Chapter 15 Study Guide Quiz

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Question #1

When the dominant party in a fiduciary relationship benefits from that relationship, a presumption of undue influence arises.

A False

B True

Question #2

The element of justifiable reliance requires the misrepresentation to be the sole factor in inducing the deceived party to enter into the contract.

A False

B True

Question #3

Scienter clearly exists if a party knows a fact is not as stated.

A False

B True

Question #4

Misrepresentation of a material fact cannot occur through conduct alone.

A True

B False

Question #5

Misrepresentation can occur by words or actions, but not by silence.

A True

B False

Question #6

Many courts have broadened the concept of unconscionability to apply it in situations other than sales of goods.

A True

B False

Question #7

In some states, the courts prefer to rely on traditional notions of fraud, undue influence, and duress rather than the concept of unconscionability.

A False

B True

Question #8

Duress is a defense to the enforcement of a contract, but not a ground for rescission of a contract.

A True

B False

Question #9

Because fraud actions necessarily involve wrongful conduct, courts may award punitive damages.

A True

B False

Question #10

An innocent party can rescind a fraudulent contract and be restored to his or her original position.

A True

B False

Question #11

A negligent misrepresentation is not a basis for rescinding a contract.

A False

B True

Question #12

A material fact is a fact that a reasonable person would consider important when determining his or her course of action.

A False

B True

Question #13

Ray buys a rural vineyard from Sergio, who claims that it would be a prime site for a housing subdivision. Ray later learns that the law does not permit the land to be used for housing. Ray may

A rescind the contract only if Sergio knew about the law before the deal.

B rescind the contract only if the law is not common knowledge.

C not rescind the contract.

D rescind the contract only if Ray did not know the law before the deal.

Question #14

Raven, the owner of Strawberry Fields, contracts to sell its harvest to Tender Fruits, Inc. When Raven refuses to per¬form, Tender Fruits files a suit to enforce the contract. Raven and Tender Fruits are in a state that does not recognize the doctrine of unconscionability. To defend success-fully against enforcement of the contract on similar grounds, Raven might rely on traditional notions of

A value.

B materiality.

C fraud.

D mistake.

Question #15

Nora enters into a contract with Oceanic Transport, Inc., to insure and ship a painting from France to the United States for a certain price. But Oceanic makes a mistake in adding the costs, which results in a contract price that is $1,000 less than the true cost. Most likely, a court would

A allow the parties to rescind the contract.

B award damages to Nora for the mistake.

C enforce the contract as is.

D award damages to Oceanic for the mistake.

Question #16

Gene sells a trail bike to Hollis without disclosing that the odometer, which reads 10,000 miles, was disconnected 90,000 miles ago. Gene is most likely liable for

A mistake.

B unconscionability.

C nothing.

D fraud.

Question #17

Garth owns two all-terrain vehicles (ATVs), worth $1,000 and $500, respectively. Helen agrees to buy “Garth’s ATV” for $750. Garth believes, in good faith, that he is selling the $500 ATV. Helen believes, in good faith, that she is buying the $1,000 ATV. In this situation

A there is no contract.

B Helen must buy both ATVs for $1,500.

C Garth is entitled to $750 for the $500 ATV.

D Helen is entitled to the $1,000 ATV for $750.

Question #18

Fact Pattern 15-B3
In selling a commercial building, Birdie tells Colt that the property has a certain capacity, making it suitable for a nightclub. Birdie knows nothing about the capacity of the building, but it is not as she specifies. Colt buys the building.

Refer to Fact Pattern 15-B3. Under these circumstances, Colt’s best course of action is most likely to

A sabotage Birdie’s career with bad publicity.

B induce Birdie to give him the commission on her next sale.

C recover damages or rescind the contract to buy the building.

D scam Birdie.

Question #19

Fact Pattern 15-B2
Organic Farms Company contracts to buy two tracts of land from Prime Bottomland, Inc. Both parties believe that the two tracts are adjacent, but in fact they are not. Prime Bottomland is still willing to sell the land, but under these circumstances the deal would adversely affect Organic Farms.

Refer to Fact Pattern 15-B2. The parties’ belief about the adjacency of the property is

A unconscionable.

B a unilateral mistake.

C a bilateral mistake.

D a fraudulent misrepresentation.

Question #20

Fact Pattern 15-B1
Digital Storage, Inc., offers to sell provide cloud-computing services to Entrepreneur Enterprises, Inc., but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Entrepreneur Enterprises accepts the written offer.

Refer to Fact Pattern 15-B1. Digital Storage’s best defense against enforcement of the contract is that Entrepreneur Enterprises knew

A a mistake of value supports the cancellation of a contract.

B a bilateral mistake supports the cancellation of a contract.

C a unilateral mistake supports the cancellation of a contract.

D the price was below the prices of comparable devices.

Question #21

Refer to Fact Pattern 15-B1. Entrepreneur Enterprises’ best argument in favor of enforcement of the contract is that

A a mistake of value does not afford relief from a contract.

B a bilateral mistake does not afford relief from a contract.

C a unilateral mistake does not afford relief from a contract.

D the price was below the prices of comparable devices.

Question #22

Camille, a tennis pro, convinces Dante, who has no athletic ability, that he has considerable skill and induces him to pay Camille $1,000 for tennis lessons. When Dante realizes the truth, he files a suit against Camille. Dante is most likely to recover on the basis of

A opinion.

B unconscionability.

C none of the choices.

D fraud.

Question #23

Byron agrees to sell to Charity, for $1,500, a remote parcel of land. They be¬lieve the land to be worthless, but beneath it is a gold mine. Byron can

A rescind the contract on the basis of undue influence.

B rescind the contract on the basis of fraud.

C rescind the contract on the basis of mistake.

D not rescind the contract.

Question #24

At an auction for the first time, Dulcinea bids on a one-hundred-year-old Edison-brand phonograph, believing that it is worth more than the price asked. When the item proves to be less valuable, Dulcinea is

A not liable on the bid because this was Dulcinea’s first auction.

B liable on the bid.

C not liable on the bid because Dulcinea overestimated the value of the auctioned item.

D not liable on the bid because the auctioneer overstated the value of the auctioned item.

Question #25

ApartmentsRUs, a property management firm, presents a standard-form lease for an apartment to Barnaby, a potential tenant. ApartmentsRUs does not pressure Barnaby to sign the lease, but offers it on a take-it-or-leave-it basis. Barnaby signs the lease, but later wants to withdraw from the contract. He is most likely to avoid enforcement of the lease on the ground of

A unconscionability.

B undue influence.

C economic duress.

D mistake.

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Chapter 15 Study Guide Quiz

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