QUESTION 1

1.Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed. In this case:

a.

there is a mistake of law, which in some states is treated no differently than a mistake of fact. In such states, since this mistake relates to a basic assumption on which the parties made their contract and it has a material effect on their agreement, the contract is voidable.

b.

Stewart is obligated to buy land elsewhere and have the complex constructed on property zoned for apartments.

c.

since everyone should know the law, Stewart is liable to Will for any losses he may incur.

d.

Will is liable to Stewart since Will is a contractor.

QUESTION 2

1.Relationships that may lead to a court's careful scrutinization of contracts between the parties to make sure undue influence was not present include all but:

a.

parent and child.

b.

doctor and patient.

c.

agent and principal.

d.

salesperson and customer.

QUESTION 3

1.A misrepresentation is material if:

a.

it would likely induce a reasonable person to enter into a transaction.

b.

the maker does not know it would likely induce the other party to enter into the transaction.

c.

it is made knowingly.

d.

All of these.

QUESTION 4

1.A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for breach of contract. The court found:

a.

the seller was in breach and must pay damages.

b.

the seller was guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain the goods.

c.

no contract existed due to mistake in meaning of terms.

d.

none of these.

QUESTION 5

1.Ben and Kate had been negotiating Ben's employment contract in conversations over the phone for a couple of weeks. Finally, they agreed on some contract terms. Kate offered to create a draft of the contract for Ben to read over. On the same day Ben was fired from his job. Afraid he would be unemployed, Ben signed Kate's draft without reading it. In this example Ben:

a.

can avoid the contract because of mistake by failure to read.

b.

cannot avoid the contract because of economic duress or failure to read.

c.

can avoid the contract because he was the victim of economic duress.

d.

may rescind the contract because of unilateral mistake.

QUESTION 6

1.The remedies of damages and rescission are available for:

a.

material fraudulent misrepresentation.

b.

negligent misrepresentation.

c.

innocent misrepresentation

d.

All of these.

QUESTION 7

1.Which of the following results in a void contract?

a.

Duress by improper threat.

b.

Duress by physical force.

c.

Undue influence on a party.

d.

Fraud in the inducement.

e.

Duress by physical force and also undue influence on a party.

QUESTION 8

1.Which of the following is correct with regard to duress?

a.

It always renders a contract void.

b.

Duress by improper threats or acts is the more common form of duress.

c.

The wrongful act must be either a crime or a tort in order to be considered wrongful.

d.

All of these.

QUESTION 9

1.Adam wants to buy a six-passenger car. The salesman tells him that the two-seat sports car Adam sees on the car lot would be just perfect for six people. Adam test drives the car and then buys it.

a.

The element of scienter is missing in this fact situation.

b.

Adam has a valid cause of action for fraud.

c.

Adam is not entitled to relief based on fraud because he was not justified in relying upon the salesman's representation that the car would seat six people.

d.

The salesman is in a confidential relationship with Adam.

QUESTION 10

1.By holding a knife to his back, Ed compelled Sean to sign a contract advantageous to Ed. This contract was entered under:

a.

improper threats.

b.

false representation.

c.

undue influence.

d.

physical duress.

QUESTION 11

1.Which of the following can meet the scienter requirement to establish fraud in the inducement?

a.

Actual knowledge.

b.

Lack of belief in the statement's truthfulness.

c.

Reckless indifference as to a statement's truthfulness.

d.

All of these meet the requirement.

QUESTION 12

1.Which of the following would be considered to be a misrepresentation of a material fact for purposes of establishing fraud in the inducement?

a.

"In my opinion, this is the best buy for the money."

b.

"This car has a new radiator."

c.

"This style of jacket is going to be the most popular style next year."

d.

A statement of value, such as "This is the best car in town for the money."

QUESTION 13

1.Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after Jill has bought the car, she finds out that Linda isn't interested in buying it. Jill:

a.

could rescind the agreement if she was mistaken in her estimate of the value of the auto.

b.

can sue Linda for detrimental reliance.

c.

can rescind the agreement.

d.

cannot void the contract.

QUESTION 14

1.If incorrect, which of the following would probably be considered a misrepresentation of a material fact?

a.

"These tires will wear like iron."

b.

"This car has new brakes."

c.

"This is the one that I think is the best buy."

d.

"This is the best computer on the market."

QUESTION 15

1.Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is a "standard" contract for this type of situation. Is the contract which Thomas signed binding upon him?

a.

No, because he entered into it based upon fraud in the execution.

b.

Yes, because he has made a unilateral mistake of law.

c.

No, because he did not read it.

d.

Yes, because he was negligent in not ascertaining its contents.

QUESTION 16

1.James threatens to hit Kenneth in the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $400 for his saw. Because of the threat, Kenneth signs the contract.

a.

This contract is voidable at Kenneth's option.

b.

James has committed physical duress against Kenneth.

c.

This is an example of economic duress.

d.

All of these.

QUESTION 17

1.Sam wants to sell his golden retriever to Al. Sam tells Al that the dog is three years old and that he will point, back, and retrieve. Al relies on these statements and purchases the bird dog. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). The buyer has most probably been a victim of:

a.

fraud in the inducement.

b.

fraud in the execution.

c.

undue influence.

d.

duress.

QUESTION 18

1.A contract induced by threatening to bring a civil suit against an individual is prohibited:

a.

if the threat is an abuse of process.

b.

if the suit is to recover a debt, whether the debt is valid or in controversy.

c.

under no circumstances.

d.

Two answers are correct.

QUESTION 19

1.In theBerardi v. Meadowbrook Mall Companycase, the court found:

a.

duress is readily accepted by the courts as a reason to avoid a contract.

b.

plaintiffs who prove economic duress may void the transaction, and this is their complete remedy.

c.

plaintiffs must produce subjective evidence of their duress to win a case of economic duress.

d.

economic duress must leave the plaintiff no reasonable alternative but to acquiesce to the terms of the contract.

QUESTION 20

1.Under the Restatement, if the parties to a contract attach materially different meanings to their manifestations and neither party knows or has reason to know the meaning attached by the other:

a.

and neither party is to blame, there is no contract at all.

b.

and both parties are to blame, there is no contract at all.

c.

and one party is to blame, that party will be held responsible, but the contract is not void.

d.

All of these.