Chapter 15

Question 1

Voluntary Consent

Answer 1

knowing and voluntary agreement to the terms of a contract. If voluntary consent is lacking, the contract will be voidable

Question 2

Unilateral Mistakes of Fact

Answer 2

One party mistaken

Contract enforceable UNLESS
* Other party knew/should known that mistake was made for
* Mistake was due to substantial math error, made inadvertently and without gross negligence

Question 3

Bilateral (Mutual) Mistakes of Fact

Answer 3

 Both parties mistaken
* Contract can be rescinded by either party

Question 4

Mistakes of Value

Answer 4

If a mistake concerns the future market value or quality of the object of the contract, the mistake is one of value, and the contract normally is enforceable

Question 5

Occurrence of Misrepresentation

Answer 5

The first element of proving fraud is to show that misrepresentation of a material fact has occurred. This misrepresentation can occur by words or actions

Question 6

Examples of Mistakes

Answer 6

1. Mistake by Conduct
2. Statement of Opinion
3. Misrepresentation of Law
4. Misrepresentation by Silence

Question 7

Mistake by Conduct

Answer 7

occurs when a party takes specific action to conceal a fact that is material to the contract

Question 8

Statement of Opinion

Answer 8

representations of future facts (predictions) generally are not subject to claims of fraud. Statements such as “This land will be worth twice as much next year” and “This car will last for years and years” are statements of opinion, not fact. A fact is objective and verifiable, whereas an opinion is usually subject to debate. Contracting parties should know the difference and should not rely on statements of opinion

Question 9

Misrepresentation of Law

Answer 9

Misrepresentation of law ordinarily does not entitle a party to relief from a contract.

Question 10

Misrepresentation by Silence

Answer 10

neither party to a contract has a duty to come forward and disclose facts. Therefore, courts typically do not set aside contracts because a party did not volunteer pertinent information.

Question 11

Intent to Deceive

Answer 11

The second element of fraud is knowledge on the part of the misrepresenting party that facts have been falsely represented.

This element, normally called scienter, or “guilty knowledge,” signifies that there was an intent to deceive

Question 12

Innocent Misrepresentation

Answer 12

false statement of fact or an act made in good faith that deceives and causes harm or injury to another.

Question 13

Negligent Misrepresentation

Answer 13

occurs if the party does not exercise reasonable care in uncovering or disclosing facts, or use the skill and competence required by his or her business or profession

Question 14

Justifiable Reliance on Mispresentation

Answer 14

deceived party must have a justifiable reason for relying on the misrepresentation. Also, the misrepresentation must be an important factor (but not necessarily the sole factor) in inducing the deceived party to enter into the contract.

Question 15

Undue Influence

Answer 15

arises from relationships in which one party can greatly influence another party, thus overcoming that party’s free will. A contract entered into under excessive or undue influence lacks voluntary consent and is therefore voidable.

Question 16

One Party Dominates Other

Answer 16

Undue influence can arise from a number of fiduciary relationships, such as physician-patient, parent-child, husband-wife, or guardian-ward situations

Question 17

Duress

Answer 17

To establish, there must be proof of a threat to do something that the threatening party has no right to do.

Must be wrongful/ illegal. It also must render the person who is threatened incapable of exercising free will.

A threat to exercise a legal right, such as the right to sue someone, ordinarily does not constitute duress.

Question 18

Economic Duress

Answer 18

Economic need generally is not sufficient to constitute duress, even when one party exacts a very high price for an item that the other party needs. If the party exacting the price also creates the need, however, economic duress may be found.

Question 19

Adhesion Contracts

Answer 19

written exclusively by one party and presented to the other party on a take-it-or-leave-it basis. The contracts often use standard forms, which give the adhering party no opportunity to negotiate the contract terms.

Question 20

Standard Form Contract

Answer 20

often contain fine-print provisions that shift a risk ordinarily borne by one party to the other.

Life insurance policies, residential leases, loan agreements, and employment agency contracts are often standard-form contracts.

Question 21

Unconscionability under Section 2–302 of the Uniform Commercial Code (UCC)

Answer 21

applies only to contracts for the sale of goods. Many courts, however, have broadened the concept and applied it in other situations