Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 7: Genuineness of Assent
1. Parties that cancel their contract obligations by rescission cannot get back what they've already put into the
contract.
2. A contract that lacks the genuine assent of the parties to it is typically voidable.
3. Committing an act of violence to obtain a signature on a written contract is duress.
4. When the dominating party to a confidential relationshipexerts irresistible pressure on the dominated party to
enter into a contract that benefits the former, undue influence occurs.
5. You will not be bound to a contract you have not read, even if you sign it.
6. A mutual mistake about the law applicable to the contract will render the contract void.
7. Regardless of whether a misrepresentation is innocent or fraudulent, the resulting contract is voidable by the
party to whom the misrepresentation is made.
8. Active concealment of a material fact nonetheless leaves the resultant contract valid.
9. Being able to show fraud allows a victim to recover punitive damages in addition to being able to utilize
other remedies.
10. To prove fraud, an alleged victim must show all the elements necessary to prove misrepresentation in
addition to showing intent and injury.
11. A contract can only be ratified by an explicit statement made orally or in writing.
12. Which of the following is not a legal rationale for showing the lack of genuine assent to a contract?
A. duress
B. undue influence
13. Which of the following could not be used to show legal duress?
C. threats to sue on a matter unrelated to the contract at hand
D. All of these could be used.
14. In economic duress cases, the courts look at
A. both the threat and the size of the threatened party.
B. both the threat and the place where the threat occurred.
15. When a contract arises because of undue influence, the contract is voidable by the
C. court.
D. none of these.
16. A mistake resulting from a failure to read a contract before signing it will render the contract
A. void.
B. voidable.
17. A mutual mistake of fact as to the identity of the subject matter of the contract will render the contract
C. valid.
D. none of the above.
18. Fraud renders the contract ____________________ by the victim.
C. valid
D. none of the above
19. Disclosure is required in contractual negotiations when a statement
A. omits important information about a material fact.
B. is made false by subsequent events.
20. To prove misrepresentation the reliance placed on the untrue statement must be
A. absolute.
B. immediate.
21. If legal duress is proven the contract is rendered
C. valid.
D. none of the above.
22. When both parties have an incorrect belief about material facts relating to a contract, what may result?
A. unilateral mistake
B. mutual mistake
23. Which of the following need not be shown to prove misrepresentation?
C. reliance on the statement by the victim
D. untruthful nature of the statement
24. In the case of fraud, what remedies are available to the injured party?
A. rescission only
B. rescission and compensatory damages only
25. Ima has a neighbor named Judy, who works for Kevin. Ima threatens Judy that she will tell Kevin that Judy
lied about her job experience on her resume unless Judy buys one of the $1,000 vacuum cleaners Ima sells.
Ima's threat is an example of
C. ratification.
D. unilateral mistake.
26. Which of the following makes a contract voidable?
A. mutual mistake of fact
C. "The engine is in top shape."
D. "These collectibles should increase in value at least 15 percent next year."
28. Michelle was a victim of fraud. The $40,000 portion of her court award that Michelle received in order to
punish the party who committed fraud against her is known as
A. actual damages.
B. compensatory damages.
29. Because of her allergies, it is important for Isabel to have her carpet steam-cleaned regularly in her leased
apartment. Prior to signing an apartment lease, Isabel is shown a contract that verifies that the apartment
manager at one complex pays for carpet to be steam-cleaned twice a year. Based upon this information, Isabel
signs a two-year lease with that complex. What has occurred with regard to this contract term?
C. rescission
D. renunciation
30. Zambo bought a corner lot in a residential area in hopes of putting in a drive-thru restaurant. She did not
mention her plans in the bargaining sessions for fear that the seller would raise the asking price. Afterwards, she
discovered that the legal zoning of the lot prohibits any retail establishment. Her mistake is best described as
C. mutual mistake of fact
D. mutual mistake of law
31. Bob and Susan are selling their house, but the foundation is unstable. Instead of fixing the foundation before
they put the house on the market, Bob and Susan merely paint over the crack that runs through the ceiling in the
living room of the home. Bob and Susan are guilty of a type of misrepresentation called
____________________.
32. Esteban has negotiated with a wholesale lumber dealer for a specific price per bundle of lumber needed in
his apartment building construction plans. Weeks after the negotiations, the manager at the wholesale lumber
company learns of the number of apartment buildings Esteban will be building and wants to capitalize on
Esteban's success. So, he threatens to withhold Esteban's lumber supply unless he agrees to pay $20 more per
bundle. This threat is an example of ____________________.
