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Exam 11: Conduct Invalidating Assent

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Question 41

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For a misrepresentation to be fraudulent, it need not be material.

A) True
B) False

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Question 42

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Which of the following results in a void, rather than voidable, agreement?

A) Duress by improper threat.
B) Fraud in the execution.
C) Fraud in the inducement.
D) Undue influence.

E) A) and B)
F) A) and C)

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Question 43

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To sustain a case of fraud in the inducement, the injured party must prove that he actually relied upon the false representation.

Identify two situations in which silence or nondisclosure constitutes a misrepresentation.

Which of the following is correct with regard to duress?

A voluntary choice from among perfectly legitimate alternatives may in some instances constitute economic duress.

Acts constituting duress are necessarily crimes or torts in themselves.

A misrepresentation is material if:

Economic duress, such as that found in the case of Berardi v.Meadowbrook Mall Company, renders a contract void.

Physical compulsion and improper threats are the two basic types of duress.

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation.Bob wasn't sure as to the nature of the stone, but told Albert he thought it was a topaz.Bob then offered to buy the stone for $25 and Albert agreed.Later Albert found out the stone was an uncut diamond worth about $700.This:

For a misrepresentation to be material, it must be likely to induce a reasonable person to manifest assent or the maker must know that it would be likely to induce the recipient to do so.

At the marriage of her daughter, Lorna is given papers to sign, which the catering company says are the invoices for the food, service, and decorations.Underneath the invoices are a carbon and a contract of sale for a portion of the failing catering business.Lorna signs the papers; her signature is transferred to the sales contract.This is a void contract because it was entered by fraud in the execution.

Matt sells bikes at a local discount store.To encourage Bob to buy a more expensive model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price.You can expect lots of riding pleasure." Based on this statement Bob buys the bike.A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store.Bob can avoid his contract with Matt because of fraudulent misrepresentation.

Bill, a builder, wants to submit a bid on a city sewer project.He computes the cost, but mistakenly omits the cost of one item.Accordingly, he submits a bid of $430,000 to the city.The next highest bid is $675,000, and the rest of the bids are even higher.The city is happy to have such a low bid, so it accepts Bill's bid and awards him the contract for the job, even though the city engineer is of the opinion the job cannot be done for less than $650,000.In this case:

An arm's length transaction is one in which:

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County.Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed.