Mann_BLRB 9_TB_Ch11

Business Law and the Regulation of Business

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Chapter 11—Conduct Invalidating Assent TRUE/FALSE 1. Marjorie has been cared for by her family physician for 35 years. She decides to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence. ANS: F MSC: AACSB Analytic 2. 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. ANS: T MSC: AACSB Analytic 3. Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked. ANS: F MSC: AACSB Analytic 4. Physical compulsion and improper threats are the two basic types of duress. ANS: T MSC: AACSB Analytic 5. Economic coercion that compels a person to enter into a contract renders that contract void. ANS: F MSC: AACSB Analytic 6. The law requires that to form a valid contract the agreement must be voluntary and knowing. ANS: T MSC: AACSB Analytic 7. Acts constituting duress are necessarily crimes or torts in themselves. ANS: F MSC: AACSB Analytic 8. Harry was told that he had to pay $50 for filing his claim in small claims court. He did. If the fee is really $40, he cannot recover the $10 because it is a unilateral mistake of fact. ANS: F MSC: AACSB Analytic 9. Economic duress, such as that found in the case of Berardi v. Meadowbrook Mall Company, renders a contract voidable. ANS: T MSC: AACSB Analytic 10. Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship. ANS: T MSC: AACSB Analytic
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11. Fraud in the inducement will render an agreement void. ANS: F MSC: AACSB Analytic 12. For a misrepresentation to be actionable as fraud in the inducement, it must be a misrepresentation of opinion. ANS: F MSC: AACSB Analytic 13. 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, be- fore 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. ANS: F MSC: AACSB Analytic 14. Ty threatened to have Lisa’s father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward Lisa’s father rather than Lisa herself. ANS: F
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Mann_BLRB 9_TB_Ch11 - Chapter 11-Conduct Invalidating...

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