Business Law: Contracts Part II

Question 1

What is fraud in the inducement?

Answer 1

Fraud in the inducement means that the victim was deceived as to the reason for entering into the fraudulent transaction. The misrepresentation does not have to have been made in writing.

Question 2

What is the Statute of Frauds concerned with?

Answer 2

The Statute of Frauds is concerned about who has signed a contract

Question 3

What is the parol evidence rule?

Answer 3

Oral statements offered to prove the meaning of a written contract. The parol evidence rule prohibits introduction of prior written statements to vary the terms of a fully integrated contract, but it does not bar the introduction of subsequent oral or written agreements.

Question 4

What act will discharge the original duty?

Answer 4

Accord ( an agreement to substitute one contract for another) and satisfaction (execution of the accord)

Question 5

What is novation?

Answer 5

A novation is an agreement to substitute a third party for one of the parties to a contract and to release the party who was substituted out

Question 6

What is undue influence?

Answer 6

Undue influence is when a person in a position trust or confidence takes unfair advantage of the relationship such that the other party’s free will to contract is overcome

Question 7

What is a rescission?

Answer 7

A rescission “undoes” a contract and restores the parties to the positions they would have been in if no contract were made

Question 8

How long is the statute of limitations?

Answer 8

The limitation period on most contracts claims generally varies from four to six years

Question 9

What is a liquidated damage clause?

Answer 9

A liquidated damage clause is enforceable if the amount is: (i) reasonable in relation to the actual harm done, and (ii) not a penalty.