Ch. 11: Conduct Invalidating Consent

Question 1

Duress

Answer 1

Any wrongful or unlawful act or threat that overcomes the free will of a party.

Question 2

Void

Answer 2

No legal force or binding effect; unable, in law, to support the purpose for which it was intended.

Question 3

Voidable

Answer 3

Capable of being voided

Question 4

Concealment

Answer 4

An action intended or known to be likely to keep another from learning of a fact of which he otherwise would have learned.

Question 5

Silence/Nondisclosure

Answer 5

Silence or nondisclosure alone does not amount to fraud

Question 6

Fiduciary

Answer 6

A person in a confidential relationship who owes a duty of trust, loyalty, and confidence to another

Question 7

Fact

Answer 7

An event that actually took place or a thing that actually exists.

Question 8

Opinion

Answer 8

Belief in the existence of a fact or a judgment as to value.

Question 9

Prediction

Answer 9

Predictions, which are similar to opinions in that no one can know with certainty what will happen in the future, normally are not regarded as factual statements.

Question 10

Material

Answer 10

Matters to which a reasonable investor would attach importance in deciding whether to purchase a security.

Question 11

Scienter

Answer 11

Refers to a person’s knowledge or intent to commit a wrongdoing.

Question 12

Negligent misrepresentation

Answer 12

A false representation that is made without knowledge of its falsity and without due care in ascertaining its truthfulness

Question 13

Innocent misrepresentation

Answer 13

A false representation made without knowledge of its falsity but with due care.

Question 14

Mistake

Answer 14

A belief that is not in accord with the facts

Question 15

Mutual mistake

Answer 15

Occurs when both parties are mistaken as to the same set of facts

Question 16

Physical Compulsion

Answer 16

Coercion involving physical force renders the agreement void

Question 17

Improper Threats

Answer 17

Improper threats or acts, including economic and social coercion, render the contract voidable

Question 18

Undue Influence

Answer 18

Taking unfair advantage of a person by reason of a dominant position based on a confidential relationship

Question 19

Fraud in the Execution

Answer 19

A misrepresentation that deceives the other party as to the nature of a document, evidencing that the contract renders the agreement void