updated 2/17/01

CHAPTER 16 GENUINESS OF ASSENT BUSINESS LAW I CONTRACT

1. Which of the following are cited as benefits of the doctrine of unconscionability?

a. greater certainty in contracts
b. greater flexibility in the law
c. both A and B
d. none of the above

2. What options are available to someone who has been fraudulently induced to sign a contract?

a. avoid contractual obligations
b. sue for damages
c. seek the return of any value given to the other party
d. all of the above

3. Mel is selling his watch to a classmate. The watch is worth $200. In which of the following statements by Mel does scienter exist?

a. "My watch is worth $500," when Mel knows it is worth $200
b. "My watch is worth $500," when Mel believes it is worth $500
c. "My watch is worth $500," when Mel has no idea what it is worth
d. both A and C

4. Manny is a slick used car dealer. Which of the following statements are fraudulent if made about a 1976 Pinto?

a. "It's a classic."
b. "It's a 1978 Pinto."
c. "It runs like a dream."
d. all of the above

5. Ben goes to buy a car from Manny's car lot. Manny knows that the Ford Pinto is one of the least safe cars of all time, and his models in stock have no modern safety features. When Ben asks about safety, Manny says, "Safest car ever! A tank couldn't be safer. It has dual airbags and anti-lock brakes." Ben agrees to buy the car. What is the status of this contract?

a. valid
b. void
c. voidable
d. unenforceable

6. Mulder finds a gold coin, and has no idea what it is worth. His friend Scully does not know its value either, but she offers to buy it for $50, and Mulder agrees. In which of the following situations can Mulder rescind their contract?

a. The coin's value is actually $1.
b. The coin's value is actually $100.
c. The coin's value is actually $50,000.
d. none of the above


7. Pete offers Craig $1,000 to deliver a shipment to "The Flying Dutchman," and Craig accepts. Pete meant the restaurant "Flying Dutchman," and Pete thought he meant the ship "Flying Dutchman." When Craig learns of Pete's meaning, he wants to get out of the contract as the restaurant is 100 miles beyond the boat. What will happen?

a. Craig will have to deliver to the restaurant for $1,000.
b. Craig will only have to drive as far as the ship.
c. Craig will have to deliver to the restaurant, but will receive $1,000 plus a reasonable amount.
d. Craig will not have to make the delivery at all.

8. Ted is trying to sell his house, but has problems because there is a hole in the floor of his kitchen. Buyer A comes by the house. She does not ask to see the kitchen, and so never sees the hole. Buyer B asks to see the kitchen. Ted quickly moves a rug over the hole in the floor when B is in the other room. He says nothing at all about the kitchen to B. To which buyer(s) has Ted made a fraudulent misrepresentation?

a. A
b. B
c. both A and B
d. none of the above

9. Michelle sells collectable antiques. Which of the following statements to a customer would be a misrepresentation by Michelle if coupled with the outcomes described?

a. "This doll is worth $300;" the doll is actually worth $100.
b. "This doll will double in value in one year"; the doll is worth the same amount in one year.
c. "This doll will double in value in one year"; the doll does not double in value for five years.
d. both A and B

10. Ann lives in a housing project in downtown Detroit. Her car breaks down, and she cannot get to work. The only mechanic in the area gives her a standardized form that adds $400 to her bill as a "service charge." She signs the agreement because she feels she has no choice. What has occurred?

a. fraud
b. undue influence
c. duress
d. an adhesion contract

11. Ted, a mechanic, is trying to sell his house, and Bertha expresses interest. She asks him, "Can I put a pool in the back yard? I really want a pool." Ted says, "Sure, build an Olympic-size pool!" Bertha agrees to buy the house. As it turns out, a local ordinance prohibits building pools on residential lots. Can Bertha rescind the contract?

a. yes, but only if Ted knew about the ordinance
b. yes, regardless of whether Ted knew about the ordinance
c. yes, but only if she cannot convince the city to give her an exemption from following the ordinance
d. no

