Question 1

Which of the following was the result on appeal in Caliber One Indemnity Co. v. Wade Cook Financial Corp. and Diana K. Carey, the case in the text in which the plaintiff claimed relief on the basis that the limit of insurance coverage for earthquake damage was reduced from $5,000,000 to $500,000 due to a mutual mistake?

Accepted Answer

A)   That the plaintiff was not entitled to relief on the basis that a representative of the plaintiff should have read the contract and noticed the mistake.
B)   That because both parties were negligent in not catching the mistake, the mutual-mistake doctrine was inapplicable resulting in no relief to the plaintiff.
C)   That the plaintiff was not entitled to relief because the mistake was not related to a basic assumption on which both parties relied when making the contract for all types of property insurance.
D)   That the plaintiff was entitled to relief based on the mutual-mistake doctrine.
E)   That the plaintiff was entitled to relief based on the unilateral-mistake doctrine.F) A) and C)
G) B) and D)

Question 2

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

Accepted Answer

A)   Duress
B)   Undue influence
C)   Durable fraud
D)   Criminal influence
E)   Duress and undue influence, but not durable fraudF) B) and C)
G) A) and C)

Question 3

Reference - Pet Pig Farm. Marcy wanted to buy Lucy's land and use it to breed small pigs to be kept as pets. Marcy told Lucy that having water on the property was very important. Lucy assured her that a spring ran through one corner of the property. Therefore, Marcy agreed to buy the farm. Although she did not ask Lucy anything about it, Marcy, who loved pigs, assumed that the neighbors would be pleased with the pigs being in the area. In a separate contract, Lucy also agreed to sell Marcy a used truck for $5,000. After the contract for the land sale was entered into, it was discovered that actually the spring did not run through the corner of Lucy's property. The area in which the spring ran actually belonged to a neighbor. Additionally, when Lucy brought Marcy the used truck, Marcy said, "That's not the truck!" It was discovered that Lucy, who had two trucks, thought that Marcy had bought the older truck when Marcy thought she had purchased the newer truck. Marcy was also surprised when she received a petition signed by all surrounding landowners objecting to the presence of the pigs and threatening to sue Marcy for nuisance. Which of the following is the most likely result in the dispute between Marcy and Lucy regarding which used truck was sold assuming that both Marcy and Lucy were each innocently mistaken and did not intend to defraud the other?

Accepted Answer

A)   The contract will be rescinded.
B)   Marcy will be allowed to pick the truck she wants to buy because she is the buyer, and she may also recover damages.
C)   Lucy will be allowed to pick the truck she wants to sell because she is the seller.
D)   Marcy will be allowed to pick the truck she wants to buy because she also had a contract on the ancillary farm.
E)   Marcy will be allowed to pick the truck she wants to buy because she is the buyer, but she may not recover damages.F) B) and E)
G) D) and E)

Question 4

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

Accepted Answer

A)   Unclear
B)   Mutual
C)   Unilateral
D)   Clear
E)   SingleF) A) and D)
G) B) and C)

Question 5

What was the result in the Peerless case discussed in the text in which there were two ships named Peerless and the parties disagreed over which ship was the subject of the contract?

Accepted Answer

A)   The court rescinded the contract.
B)   The court ruled that the older ship would be identified to the contract.
C)   The court ruled that the newer ship would be identified to the contract.
D)   The court ruled that the defendant would be allowed to choose which ship would be identified to the contract.
E)   The court ruled that the plaintiff would be allowed to choose which ship would be identified to the contract.F) C) and D)
G) A) and E)

Question 6

Which of the following occurs when one party threatens physical harm or extortion to gain consent to a contract?

Accepted Answer

A)   Duress
B)   Undue influence
C)   Durable fraud
D)   Criminal influence
E)   Duress and undue influence, but not durable fraudF) A) and B)
G) C) and D)

Question 7

What must a party prove in order to obtain money damages based on a fraudulent misrepresentation?

Accepted Answer

(1) A False statement about a past or ex...

Question 8

Threatening physical harm or extortion to gain consent to a contract is classified as duress.

Accepted Answer

A) True 
 B)False

Question 9

When duress is at issue, the ____________ needed for legal consent has been removed by the specifics of the threat.

Accepted Answer

A)   Free will
B)   Knowledge
C)   Specifics
D)   Consideration
E)   RealizationF) None of the above
G) A) and E)

Question 10

When a contract is voidable, it may be ____________.

Accepted Answer

A)   Chargeable
B)   Rescinded
C)   Deassented
D)   Reassented
E)   UnchargedF) A) and B)
G) C) and E)

Question 11

Which of the following involves the active hiding of the truth about a material fact?