33. On her first day of employment with an advertising firm, DeShawn received an employment contract which
she carelessly read. Two weeks later DeShawn's employer notifies her that she will be relocated according to
the terms of her employment contract. DeShawn believes the contract is voidable because she did not read the
relocation clause in the contract. A court, noting DeShawn's ________________ mistake, would hold that the
contract was valid.
34. Tania agrees to purchase one of Kim's formal dresses for $45 to wear to her company's Christmas party. The
next day she is fired and will, therefore, not need the dress. She agrees to return the dress, and Kim returns the
$45. Their actions are an example of the contract remedy of ________________.
35. After Patricia's husband died, her neighbor persuaded her to sell her husband's motorcycle for 70 percent of
its real value. For more than a year she accepted her neighbor's monthly payments. By her acceptance of these
payments she has ____________________ their agreement, which, as a consequence, cannot be rescinded.
36. If fraud is proven, an additional remedy beyond rescission becomes available to the injured party. That
remedy is ____________________.
37. Two years ago, Hope purchased a car from her friend. At the time of the purchase, the odometer reading
was 30,000 miles. Hope drove the car for a year and put an additional 15,000 on the vehicle, and then sold the
car to Miguel. Miguel later learned that the car had 60,000 on it. Because Hope did not know the original owner
had altered the odometer reading, her original statement regarding the odometer reading is an example of
____________________.
38. While working for Joe as a legal secretary, Doris discovers that Joe has taken a piece of land in lieu of a
client's payment for legal fees. Joe, however, notifies the other partners in his law firm that this client's legal
fees are uncollectible. The firm then absorbs the loss resulting from the uncollectible fees. Joe later sells the
land for $80,000 and secretly pockets the money. Doris then threatens Joe into giving her a pay raise of $25,000
to "keep her mouth shut." If Joe does so, Doris' new employment contract would be voidable due to legal
___________________.
39. A(n) ____________________ is one in which an inordinate amount of trust and confidence is placed by a
dependent party in the dominant party.
40. Johnston owns two cars. One is a 2000 Thunderchicken and the other a 2004 model Thunderchicken.
Thompson, not knowing that Johnston has two Thunderchickens, makes an offer to buy "Johnston's
Thunderchicken." Johnston accepts thinking from the size of the offer that Thompson is referring to his 2000
Thunderchicken. The resulting contract is void due to the parties' ____________________ mistake of fact.
41. When it became clear that Dean's parents needed someone to live in and help care for them, Dean offered to
do it. Within a month after moving in, he told his parents that he would continue to stay only if they signed all
the real estate over to him and gave him power of attorney on their bank accounts. Within four months after
they did this, Dean put his parents in a nursing home. Would Dean's threat to leave be considered legal duress?
Could this be considered undue influence? Explain your answer.
42. List and discuss the various forms that legal duress may take.
Threats of illegal conduct—committing an act of violence, threatening a crime, committing a tort, or threatening
a tort to obtain a signature on a written contract will always be considered legal duress.
43. Paul is an elderly gentlemen living alone who requires assistance in getting to the grocery store, doctor, and
pharmacy for his prescriptions. Paul's children live out-of-state so Paul has come to rely on his neighbor, David,
for companionship and assistance in these routine matters. After a recent fall resulting in a broken hip, Paul's
mobility decreases. Paul and David reach an agreement in which David will be added as a signatory on Paul's
checking account in order to purchase Paul's groceries and medicine and to pay his routine bills. At the end of
each month David agrees to provide Paul with a detailed accounting of transactions and monies spent on Paul's
behalf. Additionally, Paul agrees to pay David $300 a month for the assistance provided. Paul's son, Michael,
accuses David of undue influence. Is Michael correct or incorrect? Why or why not?
Answers will vary. In order to prove undue influence, it must be shown that a confidential relationshipexerts
44. Juanita has owned and operated "Hair Dos" for five years but now wants to sell the salon equipment, hair
care products, and customer list. Beth answers Juanita's advertisement. They meet and Beth examines the
equipment, customer list, and hair care product inventory. During price negotiations Juanita neglects to mention
that her customer list is outdated because many customers have moved or have taken their business elsewhere.
Juanita also fails to mention that highway construction will begin next month that will complicate customer
access to the shop and reduce business. Beth agrees to pay Juanita $13,500. Business is slow so Beth begins
calling customers from the customer list and discovers that the customers are not viable ones. Is the contract
voidable and why? What remedies does Beth have?
Answers will vary. The contract between the parties is voidable due to the misrepresentation of the customer
