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Exam 17: Legal Assent

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Question 21

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Is the impact of negligent misrepresentation the same as that for fraudulent misrepresentation?

A) Yes, they are identical. The contract is void as a matter of law.
B) Yes, they are identical. The contract can be rescinded.
C) Yes, they are identical. The contract can be rescinded, but the misled party cannot sue for damages.
D) No, in negligent misrepresentation, the contract is void. In a case of fraudulent misrepresentation, the contract can be rescinded.
E) No, in fraudulent misrepresentation, the contract is void. In a case of negligent misrepresentation, the contract can be rescinded.

F) A) and D)
G) None of the above

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Question 22

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[Scheming 'Friends'] Richard wants to rent a basement apartment in Eric's home. Richard threatens to tell Eric's parents that Eric had been arrested for illegally smoking marijuana unless Eric rents the apartment to him for $100 per month. (The information regarding the arrest is true.) Eric reluctantly agrees to rent the apartment to Richard for $100 per month. Richard also wants to buy Eric's car. Eric runs back the odometer on the car before Richard looks at it. Richard is impressed by the low mileage and agrees to buy the car. Eric offers to sell Richard a ring for Richard's fiancée. Eric tells Richard that the ring is a diamond and believes that to be true. After the deal is made, however, a jeweler friend of Eric informs him that the ring is a fake. When Richard shows up with the money, Eric says nothing. He just hands Richard the ring and takes the money. Later, Richard finds out that the odometer was run backwards from another friend in whom Eric confided. Richard also finds out from his girlfriend that the ring is a fake. -Which of the following is Richard guilty of in threatening to tell Eric's parents about the arrest unless Eric rents the apartment?

A) Duress
B) Unconscionability
C) Fraud
D) Undue influence
E) Consumer misbehavior

F) C) and D)
G) B) and D)

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Question 23

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What is the purpose of the concept of legal assent?

Monica and Omar talk about the fact that a new teacher is being hired for business law at their school. Omar mentions that he does not yet have a book, and Monica agrees to sell Omar a used business law book for $30 for the upcoming semester. When the new semester begins, the new business law teacher announces that a new custom business law text will be used that is only available in the campus bookstore. Omar wants a refund. Which of the following is Monica's best defense?

Set forth the factors referenced in the text that enter into a finding of whether undue influence exists.

If the parties have entered into a voidable contract, the contract may be ________.

In the case of Fantastic Sams Salons Corp. v. PSTEVO, LLC and Jeremy Baker, the court dismissed the defendant's fraudulent misrepresentation counterclaim because the defendant affirmed, in response to the plaintiff's ________, that certain representations were not made.

If both parties are mistaken about a material fact, the mutual mistake does not void the contract.

Regarding European courts, which statement is true?

The statement of fact need not be an actual assertion for fraudulent misrepresentation to be the basis for a contract rescission.

Courts find negligent misrepresentation only when the party making the false statement ________.

Intent to deceive may not be inferred when a fraudulent misrepresentation is at issue.

[Sale of KyRo's Toys] Ky and Roland owned KyRo's Toy Distributors together for many years. After years of arguing about sharing an office, they decided they no longer wanted to work together, even though each wanted to remain in the toy distribution business. They asked their accountant, Delia, to separate the accounts equitably, and she prepared a spreadsheet showing the value of KyRo's accounts, and an equitable division of those accounts. Ky and Roland reviewed the division of accounts and signed a separation agreement that included a phrase that the accounts would be divided 50-50 as per Delia's spreadsheet attached to the agreement. Both Ky and Roland signed a disclaimer that stated that they had reviewed the attachment. Six months later, when commissions arrived for the two separate companies, Ky noticed that he was making substantially less than one-half of what he made with KyRo, and upon investigation, realized that some of the financial information on which Delia had relied in preparing the spreadsheet had been outdated, and the accounts, were in fact, not divided equally. Ky now wants to rescind the separation agreement, claiming that all three elements of mutual mistake are present, and that the mistake about the division of accounts had a material effect on the agreement because it was not what was intended. -Is Ky correct in claiming that the mistake in the division of the accounts is material?

Abraham told Linda that if she did not sign over her stock options to him he would inflict bodily harm on her and her family. Linda quickly signs over all of her stock options. This is known as ________.

Without legal assent a contract may be found to be ________ by the courts.

Why is it important to distinguish between unilateral and mutual mistakes?

As described in the text, which statement is true regarding consumers and Japanese law?

[Pet Pig Farm] Jen was interested in buying Monique's land in order to breed small pet pigs. Jen told Monique that having water on the property was very important although she did not mention to Monique her plan to breed small pigs. Monique assured her that a spring ran through one corner of the property. Therefore, Jen agreed to buy the farm. Jen, who loved pigs, assumed that the neighbors would be pleased with the pigs being in the area. Monique also agreed to sell Jen a used truck for $5,000. After the contract for the land sale was entered into, Jen had a land survey done, and it was discovered that the spring did not actually run through the corner of Monique's property. The area in which the spring ran belonged to a neighbor. Additionally, when Monique brought Jen the used truck, Jen said, "That's not the truck!" It was discovered that Monique, who had two trucks, thought that Jen had bought the older truck although Jen thought she had purchased the newer truck. Jen was also surprised when she received a petition signed by all surrounding landowners objecting to the presence of the pigs and threatening to sue Jen for nuisance. It will cost Jen more than she had agreed to pay Monique in order for Jen to obtain a similar farm that has a spring within its legal boundaries. -Assuming that Monique made an innocent misrepresentation regarding the spring running through the corner of the farm with no reason to believe that this item was incorrect, which of the following is true, considering only the lack of a spring issue, if Jen does not want to go through with the sale?

The active hiding of the truth about a material fact is called nondisclosure.

Which of the following was the result in the case in the text, Fantastic Sams Salons Corp. v. PSTEVO, LLC and Jeremy Baker, in which the court considered PSTEVO's counterclaim for fraudulent misrepresentation with regard to a franchise agreement?