Business Law Chapter 13

Jose visited a garage sale and found a baseball card collection which he believed was worth over $1,000. He bought the collection for $50.00 from Wanda. Later Jose discovered the collection was essentially worthless and demands his money back from Wanda. Must Wanda refund Jose's money? A. No, the contract is enforceable because Jose was operating under a unilateral mistake and Wanda did not know the value of the cards. ​B. Yes, the contract is enforceable because Jose made a unilateral mistake of fact. C. ​Yes, the contract is enforceable because of mutual mistake of fact. ​D. No, the contract is enforceable because of mutual mistake of value.

A. No, the contract is enforceable because Jose was operating under a unilateral mistake and Wanda did not know the value of the cards.

All of the following statements refer to an element of fraud except: A. the defendant desired to obtain a financial benefit. B. ​the defendant made a false statement. ​C. the defendant knew that the statement was false or was recklessly indifferent regarding its truth. ​D. the defendant intended for the other party to rely on the false statement.

A. the defendant desired to obtain a financial benefit.

​In which of the following cases is a contract between A and B binding? A. ​A makes a mistake of material fact, and the mistake is unknown by B. ​B. A and B make the same mistake of material fact. ​C. A recklessly but honestly misrepresents a material fact. ​D. A innocently misrepresents a material fact.

A. ​A makes a mistake of material fact, and the mistake is unknown by B.

A minor cannot avoid a contract that has been: A. ​ratified. ​B. signed. ​C. processed. ​D. disallowed by the court.

A. ​ratified.

An agreement is not binding when: A. one party makes a mistake regarding a material fact but the mistake is unknown to the other contracting party. ​B. both parties make a mistake regarding a material fact. ​C. one party makes a mistake of law. ​D. both parties make a mistake in judgment.

B. both parties make a mistake regarding a material fact.

​Marquez agrees to buy Dale's pickup truck so he can pull his trailer. Both Marquez and Dale believe that the truck is big enough to do the job. After they complete the deal, Marquez finds that the truck is not strong enough to handle the trailer. The contract between Marquez and Dale can be rescinded because of: A. ​a unilateral mistake. B. ​a defective acceptance. C. ​a mutual mistake. ​D. negligent misrepresentation.

C. ​a mutual mistake.

The maximum amount of time that a minor has to disaffirm a contract is: A. ​one year from the date of the agreement. ​B. 30 days from learning of his or her right to disaffirm. ​C. the age of majority. D. ​a reasonable period of time after reaching the age of majority.

D. ​a reasonable period of time after reaching the age of majority.

A minor cannot avoid a contract to purchase a car if the: A. car has been destroyed. ​B. car has been damaged. ​C. car is used for non-commercial purposes. D. ​minor is able to return the car but does not do so.

D. ​minor is able to return the car but does not do so.

Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if:

Jim relied on jacks statement

Assume Harvey Buys a bull from Mike for the purpose of breeding The bull ends being sterile, Although both believed it not to be at the time, the contract is:

Voidable based on misrepresentation

​Judy, a widow, just sold a piece of property. She will live off that money during her retirement. Judy dotes on her son, Chris, who asks her to invest her money in his restaurant, which is faltering. He tells her that if she does not lend him the money she will never see him again. She is afraid of being alone and agrees to his request, but soon changes her mind and asks for her money back. Chris claims they have formed a binding contract. What is your conclusion? A. The contract is voidable based on duress. ​B. The contract is valid because it was a unilateral mistake. ​C. The contract is voidable based on undue influence. ​D. The contract is voidable based on fraud.

​C. The contract is voidable based on undue influence.

A finding of undue influence would most likely not occur in a contract between: A. parent and child.​ B. ​attorney and client. ​C. neighbor and neighbor. ​D. guardian and ward.

​C. neighbor and neighbor.

Contractual capacity is the ability to: A. read and write. ​B. sign a written contract. ​C. understand that a contract is being made and to understand its general nature. ​D. understand the legal meaning of the contract being made.

​C. understand that a contract is being made and to understand its general nature.

An apparently voluntary agreement may in fact not be voluntary if: A. undue influence is present. ​B. physical duress is present. ​C. economic duress is present. ​D. all of these.

​D. all of these.

The obligation of a cosigner is discharged by: A. the minority status of one of the parties. ​B. the majority status of one of the parties. C. ​the court's declaration of the contract's provision of necessaries. ​D. the payment of the debt.

​D. the payment of the debt.