Question 1

Larry is cleaning out his basement.While digging through all the clutter Larry found a few old pictures his mother gave him before she died.Larry does not know the value of the paintings but he thinks they are not worth much money.Larry, just to be on the safe side, hires a local expert in the field of art to value the pieces of art.The expert, John, quickly realizes that one of the paintings is a long lost VanCrandall - a famous painter.The painting is worth $25,000.00 at a minimum.John intentionally fails to disclose this to Larry and instead tells Larry to sell the painting to him for $25.00.Larry agrees.Which statement is the most accurate?

The contract is not enforceable because it lacks consideration and there is no mutual assent.

The contract is enforceable under the doctrine of assumption of the risk.

The contract is not enforceable because of mutual mistake.

The contract is not enforceable since John fraudulently misrepresented the value of the painting to Larry and Larry had hired John as an expert so John knew that Larry was relying on him for his expertise.

Question 2

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

undue influence.

false representation.

physical duress.

improper threats.

Question 3

Sam wants to buy Bill's land.Bill has agreed to sell the land to Sam for $100,000.00.Sam - who knows there is oil on Bill's land - jumps at the opportunity to buy the land since knows that the property is worth $750,000.00.Bill has no idea that there is oil on the land.He believes that the real value of the land is $75,000.00.Sam and Bill enter into a written contract.Before the closing on the land Bill finds out that there is oil on the property and wishes to get out of the contract.Which statement is most accurate?

It is unlikely that a court would allow Bill out of the contract because it is not fraud if one person (in this case Sam) possess information that Bill does not have.Sam does not have an affirmative obligation to tell Bill about the oil.

It is likely that a court would allow Bill out of the contract because it is fraudulent if one person (in this case Sam) possess information that another person (Bill) does not have.Sam does had an affirmative obligation to tell Bill about the oil.

A court would most likely not enforce the contract because of the mutual mistake that Bill and Sam each made.

A court would most likely not enforce the contract because of the doctrine of unilateral mistake

Question 4

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:

doctor and patient.

salesperson and customer.

agent and principal.

parent and child.

Question 5

Spencer loved cats and decided to buy a cat off Craig's List.He found an ad by Lexi and contacted her.Lexi told Spencer that she had a beautiful orange cat named Simba who needed a good home.Spencer agreed to the purchase Simba from Lexi.When Spencer went to pick up Simba from Lexi, Lexi told him - pretty much as an after thought -that Simba was a rare breed of Orange longhair, white face exotic cats.Spencer was thrilled to get such a good bargain and readily took Simba home.A few weeks later Spencer found out that there is no such breed known as orange longhair, white face exotic cats.Spencer called the law firm where you are employed.The attorney who he spoke with asked your opinion about Spencer's potential law suit.Which statement is most accurate?

Spencer most likely does not have a law suit against Lexi because - under the circumstances of this case - there is little to no evidence that Lexi's representation regarding the cat was material to the contract entered into between Spencer and Lexi.

Spencer most likely has a law suit regardless of whether the breed of the cat is material.

Both the second and third answers are correct.

Spencer most likely has a law suit as long as there is an offer, acceptance and consideration.

Question 6

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

"This car has a new radiator."

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

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

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

Question 7

Mike enters into a contract to purchase a boat from Peter.Mike believes the boat is worth $25,000 - when in fact the book value of the boat is $10,000.00.Which statement is most accurate?

The contract is not enforceable because of the doctrine of fraud in the inducement.

The contract is enforceable despite Mike's wrong belief.Mike cannot get out of the contract simply because he was mistaken as to the value of the boat.

The contract is not enforceable because of the doctrine of mutual mistake.

The contract is not enforceable because of the doctrine of unilateral mistake.

Question 8

Sherry was selling her used car.She saw Mark's son peeping in the window of the car.Sherry thought that Mark's son was trying to take the car - so she called Mark on the phone.Sherry told Mark that if he didn't buy her used car for his son she was going to have his son arrested.In order to avoid having his son arrested Mark agreed to buy Sherry's used car.Which statement is most accurate?

The contract is enforceable since there was an offer, acceptance and consideration.

The contract is not enforceable since Sherry threatened to have Mark's son arrested - and threatening the criminal prosecution of someone is duress.A contract entered into under duress is not enforceable.

The contract is enforceable since threatening someone with criminal prosecution is not duress.

The contract is not enforceable since the sale of the car had to be in writing.

Question 9

Vicki wanted to sell her tenant Kim (age 22) her used dining room furniture for $2,000.00. (The furniture was worth about $200 - and Vicki knew it.)Vicki told Kim that if she didn't agree to buy her used dining room furniture she would evict her.Kim agreed to purchase the furniture only because of Vicki's statements.Which statement is most accurate?

The contract is enforceable - there was an offer, acceptance and consideration.

The contract is not enforceable because Vicki was asking too much money for the furniture - and Vicki knew it.

The contract is enforceable since Kim is not a minor.

