An incorrect statement made knowingly with the intention of causing injury to another is known as

conflict of interest.

negligent misrepresentation.

third-party liability.

innocent misrepresentation.

fraudulent misrepresentation.

A material misrepresentation is a

vague statement made to encourage a deal.

misleading statement made to discourage a contract.

false statement made to start bargaining.

false statement that persuades someone to enter a contract.

false belief of one party that influences his decision.

If there has been a negligent misrepresentation, the victim can

sue for the negligent act or for the breach of contract.

only sue for the breach in contract.

only sue for the negligent act.

repudiate the contract.

demand rescission.

Rescission refers to

a contract that exists until set aside by a court due to public policy reasons.

an equitable remedy in which one party believes there is a mistake in the contract.

a contract that never comes into existence and no rights pass.

an equitable remedy that ends a contract and attempts to return both parties to their original positions.

a discretionary remedy developed through common law by following a precedent.

Harry is walking down the sidewalk when April, who is jogging and not paying attention, slams into him. Harry falls onto the sidewalk and is injured. Harry has an eighth-grade education. April has a college education and works in the insurance industry. She can tell his injuries are serious and that he does not yet understand the harm done to his back. She also knows that if Harry sues her, he will likely win, a fact he does not know. April offers to pay Harry $1000 to help with his bills if he agrees not to sue her. Harry, thinking he is just bruised, agrees. April and Harry sign a contract with these terms the next day, before Harry has seen a doctor. Harry has a serious back injury that will require over $100 000 in treatments and from which he may never fully recover. Can Harry sue April?

Maybe, but only if he can prove April made a misrepresentation

Yes. Harry can claim he signed the contract under duress.

Yes. Harry can claim the transaction was unconscionable and should be set aside.

No. Because he agreed to not sue, Harry is bound by the agreement.

No. The transaction had no undue influence, so it was valid.

Edgar was married to Stella, a sophisticated business person. Edgar inherited a considerable fortune from his great-aunt Hilda. He was a poet and spent his days composing sonnets and dreaming of an idyllic life. Edgar trusted Stella completely. She asked Edgar to sign indemnity investment agreements that placed all the risk on Edgar if a venture failed whereas Stella gained all the benefits if the venture succeeded. Which one of the following is true?

Edgar must prove an imbalance of power, amongst other matters, to succeed in getting these agreements voided.

All of these agreements are void from the beginning because Stella is a sophisticated business person.

Undue influence is presumed in relationships of husband and wife.

Edgar can win but only if he can show that he has a close relationship with Stella.

Edgar can always get out of these contractual obligations even if he makes a profit because the court will set aside all contracts where there was undue influence.

What of the following is an example of duress in contract law?

A criminal threatens that unless Joe signs a contract, he will beat up Bill, who is a complete stranger to Joe.

A bank official threatens to foreclose if the debtor does not make an overdue mortgage payment.

A news reporter threatens to release true information about a politician's shady past.

A supervisor threatens an employee that unless he completes the job on time he will be fired.

A car salesman threatens that if Bill does not buy the car today, the price will go up another 10 percent tomorrow.

A shared mistake occurs when

both of the parties discuss the mistake with someone outside of the contract.

both parties are mistaken but for different reasons.

one of the parties is mistaken.

both parties are mistaken for the same reason.

one of the parties has discussed the mistake with the other party.

What of the following situations does not contain a mistake that a court would review?

Both parties meant to have the property sold for $1000 but a typo made the price $1.

Both parties do not know the subject of the contract has been destroyed.

A person sold a valuable antique for little money.

Both parties use the term "COB" but have different definitions and the term is used to determine deadlines.

Both parties do not know that the property to be sold is already owned by the buyer.

What of the following statements is incorrect?

It is difficult to have a contract set aside for a mistake.

Innocent third-party rights bar the right to have a contract declared voidable.

If the subject matter of a contract does not exist when the contract is made, the contract will be declared void.

If the subject matter of a contract exists but its qualities are radically different from those cotemplated by the parties, the contract will be declared void.

The rules of interpretation as well as the law of mistake solve mistakes about the meanings of words used in contracts.

Whatof the following is incorrect with respect to the plea of non est factum?

Non est factum means it is not my act.

Non est factum requires that the person claim to be blind or illiterate.

