BLAW 3201 Chapter : Chapter 11 Test Bank
Chapter 11—Conduct Invalidating Assent
TRUE/FALSE
1. Marjorie has been cared for by her family physician for 35 years. She decides to
assume the mortgage on his new clinic. The contract is automatically invalid because of undue
influence.
ANS: F PTS: 1
2. At the marriage of her daughter, Lorna is given papers to sign which the catering
company says are the invoices for the food, service, and decorations. Underneath the invoices are a
carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers; her
signature is transferred to the sales contract. This is a void contract because it was entered by fraud in
the execution.
ANS: T PTS: 1
3. Pat told her friends that her car got 35 miles to the gallon in the city when in reality it
only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat
is under no duty to tell the correct figure unless asked.
ANS: F PTS: 1
4. If an agreement is not voluntary and knowing, it will be either void or voidable.
ANS: T PTS: 1
5. Physical compulsion and improper threats are the two basic types of duress.
ANS: T PTS: 1
6. The difference between fraud and misrepresentation is that fraud involves malice
while nonfraudulent misrepresentation is always innocent.
ANS: F PTS: 1
7. Rescission is usually permitted where the parties to a contract are both mistaken about
a material fact.
ANS: T PTS: 1
8. Generally, whether or not the parties deal at arm’s length does not affect whether
silence alone amounts to fraud.
ANS: F PTS: 1
9. Economic duress renders a contract voidable.
ANS: T PTS: 1
10. Undue influence is the taking of unfair advantage of a person by reason of a dominant
position based upon a confidential relationship.
ANS: T PTS: 1
11. Fraud in the inducement will render an agreement void.
ANS: F PTS: 1
12. For a misrepresentation to be actionable as fraud in the inducement, it must be a
misrepresentation of opinion.
ANS: F PTS: 1
13. Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive
model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy
at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A
week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another
store. Bob can avoid his contract with Matt because of fraudulent misrepresentation.
ANS: F PTS: 1
14. If a seller occupies a fiduciary relationship with the buyer and fails to make full
disclosure to the buyer, then the latter will be able to avoid the transaction.
ANS: T PTS: 1
15. A unilateral mistake of fact is ordinarily grounds for avoiding a contract.
ANS: F PTS: 1
16. To sustain a case of fraudulent misrepresentation, the injured party must prove that he
actually relied upon the false representation.
ANS: T PTS: 1
17. A famous decision involving mistake as to the meaning of contract terms is Raffles v.
Wichelhaus, a case involving two ships with the same name which were confused by the two parties to
the contract.
ANS: T PTS: 1
18. Mistake by failure to read a document is grounds to void a contract.
ANS: F PTS: 1
19. A party to a contract may be entitled to relief even if he is contributorily negligent in
relying on a fraudulent misrepresentation.
ANS: T PTS: 1
20. Historically, courts held that representations of law were statements of fact, but the
present trend is to recognize that they have only the effect of statements of opinion.
ANS: F PTS: 1
21. Scienter is the element of fraud that requires that the person who makes the misrepre-
sentation knows that it is false or has reckless indifference as to its truthfulness.
ANS: T PTS: 1
22. The trustee of a trust does not owe a fiduciary duty to the beneficiary of that trust.
ANS: F PTS: 1
23. Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under
the farm and offers Al $160,000 for it. Al accepts and sells the farm to Betty. Al later realizes that the
land was worth more than $160,000. Al can have the contract avoided based upon fraud.
ANS: F PTS: 1
24. Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under
the farm and offers Al $160,000 for it. Al is suspicious and asks her why she wants to buy the place.
She says she would like to live in the country. Al then asks her if she thinks there might be valuable
minerals under the land. Betty laughs and says she doubts that very much, so Al sells her the farm for
$160,000. Al later realizes that the land was worth more than he was paid. Betty's statement to Al was
a misrepresentation requisite for fraud.
ANS: T PTS: 1
25. The most uncommon type of duress involves the use of economic and social coercion.
ANS: F PTS: 1
26. To obtain relief for negligent or innocent misrepresentation all the remaining elements
of fraud must be present and the misrepresentation must be material.
ANS: T PTS: 1
27. For a misrepresentation to be fraud in the inducement, it need not be material.
ANS: F PTS: 1
28. An arm's-length transaction is one in which the parties owe each other special duties.
ANS: F PTS: 1
29. The test for duress is objective and the act must be classified as a tort or a crime in
order to be wrongful.
ANS: F PTS: 1
30. An act that is contrary to public policy or is morally reprehensible may constitute
duress.
ANS: T PTS: 1
31. If the act or threat would affect a person of average strength and intelligence, then and
only then will the act constitute duress.
ANS: F PTS: 1
32. If a confidential relationship exists between parties to a contract, the law presumes that
undue influence exists if it appears that the dominant party has gained at the other party’s expense, but
the presumption can be rebutted by evidence that it was not exercised.
Document Summary
Marjorie has been cared for by her family physician for 35 years. She decides to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence. At the marriage of her daughter, lorna is given papers to sign which the catering company says are the invoices for the food, service, and decorations. Underneath the invoices are a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers; her signature is transferred to the sales contract. This is a void contract because it was entered by fraud in the execution. Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When pat decides to sell and one these friends decides to buy the car, pat is under no duty to tell the correct figure unless asked.