Accepted Answer

A)   Concealment
B)   Nondisclosure
C)   Negligence
D)   Concealment, nondisclosure, and negligence
E)   Concealment and nondisclosure, but not negligenceF) A) and C)
G) A) and B)

Question 12

Reference - Pet Pig Farm. Marcy wanted to buy Lucy's land and use it to breed small pigs to be kept as pets. Marcy told Lucy that having water on the property was very important. Lucy assured her that a spring ran through one corner of the property. Therefore, Marcy agreed to buy the farm. Although she did not ask Lucy anything about it, Marcy, who loved pigs, assumed that the neighbors would be pleased with the pigs being in the area. In a separate contract, Lucy also agreed to sell Marcy a used truck for $5,000. After the contract for the land sale was entered into, it was discovered that actually the spring did not run through the corner of Lucy's property. The area in which the spring ran actually belonged to a neighbor. Additionally, when Lucy brought Marcy the used truck, Marcy said, "That's not the truck!" It was discovered that Lucy, who had two trucks, thought that Marcy had bought the older truck when Marcy thought she had purchased the newer truck. Marcy was also surprised when she received a petition signed by all surrounding landowners objecting to the presence of the pigs and threatening to sue Marcy for nuisance. Which of the following would be the result if Marcy attempts to rescind the contract and recover damages only on the basis of the neighbor's objection to a pig farm?

Accepted Answer

A)   Marcy may rescind the contract and recover damages because Lucy made an implied misrepresentation.
B)   Marcy may rescind the contract but may not recover damages because the situation involved a mutual mistake.
C)   Marcy may recover damages but may not rescind the contract because Lucy made an implied misrepresentation.
D)   Marcy may not rescind the contract nor may she recover damages because she, Marcy, made a unilateral mistake.
E)   Marcy may rescind the contract but may not recover damages because she, Marcy, made a unilateral mistake.F) C) and D)
G) B) and C)

Question 13

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.

Accepted Answer

A) True 
 B)False

Question 14

Reference - Scheming Friends. Willy very much wants to rent a basement apartment in Weaver's home. Willy threatens to tell all Weaver's friends that he and Weaver had been arrested for illegally smoking marijuana unless Weaver rents the apartment to him for $100 per month. Weaver reluctantly agrees to rent the apartment to Willy for that amount. Willy also wants to buy Weaver's car. Weaver runs back the odometer on the car before Willy test drives it. Willy is impressed by the low mileage and agrees to buy the car. Finally, Weaver offers to sell Willy a ring for Willy's fiancée. Weaver tells Willy that the ring is a diamond and believes that to be true. After the deal is made, however, a jeweler friend of Weaver's informs him that the ring is a fake. When Willy shows up with the money, Weaver says nothing. He just hands Willy the ring and takes the money. Later, Willy finds out that the odometer was run backwards from another friend to whom Weaver confided. Willy also finds out from his girlfriend that the ring is a fake. Which of the following is true regarding Willy's rights in regards to the ring purchase?

Accepted Answer

A)   He will not be able to rescind the contract because Weaver did not make an express false statement regarding the ring.
B)   He will not be able to rescind the contract because Weaver did not make an express false statement regarding the ring and also because Weaver did not know the ring was a fake when the initial agreement was made.
C)   He will not be able to rescind the contract unless he can prove that Weaver was at least negligent in not realizing the ring was a fake when the initial agreement was made.
D)   He will be able to rescind the agreement because Weaver was guilty of duress.
E)   He will be able to rescind the agreement because Weaver was guilty of fraudulent misrepresentation.F) A) and D)
G) D) and E)

Question 15

Heather innocently misrepresented the status of a puppy as being a full blooded Pomeranian when actually it was a mixed breed. Brad had contracted to purchase the dog, but the problem was discovered prior to his paying for the dog and picking it up. Nevertheless, Brad was very angry and felt that Heather should have been more careful. He said that he planned to rescind the contract and also sue her for damages to punish her and deter others from behaving similarly. Which of the following is true regarding the remedies available to Brad?

Accepted Answer

A)   Because Heather violated the contract to provide a full blooded Pomeranian, Brad is entitled to rescind the contract and also to the damages he seeks.
B)   Because Heather violated the contract to provide a full blooded Pomeranian, Brad is entitled to rescind the contract, but he is not entitled to the damages he seeks.
C)   Because Heather is not guilty of any wrongdoing, Brad is entitled to no remedy; and Heather has an additional 30 days in order to honor the contract.
D)   Because Heather is not guilty of any wrongdoing, Brad is entitled to no remedy; and Heather has an additional 60 days in order to honor the contract.
E)   Because Heather is not guilty of any wrongdoing, Brad is entitled to no remedy; and Heather has an additional 90 days in order to honor the contract.F) C) and D)
G) A) and E)

Question 16

A _____________ is a false representation of a material fact that is consciously false and intended to mislead the other party.

Accepted Answer

A)   Negligent misrepresentation
B)   Fraudulent misrepresentation
C)   Scienter misrepresentation
D)   Negligent misrepresentation, fraudulent misrepresentation, and scienter misrepresentation
E)   Negligent or fraudulent misrepresentation, but not a scienter misrepresentationF) A) and D)
G) None of the above

Question 17

What was the result in Scott v. Mid-Carolina Homes, Inc., the case in the text in which the defendant attempted to rescind a contract to sell a mobile home because its salesperson was acting under a mistake of fact when he gave the plaintiff the sales price?

