BUSL 250: Chapter 12 Smartbook

______ is a false statement of material fact made by a party who thinks it is true but who would have known the truth about the fact had he or she used reasonable care to discover or reveal it.

A negligent misrepresentation

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.

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

Fraud

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.

______ is present when the party making the false statement in a contract claims or implies that he or she has personal knowledge of the accuracy of the assertion.

Intent to deceive

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.

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

Nondisclosure

Which of the following conditions would not permit a court to invalidate a contract on the grounds of unilateral mistake?

One party entered into the contract as a result of sales talk, or "puffery."

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.

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."

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.

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.

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

The mistake was so serious that the contract is unconscionable.

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.

______ 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

______ refers to those special relationships in which one person has taken advantage of his or her dominant position in the relationship to persuade the other person.

Undue influence

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, either party can rescind the contract.

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

In the context of contract law, which of the following terms refers to 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

Any unlawful threat exercised on a person whereby the person is forced to enter into an agreement is known as ______.

duress

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

Fraudulent misrepresentation is ______ misrepresentation.

intentional

Scienter means ______.

knowledge

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

In the context of contract formation, a(n) ______ mistake is shared by both parties to the agreement.

mutual

When both parties to a contract are mistaken about either a current or a past material fact, it is referred to as a(n) ______ mistake.

mutual

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

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

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

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

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

will not

For a mutual mistake to interfere with legal consent, it must involve all but which of the following?

a buyer who relied on the seller's sales talk (also known as "puffery")

For a mutual mistake to interfere with legal consent, it must involve all but which of the following?

a contract for the sale of goods transaction that provided ambiguous bargaining power

Which of the following is not one of the elements required for a finding of fraudulent misrepresentation in a contract?

a false statement about a fact that is unimportant to the contract

In the context of contract law, a(n) ______ misrepresentation is a false representation of a material fact that is consciously false and is intended to mislead the other party.

fraudulent

Which of the following is present when the party making the false statement in an agreement claims or implies that he or she has personal knowledge of the accuracy of the assertion?

intent to deceive