The contract is not enforceable because since Vicki threatened Kim.

Question 10

Sam is a building contractor.He wanted to bid on a giant project.In the middle of his computations his 2 year old daughter fell down the stairs distracting Sam.As a result Sam submitted a bid for $10,000.00 when in fact his bid should have been for $100,000.00.Company Xena quickly accepted Sam's bid - since all the other bids were for over $100,000.00.Which is the most accurate statement?

Most likely the contract between Sam and Company Xena is enforceable because there was consideration and mutual assent.

None of the answers.

Most likely the contract between Sam and Company Xena is enforceable.Sam had a duty to use due care before submitting his offer. Once Company Xena accepted Sam's offer, Sam was committed to the contract.

Most likely the contract between Sam and Company Xena will not be enforced by the court because Company Xena should have known that Sam had made a mistake.To hold Sam to his mistake would be unreasonable.

Question 11

Which of the following is NOT an element of fraud?

Knowledge of falsity.

Justifiable reliance.

Competent parties.

Material misrepresentation.

Question 12

Victor owes Scott $2,500.00.Both Scott and Victor agree on the amount of the debt - and the fact that it is 6 months past due.Scott has had it with Victor and tells Victor that if he does not pay the debt within the next month that Scott will sue Victor to collect the debt.Which statement is most accurate?

The debt is still valid as long as Victor was not afraid of Scott's threat of being sued. The test is Victor's subjective belief of whether or not he was threatened.

The debt is still valid even though Scott threatened to sue Victor for the debt.It is permissible to threaten legal action to collect a debt as long as the debt is a legitimate debt.

The debt is no longer valid because Scott threatened Victor with a civil law suit.

The debt is no longer valid because Scott gave Victor an unreasonable period of time to pay the debt off.

Question 13

Frank wants to sell his guard dog to Hal.Frank tells Hal that the dog is four years old and that he is a trained guard dog.Hal relies on these statements and purchases the dog for $5,000.00.Shortly after Frank gets the dog home, Frank realizes that the dog is not a trained guard dog.Frank has experienced ______.

Group of answer choices

undue influence.

fraud in the execution.

fraud in the inducement.

duress.

Question 14

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Bob wasn't sure as to the nature of the stone, but told Albert he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. The sales contract:

can be voided based upon fraud in the execution.

can be voided based upon fraudulent misrepresentation.

can be voided based upon mistake as to the identity of the subject matter.

is a valid contract that should be enforced by the law, because neither party knew the exact nature of the stone at the time of the sale.

Question 15

Harry is having a yard sale.He is selling the 'junk' from his garage.One item of "junk" that Harry is selling is a picture painted by an artist who Harry never heard of. It just so happens that Joshua an art dealer is driving around to garage sales and sees the painting. Harry offers to sell the painting to Joshua for $15.00.Joshua does not tell Harry that he is an art dealer.Joshua knows the value of the painting to be $15,000.00.Joshua jumps on the opportunity and quickly agrees to Harry's outrageously low price.

Which statement is most accurate?

Group of answer choices

There is not an enforceable agreement because Joshua was under an obligation to disclose to Harry that he was an art dealer.

Two of the three answers are correct.

There is an enforceable contract between Harry and Joshua.It is not fraud when one person (in this case Joshua) possesses information that the other party (Harry) does not have.

There is not an enforceable agreement because false representation can occur by both misrepresentation as well as active concealment - and both occurred here.

Question 16

Which of the following, if any, are requisites for fraud in the inducement?

Group of answer choices

All of these.

The representation is justifiably relied on.

False representation of a fact that is material.

Two, but not all of these.

Representation is made with knowledge of its falsity and the intention to deceive.

Question 17

Fran offers to sell her show horse "Fancy Free" to Peggy.Fran tells Peggy that the horse was grand champion at the Manchester Summer Festival Horse Show.(Peggy knows that that particular horse show runs 8 weeks and is a big deal - a very big deal.Only the best horses compete.)Peggy wants to show a horse at the Manchester Summer Festival Horse Show and figures that she would buy "Fancy Free" and show him there.Peggy and Fran enter into an agreement whereby Peggy agrees to buy Fancy Free from Fran for $50,000.00.Several weeks later Peggy finds out that Fancy Free never even showed at the Manchester Summer Festival Horse Show - and was definitely not the grand champion after 8 weeks of showing.Which statement is most accurate?

Group of answer choices

The contract is enforceable as long as there is an offer, acceptance and consideration.

Fran has not engaged in Fraud in the Inducement because the show history of the horse was not a material fact unless Peggy specifically told Fran that she was relying on it.

Fran has not engaged in Fraud in the Inducement - while she knowingly made a false representation of a material fact to Peggy with the intent to deceive, Peggy's relianceon the fact was justified.Peggy had an affirmative obligation to verify the accuracy of Fran's statements.

Fran has engaged in Fraud in the Inducement - she knowingly made a false representation of a material fact to Peggy with the intent to deceive.Peggy relied on the material fact and Peggy's reliance on it was justified.