Accepted Answer

A)   The seller was allowed to rescind the contract because a unilateral contract was involved.
B)   The seller was allowed to rescind the contract because a bilateral contract was involved.
C)   The seller was allowed to rescind the contract because the mistake involved a price differential of over 25%.
D)   The seller was allowed to rescind the contract because the mistake involved a price differential of over 50%.
E)   The seller was not allowed to rescind the contract.F) A) and D)
G) D) and E)

Question 18

Which of the following occurs when a party threatens to file a frivolous civil lawsuit unless consent is given to the terms of a contract by another party?

Accepted Answer

A)   Duress
B)   Undue influence
C)   Durable fraud
D)   Criminal influence
E)   Duress and undue influence, but not durable fraudF) C) and E)
G) A) and E)

Question 19

Which of the following was the result on appeal in Manderville v. PCG&S Group, Inc., the case in the text in which the defendant property broker claimed that the plaintiffs could not recover on their claim for intentional misrepresentation because the plaintiffs did not diligently investigate the legal condition of the property and also because the agreement between the parties contained an exculpatory clause releasing the defendant from any understandings not incorporated into the contract?

Accepted Answer

A)   That the plaintiffs could not recover because the plaintiff failed to meet the obligation of inspecting the legal condition of the property.
B)   That the plaintiffs could not recover based on the exculpatory clause in the contract.
C)   That the plaintiffs could not recover because there was nothing wrong with the property, such as environmental contamination.
D)   That the plaintiffs were entitled to proceed to trial and that an exculpatory clause attempting to render a defendant not liable for fraud is void as a matter of public policy.
E)   That the plaintiffs were entitled to proceed to trial on the property issue only if they could first establish that they did no read the exculpatory clause.F) A) and D)
G) A) and C)

Question 20

Under what condition or conditions will a court now find nondisclosure as having the same legal effect as an actual false assertion?

Accepted Answer

A)   When a relationship of trust exists between the parties to the contract.
B)   When there is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement.
C)   When the transaction at issue is the first dealing the parties have undertaken together.
D)   When a relationship of trust exists between the parties to the contract and when there is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement.
E)   When a relationship of trust exists between the parties to the contract, when there is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement, and when the contract at issue is the first contract the parties have undertaken together.F) D) and E)
G) C) and D)

Exam 11: Capacity and Legality

Correct Answer
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When a contract is voidable, it may be ____________.

Correct Answer
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Threatening physical harm or extortion to gain consent to a contract is classified as duress.

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

Which of the following involves the active hiding of the truth about a material fact?

Correct Answer
verified

Correct Answer
verified

A _____________ is a false representation of a material fact that is consciously false and intended to mislead the other party.

Correct Answer
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Which of the following occurs when one party threatens physical harm or extortion to gain consent to a contract?

Correct Answer
verified

Which of the following occurs when a party threatens to file a frivolous civil lawsuit unless consent is given to the terms of a contract by another party?

Correct Answer
verified

Correct Answer
verified

What was the result in Scott v. Mid-Carolina Homes, Inc., the case in the text in which the defendant attempted to rescind a contract to sell a mobile home because its salesperson was acting under a mistake of fact when he gave the plaintiff the sales price?

Correct Answer
verified

When duress is at issue, the ____________ needed for legal consent has been removed by the specifics of the threat.

Correct Answer
verified

Correct Answer
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What was the result in the Peerless case discussed in the text in which there were two ships named Peerless and the parties disagreed over which ship was the subject of the contract?

Correct Answer
verified

Correct Answer
verified

Under what condition or conditions will a court now find nondisclosure as having the same legal effect as an actual false assertion?

Correct Answer
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Correct Answer
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What must a party prove in order to obtain money damages based on a fraudulent misrepresentation?

Correct Answer
verified
(1) A False statement about a past or ex...
View Answer

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

Correct Answer
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Exam 11: Capacity and Legality

Correct AnswerverifiedShow Answer

When a contract is voidable, it may be ____________.

Correct AnswerverifiedShow Answer

Threatening physical harm or extortion to gain consent to a contract is classified as duress.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following involves the active hiding of the truth about a material fact?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A _____________ is a false representation of a material fact that is consciously false and intended to mislead the other party.

Correct AnswerverifiedShow Answer

Which of the following occurs when one party threatens physical harm or extortion to gain consent to a contract?

Correct AnswerverifiedShow Answer

Which of the following occurs when a party threatens to file a frivolous civil lawsuit unless consent is given to the terms of a contract by another party?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What was the result in Scott v. Mid-Carolina Homes, Inc., the case in the text in which the defendant attempted to rescind a contract to sell a mobile home because its salesperson was acting under a mistake of fact when he gave the plaintiff the sales price?

Correct AnswerverifiedShow Answer

When duress is at issue, the ____________ needed for legal consent has been removed by the specifics of the threat.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What was the result in the Peerless case discussed in the text in which there were two ships named Peerless and the parties disagreed over which ship was the subject of the contract?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under what condition or conditions will a court now find nondisclosure as having the same legal effect as an actual false assertion?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What must a party prove in order to obtain money damages based on a fraudulent misrepresentation?

Correct Answerverified(1) A False statement about a past or ex...View AnswerShow Answer

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

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(1) A False statement about a past or ex...
View Answer

Correct Answer
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