The availability of non est factum will in part depend on the degree of the person's carelessness.

People should not escape liability under a contract simply because they failed to familiarize themselves with the contents.

The availability of non est factum will in part depend on the circumstances of the person's carelessness.

An assignor is

a transfer by a party of its rights under a contract to a third party.

the rights to intangible property that may be enforced in the courts.

a party that assigns its rights under a contract to a third party.

the right to tangible property that may be physically.

a third party to whom rights under a contract have been transferred.

A third party to whom rights under a contract have been transferred is known as a(n)

assignee.

assignment.

assignor.

recipient.

promisor.

Arlene owes Betty $100. Betty owes Chris $250. Betty pays $150 to Chris and assigns (in writing) Arlene's debt to Chris in satisfaction of the remainder of what she owes. Chris gives notice to Arlene that she should pay him the $100 and not Betty. Arlene ignores the notice from Chris and pays Betty. Whom should Chris sue to recover the $100?

Chris can successfully sue either Arlene or Betty.

Chris must sue both Arlene and Betty.

Chris cannot sue either Arlene or Betty in this case.

Chris may sue only Betty because she has the money.

Chris may sue only Arlene because she ignored the proper notice.

Merv wanted to buy a used car. The salesman said that the car had 30 000 km on the odometer. The salesman knew this was untrue, but he needed the commission to help pay for his son's university tuition. Merv replied that the mileage did not matter because he liked the car's colour. When Merv found out that the car had 300 000 km on the odometer, can he sue successfully for misrepresentation?

No, because the claim did not encourage Merv to purchase the car

No, because under caveat emptor, Merv should have looked at the odometer before agreeing

Yes, because the salesman made a false claim

Yes, because the salesman took advantage of Merv's love of the car's colour

Maybe, but only if a court found the discrepancy in the number of kilometers was not significant

Why does independent legal advice usually negate a claim of undue influence?

It ensures there was no misrepresentation at any stage of negotiations.

It ensures the contract is worded properly to ensure there are no ambiguities.

It will ensure that there are no threats of physical violence or coercion.

It will prove the weaker party had access to full knowledge and made the decision freely.

It removes any possibility there were dire circumstances.

What of the following is not a requirement to establish an error in the recording of a contract?

The document did not match the intent of the parties.

Demonstration of the existence of fraudulent conduct

The existence of a complete agreement between the parties

The absence of further negotiations

The plaintiff did not know the document was incorrect when signed.

The parol evidence rule

prohibits the use of outside evidence to define a contract term when the term itself is clear.

requires outside written evidence of the intended meaning of a contract term.

prohibits the parties from testifying about their intended definition of an ambiguous contract term.

allows all evidence if a contract term is in dispute.

prohibits the use of outside evidence to define any contract term.

On the morning of June 4, Darlene enters into a written contract with Leonard, pursuant to which Darlene agrees to purchase all of the restaurant tables and chairs he has on the premises of the caf he has just closed. Unknown to both Darlene and Leonard, Leonard's caf premises had been broken into the night before and entirely vandalized. When Leonard learns of this later that day, he calls Darlene to tell her that all of the tables and chairs have been destroyed. She wants to sue Leonard for breach of contract. Which of the following defences to the lawsuit will Leonard use?

She cannot sue him for breach of contract because it was not his fault the contract cannot be fulfilled.

The contract was void since the goods had been destroyed before the contract was concluded and therefore was formed on a true mistaken assumption of both parties.

There is no consideration for the contract as he has no goods to deliver on closing.

He has no defence. He is in breach of contract because he was responsible for delivering tables and chairs to her and he cannot.

He has breached the contract but she has no loss because she hasn't paid any money to him.

Oliver wants to make sure his daughter Penelope is taken care of after he is gone. He sets up a trust to provide for all her needs with Raymond as the trustee. He then places most of his money in the trust with Raymond. After Oliver dies Raymond refuses to give any of the money to Penelope. Can she sue to enforce the trust?

No. Since she is not an original party to the trust creation, Penelope has no right to enforce it.

Yes, because the requirement of privity does not apply to trusts

Maybe, but only if Oliver assigned his contract rights to Penelope before he died

No. Since Oliver is dead, all of his contracts have no effect.

Yes. Because Raymond is still alive, anyone can sue to enforce the trust agreement.

