Chapter 15: Mistakes, Fraud and Voluntary Consent

Question 1

T or F: A mistake of fact might allow a contract to be cancelled.

Answer 1

True

Question 1

A mistake that occurs when one party to a contract is mistaken as to a material fact.

Answer 1

unilateral mistake

Question 2

Unilateral Mistakes cannot be cancelled unless:

Answer 2

• the other party to the contract knows/should have known that a mistake of fact was made
• if mistake was due to an inadvertent mathematical and without gross negligence

Question 3

A mistake that occurs when both parties to a contract are mistaken about the same material fact.

Answer 3

bilateral mistake

Question 4

T or F: In a bilateral mistake, mistakes can be rescinded by either party.

Answer 4

True

Question 5

T or F: In mistakes of value, generally the contract is enforceable by either party.

Answer 5

True

Question 6

An act for the prevention of frauds and preinjuries

Answer 6

statute of frauds

Question 7

T or F: There are seven types of contracts that have to be in writing to be enforceable.

Answer 7

False, there is 6

Question 8

The purpose of the statue of frauds is to:

Answer 8

prevent harm to innocent parties by requiring written evidence of agreements

Question 9

T or F: A fact that is important and central to the subject matter of a contract is a material fact.

Answer 9

True

Question 10

T or F: Generally, a unilateral mistake does not give the mistaken party any right to relief from the contract.

Answer 10

True

Question 11

T or F: Each party to a contract assumes the risk that the value of the object of the deal will change in the future.

Answer 11

True

Question 12

T or F: In general, a person should not rely on a non-lawyer’s statement about a point of law.

Answer 12

True

Question 13

T or F: Reliance on a misrepresentation is justified even if the innocent party knows the true facts.

Answer 13

False

Question 14

T or F: Undue influence can arise from a confidential relationship or a relationship based on trust.

Answer 14

True

Question 15

T or F: Forcing a party to enter into a contract under the fear of threats constitutes undue influence.

Answer 15

False

Question 16

A contract that includes a bilateral mistake may be rescinded if the mistake involves
a. a material fact.
b. any fact.
c. an opinion.
d. none of the choices.

Answer 16

a. a material fact

Question 17

Alvin induces Beth to enter into a contract for the purchase of a Chef’s Burger restaurant. Alvin knowingly misrepresents a number of material features about the restaurant and the business. When Beth discovers the truth, she can rescind the contract on the basis of
a. mistake.
b. fraudulent misrepresentation.
c. none of the choices.
d. undue influence.

Answer 17

b. fraudulent misrepresentation