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Interactive Quiz for Modern-1e, Chapter 11
Chapter 11 – Defenses to Contract Enforceability
1. If you do not genuinely assent to a contract’s terms, you may:
a. legally assault the other party.
b. rescind, or cancel, the contract.
c. impose your own adhesion contract.
d. avoid the contract based on the Statute of Frauds.
Answers:
a. Incorrect. A lack of genuineness of assent does not give you the legal right to assault the other party.
b. Correct. You may rescind, or cancel, a contract to which you have not genuinely assented.
c. Incorrect. You may not impose a contract that reflects unequal bargaining power because you did not genuinely assent to the terms of the present contract.
d. Incorrect. A lack of genuineness of assent is not an issue covered by the Statute of Frauds.
2. Suppose that you purchase a purebred Scottish Terrier puppy. You pay $800 for the dog because you think it comes from champion lines. The dog’s owner did not discuss the dog’s ancestors with you. If you discover, later, that the dog was not worth $800, but only $400, can you have the contract rescinded, or canceled, based on your mistake?
a. Yes, the dog was clearly not worth $800.
b. Yes, because you had a duty to investigate.
c. Probably not, because you made a mistake about the dog’s value, not a mistake of a material fact.
d. Probably so, because you made a mistake of an immaterial fact.
Answers:
a. Incorrect. Because the dog’s owner did not mislead you, you probably made a mistake of judgment and you may not cancel the contract based on such a mistake.
b. Incorrect. You may have owed yourself a duty to investigate, but this duty does not change the fact that you cannot cancel the contract based on a mistake of value.
c. Correct. You did not adequately check into the dog’s pedigree, and this is your fault. Based on your error, you made a mistake of value.
d. Incorrect. Your mistake is not the sort that a court will take into consideration when it allows a contract to be rescinded based on a mistake.
3. Which of the following IS NOT an element of fraud?
a. There must be an intent to deceive.
b. The innocent party must have justifiably relied on the misrepresentation.
c. The misrepresentation must concern a material fact.
d. The innocent party must be under twenty-one years of age.
Answers:
a. Incorrect. An intent to deceive is a required element of fraud.
b. Incorrect. The innocent, or defrauded, party must have been justified in relying on the misrepresentation.
c. Incorrect. The misrepresentation must concern an important, or material fact, rather than some minor fact.
d. Correct. There is no requirement that the innocent party be under twenty-one years of age.
4. A misrepresentation of a material fact can occur:
a. by action alone.
b. by words alone.
c. by words or actions.
d. by fax alone.
Answers:
a. Incorrect. You may misrepresent a material fact by your actions, but this is not the only way to misrepresent such facts.
b. Incorrect. You may also misrepresent material facts by your actions.
c. Correct. You can misrepresent a material fact by both words and actions.
d. Incorrect. Misrepresentation may happen by actions other than faxing something to someone.
5. When a court alters contract terms to reflect the true intentions of parties to the contract, this is known as:
a. a rescission.
b. a reformation.
c. a cancellation.
d. a nullification.
Answers:
a. Incorrect. When a court rescinds a contract, it cancels it.
b. Correct. A reformation is a judge-directed change in contract terms.
c. Incorrect. A cancellation would be a termination of a contract.
d. Incorrect. A nullification would also be a termination of a contract.
6. Josephine buys a very rare tropical bird from Frank’s Rare Birds of the Earth store. Josephine asks Frank where the bird is from, and Frank tells her that it is from “the rainforests of Brazil. It is extremely rare, almost no one has one.” When Josephine asks Frank if the bird is on the endangered species list, Frank tells her that it is not on the list (even though he has recently learned that it is on that list). Josephine later discovers, when officials from an environmental agency arrive at her door and take her bird away, that she has illegally purchased a bird that is on the endangered species list. To recover damages (the purchase price of the bird, plus any penalties levied by the environmental agency) from Frank, Josephine would:
a. sue Frank for mistake.
b. sue Frank for defamation.
c. sue the environmental agency for regulatory overload.
d. sue Frank for fraudulent misrepresentation.
Answers:
a. Incorrect. She may not sue for mistake.
b. Incorrect. She may not sue for defamation.
c. Incorrect. Josephine may not sue the agency for regulatory overload.
d. Correct. Josephine would sue Frank for fraudulent misrepresentation in this situation.
7. If a party to a contract has an intent to deceive the other party, this is known as:
a. scienter.
b. revision.
c. rescission.
d. optimization.
Answers:
a. Correct. Scienter is the Latin term for “guilty knowledge.”
b. Incorrect. Revision occurs when something, such as a contract, is changed or modified.
c. Incorrect. Rescission is the cancellation of a contract.
d. Incorrect. Optimization is not a contract law term.
8. The Statute of Frauds refers to:
a. all tort actions for fraud.
b. those tort actions that involve fraud in the press.
c. contract actions for fraud.
d. those contracts that must be in writing to be enforceable.
Answers:
a. Incorrect. The Statute of Frauds is not concerned with tort actions.
b. Incorrect. The Statute of Frauds is concerned with contracts, not torts.
c. Incorrect. Despite its name, the Statute of Frauds is not about contract actions for fraud.
d. Correct. The Statute of Frauds tells you which contracts must be in writing in order to be enforceable.
9. One afternoon, over a couple of cold beers, Charles tells Mark that he may have a right-of-way to cross his land so that Mark can get to a fishing pond. Two weeks later, while he is walking across Charles’s land, Mark hears Charles yelling “Get off my property, you trespasser!” If Mark sues Charles to enforce his right-of-way, a court will:
a. not enforce the right-of-way because this contract was oral.
b. not enforce this contract because it was unconscionable.
c. enforce the right-of-way based on the Statute of Frauds.
d. enforce the right-of-way based on duress.
Answers:
a. Correct. This contract was for an interest in land and, as such, had to be in writing to be enforceable under the Statute of Frauds.
b. Incorrect. The contract was not unconscionable; it was just not in writing when it was required to be under the Statute of Frauds.
c. Incorrect. The Statute of Frauds requires such contracts to be in writing, not to be oral.
d. Incorrect. There was, so far was we can tell, no duress in this case.
10. Suppose that Marie guarantees to pay Frank any debts Joe incurs with Frank. Marie makes this guarantee because she knows that if she doesn’t do it, Joe will run up debt with Frank and be forced to declare bankruptcy. If Joe does that, he will be less able to pay Marie back what he owes her. Which legal principle tells you if this contract needs to be in writing?
a. The nuptial rule.
b. The main purpose rule.
c. The postpartum rule.
d. The evidentiary rule.
Answers:
a. Incorrect. There is no nuptial rule.
b. Correct. The main purpose rule states that when an oral promise is made to pay the debt of another person, it need not be in writing if the main purpose of the promise is to secure a personal benefit for the one making the promise.
c. Incorrect. There is no postpartum rule in contract law.
d. Incorrect. There is no evidentiary rule in such cases.