Chapter 8

Question 1

Assignment

Answer 1

The transfer or rights under contract to another party

Question 2

Collateral contract

Answer 2

A separate contractual obligation that can stand alone, independent of the written contract

Question 3

Common mistake

Answer 3

The same mistake made by all of the parties to the contract

Question 4

Constructive trust

Answer 4

A trust inferred by the courts to benefit a third party to a contract

Question 5

Duress

Answer 5

Force or pressure exerted upon a person to coerce that person to enter into a contract

Question 6

Economic duress

Answer 6

Improper force or pressure that creates fear of economic hardship and which is exerted upon a person to coerce that person to enter into a contract

Question 7

Fraudulent misrepresentation

Answer 7

Misleading words made knowingly without belief in their truth or recklessly cursing injury

Question 8

Innocent misrepresentation

Answer 8

A false statement made honestly and without carelessness by a person who believed it to be true

Question 9

Involuntary assignment

Answer 9

Assignment of rights that takes place involuntarily, as in the cases of death and bankruptcy

Question 10

Material misrepresentation

Answer 10

A misrepresentation that induces someone to enter into a contract

Question 11

Misrepresentation

Answer 11

A false statement of fact; an incorrect or untrue representation

Question 12

Mistake

Answer 12

An error about some aspect of a contract that destroys consensus

Question 13

Mutual mistake

Answer 13

When both parties to a contract are mistaken about an issue, but in a different way

Question 14

Negligent misstatement

Answer 14

An incorrect or false statement of fact made without the required care that misleads the recipient thus causing injury

Question 15

Negligent misrepresentation

Answer 15

An incorrect or false statement of fact made without the required care that misleads the recipient thus causing injury

Question 16

Negotiable instruments

Answer 16

Substitutes for money that bestow unique benefits; vehicles for conveniently transferring funds or advancing credit

Question 17

Non disclosure

Answer 17

A failure to reveal facts; if a duty to disclose exists, silence may constitute misrepresentation

Question 18

Non est factum

Answer 18

“It’s not my act” a defence raised by a party to a contract asking the court to declare a contract void because the party was unaware of the nature of the contract

Question 19

Non est factum

Answer 19

“It’s not my act” a defence raised by a party to a contract asking the court to declare a contract void because the party was unaware of the nature of the contract

Question 20

Novation

Answer 20

The creation of a new contract through the sub of a third party for one of the original parties to a contract by the consent of all parol evidence rule a principle that courts will not permit outside evidence to contradict clear wording of a contract

Question 21

Parol evidence rule

Answer 21

A principle that courts will not permit outside evidence to contradict clear wording of a contract

Question 22

Privity of contract

Answer 22

A principle that contract terms apply only to the actual parties to the contract

Question 23

Rectification

Answer 23

An equitable remedy by which a court can correct a mistake by ordering a change to a document to ensure it correctly expresses the common intention of the parties

Question 24

Rescission

Answer 24

Amounts to the undoing of a contract, returning parties to the position they were in before the contract

Question 25

Unconscionability

Answer 25

An equitable doctrine that allows courts to set aside a contract in which a party in a superior bargaining position took advantage of the other party, resulting in an unfair contract

Question 26

Undue influence

Answer 26

Pressure from a dominant, trusted person that makes it impossible for a party to negotiate freely

Question 27

Unilateral mistake

Answer 27

A mistake made by only one of the parties to a contract which the other party was aware of, or should have been aware of

Question 28

Vicarious performance

Answer 28

Performance by another designated person of the obligations under contract, rather than by the actual contracting party