Grandma saw it in Eliza's store on sale for $3,000. Which of the following is true.

She cannot rescind the contract because Eliza did not have a duty to tell her the value of the table.

Which of the following need NOT be provided in order to establish the defense of economic duress?

That one party explicitly made an economic threat.

Alex wants to submit a bid on a city sewer project. He computes the cost, but mistakenly omits the cost of one item. Accordingly, he submits a bid of $430,000 to the city. The next highest bid is $675,000, and the rest of the bids are even higher. The city is happy to have such a low bid, so it accepts Alex's bid and awards him the contract for the job, even though the city engineer is of the opinion the job cannot be done for less than $650,000.

The city was aware of or should have been aware of Alex's mistake. When it accepted the bid with knowledge of Alex's mistake, the city sought to take an unconscionable advantage of Alex's error. This case is an example of a palpable unilateral mistake. (Both "blank" and "blank" type of answer)

The State of Florida enters into a contract with Treasure Salvors governing the salvage of a Spanish galleon that sunk in the 1600's. Under the terms of the contract, the salvagers agree to relinquish 25% of the items recovered to the State of Florida in return for the right to salvage on state lands. At the time the parties enter into the contract, they both believe that the seabed where the ship lies is state land. Subsequently, the United States Supreme Court hold that the continental shelf on which the ship rests has never been owned by Florida. The salvagers sue to rescind the contract.

The parties made a mutual mistake for which the contract should be avoided.

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is told is a Stradivarius violin from a well known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, although it is such a good imitation that even the dealer thought it was authentic.

The sale is voidable by the purchaser for mutual mistake

A party to a contract may be able to avoid the contract if:

There was a mistake and the mistaken party was at fault in not discovering the problem before making the contract

Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence?

Brother and sister

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700.

This contract can be voided based upon fraud in the inducement

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.

This is a mistake of the law

Tom tries to sell his classic car 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?

Tom's statements provide ground to set the contract aside

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

Actual knowledge, Lack of belief in the statement's truthfulness, Reckless indifference as tot a statement's truthfulness (All of the above type of answer)

Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after Jill has bought the car, she finds out that Linda isn't interested in buying it.

Jill cannot void the contract

Kyle wants to buy a six passenger car. The salesperson tells him that the two seat sports car Kyle sees on the car lot would be just perfect for six people. Kyle test drives the car and then buys it.

Kyle was not justified in relying upon the salesperson's representation that the car would seat six people

Stephen 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?

Yes, because he was negligent in not ascertaining its contents.