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Exam 13: Voluntary Consent

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Question 21

Multiple Choice

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Fact Pattern 13 - 2 Owen, an employee of Plumbing & Pipes LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Construction Inc. is seeking bids. Consequently, Plumbing & Pipes' bid is significantly low. Refer to Fact Pattern 13-2. Any contract with Quality Construction that includes the mistake may be rescinded

A) if Quality Construction knew or should have known of the mistake.
B) if Owen's supervisor did not know of the mistake.
C) if Plumbing & Pipes knew or should have known of the mistake.
D) under no circumstances .

E) B) and D)
F) B) and C)

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Question 22

Multiple Choice

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Don enters into a contract with Eve, who claims to have access to a stock-trading algorithm that will multiply an investment many times over. When the results do not match this claim, Don learns that Eve does not have access to the algorithm and files a suit, alleging fraud. Proof of an injury is required to

A) recover damages.
B) rescind the contract.
C) undo Eve's influence.
D) punish the defendant.

E) B) and C)
F) A) and D)

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Question 23

True/False

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When both parties to a contract are mistaken about the same material fact, the contract can be rescinded by either party.

Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraudulent misrepresentation if

Berry enters into a contract with Clyde for a guided tour of Deep Canyon. Clyde represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Berry is most likely a victim of

If a mistake concerns the quality of the object of the contract, the mistake is one of fact, and the contract normally is enforceable.

In a bike shop, Jessie, who is not knowledgeable about bikes, overhears Kevin say, "This bike could win any race!" Jessie buys the bike, but does not win any races with it. Kevin's statement is

Nero is an elderly man who lives with his nephew Mervyn. Nero is dependent on Mervyn for support. Mervyn advises Nero to "invest" in Mervyn's "professional gambling" venture, or Mervyn will no longer support him. Nero liquidates his other investments and signs a contract with Mervyn, to whom Nero gives the funds. Can Nero set aside this contract?

An otherwise valid contract is enforceable even if the parties have not genuinely agreed to its terms.

Dana believes that a new phone to be sold by Ear Fruit Inc. will become the most popular phone in the market. Dana enters into a contract to buy 500 shares of Ear Fruit stock, anticipating an increase in its value. The phone does not become popular, and the price of the stock does not rise. Dana can recover

A statement of opinion cannot be used in a claim of fraud.

A misrepresentation must be expressly made through the words or writings of another.

Lee applies to Marketing Corporation for a position as a software engineer. Lee has no training in computers or programming and no background as an engineer. After Lee is hired, Marketing learns the truth. The employer can rescind the contract on the basis of

Fact Pattern 13-4 In selling a warehouse, Riley tells Sam that he knows that the property has a certain capacity, making it suitable for a nightclub. Riley knows nothing about the capacity of the building, but it is not as he specifies. Sam buys the building. Refer to Fact Pattern 13-4. On learning the truth, Sam confronts Riley, who says he was not trying to fool Sam-he was only trying to make a sale. This is

In actions based on fraud, courts often award punitive damages.

All parties to a contract have a duty to come forward and disclose all relevant facts.

Fact Pattern 13 - 2 Owen, an employee of Plumbing & Pipes LLC, makes a substantial mathematical mistake in totaling the estimated costs for a project for which Quality Construction Inc. is seeking bids. Consequently, Plumbing & Pipes' bid is significantly low. Refer to Fact Pattern 13-2. The contract with Quality Construction that includes the mistake may be rescinded

Reliance on a misrepresentation is justified even if the innocent party knows the true facts.

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

Consent to the terms of a contract is voluntary even if one of the parties is forced into the agreement.