12. Bill signs a contract to buy Al's 1977 Camaro for $5,000. Which of the following mistakes could lead to the contract being invalidated?

a. The car was actually worth $2,500.
b. The car was actually worth $7,500.
c. Bill believes he is buying Al's second car, a Mustang.
d. none of the above

13. Tom sells a car to Alex for $1,000. He says to Alex, "This is a truck." Which of the following has occurred?

a. a fraudulent misrepresentation
b. fraud
c. both A and B
d. none of the above

14. Al buys a car from Dan, and is assured that, "The brakes have just been fixed." Dan knows this is a lie. Later, the brakes fail and Al is in a wreck. His medical bills are $20,000. He files an action against Dan, and seeks the following: $20,000 for his bills, and $100,000 for "bein' lied to". What may the jury award him?

a. the $20,000 for medical bills
b. the $100,000 for "bein' lied to"
c. both A and B
d. none of the above

15. Tom buys a car from Fred. Fred fraudulently told him it had 50,000 miles on it, when in fact he had rolled the odometer back from 100,000 miles. Tom discovers this one day after making the agreement, and suffers no injury beyond annoyance at being cheated. What remedies is Tom likely to get in a fraud action?

a. rescission
b. damages
c. both A and B
d. none of the above

16. Mike graduates from law school and is hired by Jenkins and Johnson, a law firm in Dallas. Two months later, he is laid off because the firm does not have enough revenue to pay his salary. If Mike wants to bring a fraud claim, what is his best argument?

a. unilateral mistake
b. misrepresentation by silence
c. mutual mistake
d. misrepresentation by conduct

17. Tom sells his radio to Bill, who is blind. Tom says, "It is a Radio Shack radio," when in fact it is a generic brand. Which of the following has occurred?

a. a fraudulent misrepresentation
b. fraud
c. both A and B
d. none of the above

18. Which of the following relationships is most likely to give rise to a case of undue influence?

a. teacher-student
b. merchant-customer
c. husband-wife
d. officer-citizen

19. Mel is a mechanic. He sells his car to Dave, and says the air conditioner is in working order. He believes this is true, but has not checked the A/C since the end of last summer. What type of misrepresentation may have occurred here?

a. fraudulent
b. negligent
c. innocent
d. either B or C

20. Ted sells Wilma a car. He tells her it is a 1978 car, and believes that this is true. In fact, the car is a 1979 model. What remedies can Wilma seek?

a. rescission
b. compensatory damages
c. punitive damages
d. both A and B
    

21. Mel writes a letter to Sally offering to sell his aquarium for $180, and Sally calls and accepts the offer. Which fact(s) would be necessary to invalidate this contract?

a. Mel meant to type $810 in the offer, and mixed up the numbers.
b. Sally knew that Mel must have made a mistake in making such a low offer.
c. The market value of the aquarium is more than twice $180.
d. both A and B

22. An attorney convinces an elderly client to change his will and give a large gift to the attorney's wife. The man dies, and his heirs sue the attorney. If this case is brought to trial under a claim of undue influence, which statement is accurate concerning the burden of proof?

a. The heirs must show the attorney acted negligently.
b. The heirs must show the attorney did not use the utmost good in dealing with his client.
c. The attorney must prove he did not act negligently.
d. The attorney must prove he did act with the utmost good faith towards his client.

23. Tony puts a gun to Gerry's head and forces him to sign a contract. What has occurred?

a. fraud
b. undue influence
c. duress
d. an adhesion contract

24. Ron and Troy are in a wreck. The accident was Troy's fault as he was drunk when it occurred. Ron says, "Pay for my damages or I will sue you." What has occurred?

a. an adhesion contract
b. undue influence
c. duress
d. none of the above

25. Mulder finds a coin, and believes it is a rare gold piece worth $1,000. His friend Scully agrees, and she offers to buy it for $1,000. Mulder agrees. In which of the following situations can Scully rescind their contract?

a. The coin's value is actually $100.
b. The coin's value is actually $1.
c. both A and B
d. none of the above