CHAPTER 8 TEST REVIEW

DIRECTIONS: Please answer all the following questions below, then later today, go online and check your answers with the answer sheet I will post on my website. All answers can be put on this sheet or on a separate sheet of paper if you choose. You do not have to write in complete sentences, but make sure your answers are correct.

  1. What is the difference between ratification and rescission? When must recession occur to be effective?
  2. If a contract contains a unilateral mistake, what does this mean? What happens to the contract? Why?
  3. If a contract contains a bilateral mistake, what does this mean? What other name is a bilateral mistake known as? What happens to the contract?
  4. What is the difference between duress and undue influence and what is similar? What must be proven in both?
  5. How are misrepresentation and fraud connected? Why is this so?
  6. What must be proven to win a case of misrepresentation? What damage is available to the winner?
  7. What must be proven to win a case of fraud? What damage(s) are available to the winner?
  8. What is the difference between a compensatory damage and a punitive damage? What is a compensatory damage also known as?
  9. Anything important in a contract is considered this?
  10. What does active concealment mean?
  11. What is the best way to ratify a contract? What is the most used way to ratify a contract?
  12. What 2 things do courts look at in a case of economic duress? Why are these 2 things important?
  13. Describe the difference between an induced unilateral mistake and a recognized unilateral mistake.

ANSWERS:

  1. Ratification is the intent to be bound by a contract (Agreeing to it) and rescission means to back out of a contract. All rescission must occur prior to ratification.
  2. A unilateral mistake is a one sided mistake where one party to a contract believes something that is not true. A belief means that they were NOT told this fact, they concluded it themselves. If a contract contains a unilateral mistake, ONLY the injured party has rights. Sometimes, they can rescind and if they make the mistake through their own fault, they may not be able to rescind.
  3. A bilateral mistake means both sides in a contract hold an incorrect belief and therefore are asking the court to void the agreement. Bilateral mistakes are also known as mutual mistakes. The contract is void.
  4. Undue influence is a form of duress where there is a relationship. The relationship does not need to be formal, but the person being forced must claim the person forcing them has power of them. They must also prove the reason they made the decision is because they had no other choice, similar to duress.
  5. Misrepresentation must be proven before you can prove fraud. In a case of Misrepresentation, there are 3 elements that need to be proven and a case of fraud is the 3 elements of misrepresentation, then add the elements of intent to deceive and intent to injure
  6. To win a case of misrepresentation, you must prove someone was told something that turned out to be untrue, the statement was material to the person it was made to and they used the false information to make their decision. The only damage available is rescission.
  7. To win a case of fraud, the 3 elements of misrepresentation must be proven, then add the elements of intent to deceive and the intent to injure. The injured party can win the right to rescind, compensatory damages (Meant to compensate them for their loss) and possibly punitive damages (Added to compensatory damages and meant to punish)
  8. Compensatory damages are meant to get a person back what they lost in the first place. They are also known as actual damages. Punitive damages are meant to punish the defendant and are usually only given if you sue a business.
  9. Material
  10. Active concealment means to hide something from a person. It’s dangerous because you’re not allowing a buyer to have all the necessary facts to make a proper decision.
  11. Best way- Signature. Most used- Pay at a cash register
  12. Court look at the threat made and the alternatives to the victim in economic duress cases. The threat must be believable and the alternatives must put the victim in a position where they basically have no choices
  13. An induced unilateral mistake is where one party tricks the other party into believing something that is not true without telling them. A recognized unilateral mistake is when one party knows the other party believes something that is not true and does not correct them.