Bus. Law - Chap. 17

Which of the following occurs when a party threatens to file a criminal lawsuit unless consent is given to the terms of a contract?

Duress

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

Duress

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 ________.

Economic duress

A[n] ______ is a false representation of a material fact that is consciously false and intended to mislead the other party.

Fraudulent misrepresentation

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.

Innocent

Which of the following is true regarding the effect of an innocent misrepresentation on a contract?

It permits the party that was misled by the false statement to rescind the contract, but damages are not available.

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?

Jen may not rescind the contract nor may she recover damages because she, Jen, made a unilateral mistake.

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?

Jen may rescind the contract, but she may not recover damages.

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?

Jen may rescind the contract, or she may keep the contract and sue for damages.

Which of the following involves a promise to buy or sell that the courts will require the parties to obey?

Legal assent

A[n] ______ mistake is a mistake that is shared by both parties to an agreement.

Mutual

Which of the following refers to an intentional failure to provide pertinent information about a projected contract?

Nondisclosure

When a contract is voidable, it may be ______.

Rescinded

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?

That Jason knew of the change of teacher and bore the risk of mistake.

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?

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.

Which of the following is true regarding the elements that must be satisfied in order for a mutual mistake to interfere with legal consent?

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.

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?

The ring will remain with Penelope because the parties contracted on the assumption that they did not know the value of the ring.

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

True

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

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

True

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.

True

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.

True

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?

Undue influence

A[n] ______ mistake is the result of an error by one party about a material fact.

Unilateral

Although there are some exceptions, a[n] ______ mistake does not generally void a contract.

Unilateral

Without legal assent a contract may be ____.

Voidable