BUSINESS LAW QUESTIONS

1. Dingle threatens to breach an existing contract unless Porter enters another unrelated contract with Dingle. Which of the following is true?

Multiple Choice

Only threats of criminal activities can be the basis for duress, so this is not duress.

This type of situation is always duress.

Unless Dingle uses the threat of physical force against Porter, it is not duress.

This is more likely to be duress if Porter has no alternative contracting partner for the initial contract.

This is only duress if Dingle is in a relationship of trust or confidence with Porter.

2. Which of the following statements, if it turns out to be false, is most likely to give rise to a successful rescission claim of fraud or misrepresentation?

Multiple Choice

"If you buy this diamond ring, your fiance will believe you spent more money on it than you did."

"I believe that it would be hard to find a Mustang convertible of this age with an interior this clean."

"This doll should be a collector's item in 20 years, when you will be able to sell it at a significant profit."

"Because Congress is going to be fighting over the debt ceiling and deficit reduction for the next ten years, I would buy these municipal bonds rather than Treasury bonds."

"This house was built by hand by its original owner in 1845."

3. Which of the following is true about the relationship between mutual mistake and unilateral mistake?

Multiple Choice

The elements are the same; the difference is only a matter of describing who is mistaken.

Unilateral mistake makes a contract voidable; mutual mistake makes it void.

Unilateral mistake incorporates all of the elements of mutual mistake, plus an additional element.

Unilateral mistake incorporates all of the elements of mutual mistake, except materiality.

Avoiding a contract based on unilateral mistake is easier than avoiding a contract based on mutual mistake.

4. Which of the following is NOT true of a contract that lacks real consent due to misrepresentation, fraud, mistake, duress, or undue influence?

Multiple Choice

The contract is void.

The contract is voidable.

A party who wishes to rescind such a contract must avoid any behavior that would suggest she ratifies it.

Rescission is the remedy.

Punitive damages generally are not available.

5. Duress is based on pressure exerted by __________; undue influence's pressure is exerted through ____________.

Multiple Choice

persuasion; coercion

scienter; unfairness

unfairness; scienter

unfairness; scienter

coercion; persuasion

6. Caleb just broke up with his fiance, who returned the ring Caleb gave her when he asked her to marry him. Jack enters a contract to buy the ring from Caleb for a specified amount of money. Caleb creates and gives Jack a fake "certificate of authenticity" indicating that the ring is an antique, when in fact it is not. The certificate is an expert forgery. As a result, Jack overpays for the ring, as Caleb intended. Which of the following is true?

Multiple Choice

The contract is void due to innocent misrepresentation.

The contract is voidable due to fraud.

The contract is void due to fraud.

The contract is voidable due to innocent misrepresentation.

The contract is not voidable, because whether the ring is an antique is not material.