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Exam 12: Reality of Assent

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Question 21

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Maurice offered to sell his used computer to Mike for $300,and Mike accepted.Both Maurice and Mike believed that the computer was one year old.When the receipt was found,however,it was discovered that the computer was actually 18 months old.Mike wants out of the agreement based on mutual mistake.Which of the following is Maurice's best position in an attempt to enforce the contract?

A) That the mistake did not have a material effect on the agreement.
B) That the mistake should be allocated equally between the parties.
C) That a mutual mistake was involved.
D) That a unilateral mistake was involved.
E) None of these,because as a matter of law,Mike can legally avoid the contract with this type of mistake.

F) A) and E)
G) C) and D)

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Question 22

Multiple Choice

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Which of the following is involved in a situation in which a person refuses to perform according to a contract unless the other person either signs another contract with the one making the threat or pays that person a higher price than was specified in the original agreement?

A) Fraudulent duress
B) Conditional duress
C) Negligent duress
D) Economic duress
E) Undue influence

F) A) and B)
G) A) and C)

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Question 23

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An error on the part of both parties to an agreement is a ________ mistake.

Bruce runs back the odometer on his car to make it appear as if it had fewer miles.Wally buys the car.When he checks back through past sale reports through his state's title office,Wally discovers that the car had fewer miles when Bruce sold it to him than it had when a previous owner sold it to Bruce.In legal terms,in selling the car knowing that he had tampered with the odometer,Bruce is said to have had ________.

When the party making the statement would have known the truth about the fact had he used reasonable care to discover or reveal it,the statement is a(n) ________.

What must a plaintiff prove in order to establish fraudulent misrepresentation and recover damages as a result?

Jane operates a home decorations shop selling slightly used goods.She bought a painting from Sally for the shop.Bob came into the shop and asked if the painting was by Bill,a local artist of some repute.Jane,without checking with Sally,says,"I'm sure it is" because she really did think it looked like one of Bill's paintings.Bob bought the painting.A week or so later,he took the painting by Bill's studio.Bill just laughed and said that he never painted anything that horrible.Bob took the painting back to Jane and asked for a refund.Jane refused on the basis that she never gave refunds and that Bob took the risk that the painting was not done by Bill.Should Bob sue in small claims court,who will likely win and why?

Undue influence is a situation in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person.

Scienter is a required element of innocent misrepresentation.

In terms of the elements of fraudulent misrepresentation,there must have been justifiable reliance on the false statement by the innocent party to the agreement.

Until recently,courts have been hesitant to use nondisclosure as a basis for rescinding a contract.

What was the result in the Peerless case referenced in the textbook in which there were two ships named Peerless and the parties disagreed over which ship was the subject of the contract?

Constance was buying a used personal watercraft from Ralph.He told her that the engine on the watercraft was in good shape.Constance agreed to pay Ralph $4,000 for the watercraft.She was going to be out of town on vacation,so Ralph and Constance agreed that when she returned in a week,she would bring over the money and pick up the watercraft.During that week,the manufacturer notified Ralph that the watercraft was being recalled because it had a faulty engine that needed repair.Ralph said nothing about the condition of the engine or the recall when Constance came to pick up the watercraft.They chatted about other matters; she gave him the $4,000,and took the watercraft.Later,Constance started having problems with the watercraft and discovered that Ralph had been notified of the issue with the engine.She asked for a refund accusing Ralph of fraud.Ralph refused on the basis that he did not make any misrepresentation.Who is correct and why? For purposes of this question,assume that sales talk or puffery is not at issue.

A ________ is a false representation of a material fact that is consciously false and intended to mislead the other party.

A misrepresentation is an untruthful assertion by one of the parties about a material fact.

Which of the following involve(s) the active hiding of the truth about a material fact?

A person who makes a misrepresentation but has no knowledge about the falsity of the statement does not have ________.

Generally,a unilateral mistake makes a contract void.

When duress is at issue,the ________ needed for legal consent has been removed by the specifics of the threat.

Under what condition(s) will a court now find nondisclosure as having the same legal effect as an actual false assertion?