Peter is looking to buy a house from Mary, the current owner. Peter asks for a list of issues with the home. Mary writes a list but does not mention the roof despite knowing it leaks every time it rains. Peter buys the home. Has Mary committed an actionable misrepresentation?

Yes, because as a professional she owes the utmost good faith in contracts

No, because Mary is not a professional and so owes no duty of truthfulness

Yes, because her failure to report the roof indicates there is no problem with it

No, because non-disclosure is not actionable

Maybe, but only if Mary told Peter there was no issue with the roof

What of the following is not an element of negligent misrepresentation?

The victim suffered damage.

The speaker made a false statement.

The victim unreasonably relied on the statement.

The speaker was negligent.

There was a duty of care.

What remedy or remedies is/are available for the tort of innocent misrepresentation?

Rescission

Injunction

Damages and rescission

Rescission and specific performance

Damages

Which type(s) of misrepresentation allow(s) punitive damages as a remedy?

Negligent misrepresentation

All types of misrepresentation

Innocent misrepresentation

Innocent or negligent misrepresentation

Fraudulent misrepresentation

Duress occurs when

both parties feel economic pressure to make a deal.

one party enters a contract because the other party improperly threatens her.

both parties want to void the contract because they changed their minds.

one party agrees to the contract because the other is a trusted advisor.

one party is delayed until he signs the contract.

What of the following relationships leads to a rebuttable presumption that a contract is based on undue influence?

Lawyers contracting with each other

Parents contracting with their adult children

Siblings contracting with each other

Spouses in an equal relationship contracting with each other

Religious advisors contracting with parishioners

What of the following situations does not allow the successful use of unconscionability as an equitable defense?

There were no third parties involved in or affected by the contract.

A third party lied about a material fact during the formation of the contract.

The defendant lied about material facts during the formation of the contract.

Unconscionability is never an equitable defence.

A loan charged 200 percent interest because the debtor was desperate.

When the parties agree to all terms in a contract but the subject matter of the contract does not actually exist, this is a

valid contract.

misrepresentation.

voidable contract.

shared mistake.

unilateral mistake.

A misunderstanding occurs when

one party creates a vague term in the contract to make the contract unenforceable.

the parties have different understandings of a term in the contract but neither knows it.

one party does not understand a term of the agreement because she did not read the contract.

the parties agree to all terms but the subject matter of the contract does not exist.

the parties have different understandings of a term in the contract and both know about the difference.

Two businesses sign a contract. The contract requires all work to stop at noon, local time. The parties disagree on the meaning of "noon." The court will

apply the literal meaning of the word since there is no ambiguity.

tell the parties to settle the matter between themselves.

always apply the literal meaning of a simple word like noon.

look at the intent of the parties to define noon.

apply the most reasonable meaning of the word noon.

If the parties do not include a term in a valid contract, the court can

infer a reasonable term based on what both parties want.

infer a reasonable term based on the past dealings of the parties.

declare the contract void for lack of a meeting of the minds.

infer a term requested by the non-breaching party.

declare the contract void for lack of an essential term.

What of the following situations is not a valid exception to the principle of privity?

Abe hires Barb to mow Carl's lawn. Barb does not and Carl wants to sue Barb.

Landlord sells the property to Owner but Tenant has a valid lease from Landlord. Tenant wants to sue Owner to stay.

Earl has a life insurance policy and dies. Acme Insurance refuses to pay. Bob the beneficiary wants to sue.

Agent creates a contract for Principal and Customer. Customer believes Agent acted fraudulently and wants to sue both Agent and Principal.

Settlor creates a trust to benefit Son. Son thinks Trustee is misusing funds and wants to sue.

Mary buys a car from Fred. She pays with a cheque. Fred endorses the cheque over to Jane. Mary discovers the car Fred sold her needs major repairs even though Fred told her the work had been done. Can Jane cash the cheque?

No. Because Mary has a defense of fraud against Fred, she also can prevent Jane from cashing the cheque.

Yes, because the cheque is endorsed and she is a holder in due course

Yes, because a cheque can always be cashed by anyone if it has been signed by the account holder

No. Negotiable instruments cannot be transferred to a third party.

No. Because Jane is connected to Fred, she is considered a party to the fraud and cannot benefit from Fred's wrongdoing. End of chapter 8