ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 15
MISTAKES, FRAUD, AND VOLUNTARY CONSENT
15-1A. Duress
Schmalz should not succeed. To claim duress in avoiding a contract, a person must be so
oppressed from the wrongful conduct of another as to deprive him or her of free will. Usually,
there must be an improper threat such as blackmail or a threat of physical harm. Economic
15-2A. Fraudulent misrepresentation
Mrs. Adams cannot rescind her contract based on fraud. Fraud is the intentional mis-
representation or suppression of the truth made to obtain an unjust advantage for one party. A
claim of fraud also requires that the innocent party justifiably rely on these misrepresentations.
Fraud does not vitiate consent when the party against whom the fraud was directed could have
ascertained the truth without difficulty, inconvenience, or special skill. Mrs. Adams claimed that
she reasonably relied upon Mr. Adams’ statements, but these representations could easily have
B-2 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 15
15-3A. Fraudulent misrepresentation
A jury awarded more than $740,000 in damages to Rickert on his claim of fraud, and UPS
appealed to a state intermediate appellate court, which affirmed the award. UPS appealed to
the Kentucky Supreme Court, which also affirmed the award. The state supreme court
explained that “UPS admits that it never intended to hire all carrier flight crew members but
claims that it never made a representation to the contrary. Fraud may be committed either by
15-4A. Fraudulent misrepresentation
No. The court held that Nosrat was liable on the note because with ordinary diligence he could
15-5A. Assent
Lorenzo based her suit against Noel on fraud—misrepresentation by nondisclosure. The court
granted Noel’s motion for summary judgment, and Lorenzo appealed. The state appellate court
15-6A. Mistake
The court held that Lanci was entitled to void the settlement agreement. Lanci’s mistake as to
the amount of the policy limits was known or should have been known by Metropolitan. Quoting
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 15 B-3
15-7A. Misrepresentation
The court did not hold McConkey liable and dismissed M&D’s claims. M&D appealed. The
state intermediate appellate court affirmed the judgment of the lower court. The appellate court
concluded that McConkey did not commit misrepresentation because he did not make any
representation—the property was sold “as is.” “[T]o establish a claim of silent fraud, there must
be evidence that the seller made some sort of representation that was false. It is not enough
15–8A. Fraudulent misrepresentation
Fraud requires (1) a misrepresentation of a material fact, (2) an intent to deceive, (3) an
innocent party’s justifiable reliance on the misrepresentation, and (4) the innocent party’s injury.
Here, the evidence of Williams’s “misrepresentation of a material fact”—her promise to care for
15–9A. Mutual mistake
Yes. When both parties to a contract are mistaken about the same material fact, the contract
can be rescinded by either party. If, however, a mistake concerns the later market value of the
B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 15
object of the contract, the contract normally can be enforced by either party.
15–10A. A QUESTION OF ETHICS
1. Whatever your answer is to this question, in the eyes of the court Jacobsen had no
cause of action. The judges felt that Jacobsen simply “chose to judge Columbia’s education
2. A university has a contractual duty to its students to abide by the policies and
procedures expressed in its published manuals, catalogs, and other releases. A student
manifests assent to these policies and procedures upon entering the university and paying
3. The equitable maxims that are probably most relevant to Jacobsen’s case are the first
and third maxims listed in Chapter 1: “Whoever seeks equity must do equity” and “One seeking
the aid of an equity court must come to the court with clean hands.” Clearly, Jacobsen received