Question 18

Leonard threatened Amy with a civil lawsuit if she did not enter into a contract with him.A contract induced by threatening to bring a civil suit against an individual is prohibited:

Group of answer choices

Two answers are correct.

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

if the threat is an abuse of process.

under no circumstances.

Question 19

A misrepresentation is material if:

Group of answer choices

it is made knowingly.

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

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

All of these.

Question 20

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.

Group of answer choices

Adam would be successful in his lawsuit against the salesman since the salesman made a false statement, that was material and Adam relied upon it.

Adam would not be successful in his lawsuit because the element of scienter is missing.

Adam would not be successful in his lawsuit against the salesman since Adam was not justified in relying upon the salesman's representation that the car would seat six people.

Adam would be successful in his lawsuit since the salesman is in a confidential relationship with Adam.

Question 21

Frank tells Carol that he paid $250,000.00 for his farm in 2015 and that he believes it is worth twice that at the present time.Relying upon these statements, Carol buys the farm from Frank for $400,000.00.Frank did buy the farm for $250,000 in 2015 but its value has only increased to $300,000.It is not worth $400,000 - or the $500,000.00 that Frank led Carol to believe.Which statement is most accurate?

Group of answer choices

Carol most likely has no recourse against Frank because Frank's statement was not made with the knowledge that it was false.

Carol most likely has no recourse against Frank because Frank's statement was his belief about what the market conditions were - and that is not a basis for fraud.

The two of the answers are correct.

Carol can most likely get restitution from Frank since she justifiably relied on his statement regarding the increase in the value of the property.

Question 22

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.

Group of answer choices

This is an example of economic duress.

All of these.

This contract is voidable at Kenneth's option.

James has committed physical duress against Kenneth.

Question 23

Gail enters into a contract to purchase Sally's motorcycle for $4,500.00.Both Gail and Sally believe that the motorcycle is a Harley Davidson that has 30,000 miles on it.Gail discovers that the motorcycle is actually a Haley Peterson with 99,000 miles on it.Which statement is the most accurate?

The contract between Gail and Sally is not enforceable because of the law of unilateral mistake.

The contract between Gail and Sally is enforceable under the doctrine of assumption of the risk.

The contract between Gail and Sally is enforceable under the doctrine of promissory estoppel.

The contract between Gail and Sally is not enforceable because of the law of mutual mistake.

Question 24

Harry is selling his antique car for $5,000.00.Peter stopped at Harry's house and looked at the car.Harry told Peter that he believed the value of the antique car will probably double - if not triple - within the next few years because of the economy.Based upon Harry's statement Peter decided that it would be a good investment.Peter bought the car.Sadly for Peter the value of the car did not double or triple.Which statement is the most accurate?

Group of answer choices

The contract between Harry and Peter is not enforceable due to the law of unilateral mistake.

The contract between Harry and Peter is enforceable since a statement regarding future market conditions cannot be the basis of alleged fraudulent misrepresentation.

The contract between Harry and Peter is enforceable under the doctrine of promissory estoppel.

The contract between Harry and Peter is not enforceable due to the law of mutual mistake.

Question 25

Jeff induces Dale to purchase stocks in a company at a price of $100 per share by representing that he paid $150 a share for them just six months ago.Jeff really paid only $50 a share for the stocks.Which statement is most accurate?

Group of answer choices

Jeff defrauded Dale in purchasing the stocks because he misrepresented the true value of the stocks with the intent to deceive.

Jeff defrauded Dale by telling Dale that he purchased the stocks for $150.00 and Dale justifiably relied on the statement.

All of the answers are correct.

Jeff defrauded Dale in purchasing the stocks in the company and is therefore liable in restitution to Dale.

Question 26

Harry is selling the contents of his father's estate at a yard sale.Josh stops by to look at the items.Josh notices an old milk can.Josh thinks the milk can might be an antique.He and Harry talk about the milk can.Neither of them know for sure what it is worth.Harry offers to sell the milk can to Josh for $5.00.Josh accepts.Harry later finds out that the milk can was an antique and was worth $500.00.Which statement is the most accurate?

Group of answer choices

The contract between Harry and Josh is not enforceable under the doctrine of mutual mistake.

The contract between Harry and Josh is enforceable.Neither Harry nor Josh knew the real value of the milk can.They each assumed the risk of the bargain.

The contract between Harry and Josh is not enforceable under the doctrine of unjust enrichment

The contract between Harry and Josh is not enforceable because of the lack of mutual assent.

Question 27

Martha delivers a package to Sally's house.She asks Sally to sign the receipt for the package and Sally does.Little did Sally realize the "receipt" she signed was actually a promissory note requiring her to pay Martha $1,000.00.Which statement is the most accurate?

The promissory note is not enforceable since Martha defrauded Sally.This is known as fraud in the execution.

The promissory note is not enforceable because of duress.

None of the answers.

The promissory note is enforceable because Sally should have read what she was signing and failed to do so.