CHAPTER 9—DEFECTIVE AGREEMENTS Key
1. Mark, a civil engineer, entered into a contract with David. As per the contract, Mark agreed to design and
build a house for David for a specified fee. Mark provided David with an estimation of the total cost and the
contract was mutually agreed upon. However, during construction, when Mark increased the price stating a
miscalculation on his part, David refused to pay the amount. This scenario is an example of a _____ mistake.
2. Allen enters into a contract with Joe to sell his car. However by mistake, he undervalues his car. Though the
actual value of the car is $6000, he sells it to Joe for $3000. During the purchase, Joe is aware of the actual
value but does not communicate this fact to Allen. Which of the following is likely to be true in such a
scenario?
3. James orally entered into a contract to sell 100 tonnes of cotton to Bryan for a price of $1000 per ton. Both
parties subsequently signed a written contract. However, the written contract mistakenly stated the price of
cotton as $1100 per ton. While signing, Bryan failed to notice this mistake. Which of the following contract
terms will govern in such a scenario?
4. Which of the following is true regarding parties who make mutual mistakes of law?
5. Which of the following statements is true of fraud in the inducement?
6. _____ is a means of destroying another’s free will by one party obtaining consent to a contract as a result of a
wrongful threat to do the other person or family members some harm.
7. Economic duress occurs when:
8. Which of the following is true of undue influence?
9. As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a
contract.
10. When a mistake occurs, the parties may specify a different outcome in their contract, irrespective of what
the law provides.
11. If an unilateral mistake regarding price results arise from misunderstanding an oral quotation of the price,
the contract is invalid.
12. A contract is void if parties to a contract are mutually mistaken about their expectations.
13. Fraud in the execution occurs when a defrauded party intends to sign a contract as a result of false
statements made by the promisor.
14. Failure to disclose information when there is duty to do so is known as passive fraud.
15. A false statement made in the belief that it is true is known as innocent misrepresentation.
16. When one party wrongly threatens to injure another person physically in order to get agreement to a
contract, economic duress occurs.
17. Mistakes such as duress and undue influence render contracts void.
18. A false statement made in the belief that it is true is known as innocent misrepresentation.
19. When one party wrongly threatens to injure another person physically in order to get agreement to a
contract, economic duress occurs.
20. When can a person rescind a contract? In order to rescind, what are the four steps one must undertake after
returning what one received under a contract?