Name: ________________________ Class: ___________________ Date: __________
ID: A
Law Ch 7 Review
True/False
Indicate whether the statement is true or false.
____
1. Parties that cancel their contract obligations by rescission cannot get back what they've already put into the
contract.
____
2. A contract that lacks the genuine assent of the parties to it is typically voidable.
____
3. Committing an act of violence to obtain a signature on a written contract is duress.
____
4. When one party to the contract is in a position of trust and wrongfully dominates the other party, undue
influence occurs.
____
5. You will not be bound to a contract you have not read, even if you sign it.
____
6. A mutual mistake about the law applicable to the contract will render the contract void.
____
7. Regardless of whether a misrepresentation is innocent or fraudulent, the resulting contract is voidable by the
party to whom the misrepresentation is made.
____
8. Active concealment of a material fact nonetheless leaves the resultant contract valid.
____
9. Being able to show fraud allows a victim to recover punitive damages in addition to being able to utilize
other remedies.
____ 10. To prove fraud, an alleged victim must show all the elements necessary to prove misrepresentation in
addition to showing intent and injury.
____ 11. A contract can only be ratified by an explicit statement made orally or in writing.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 12. Which of the following is not a legal rationale for showing the lack of genuine assent to a contract?
a. duress
b. undue influence
c. ratification
d. All of these are used to disprove genuine assent.
____ 13. Which of the following could not be used to show legal duress?
a. threats of illegal conduct against a party
b. threats to do business elsewhere
c. threats to sue on a matter unrelated to the contract at hand
d. All of these could be used.
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Name: ________________________
ID: A
____ 14. In economic duress cases, the courts look at
a. both the threat and the size of the threatened party.
b. both the threat and the place where the threat occurred.
c. both the threat and the alternatives available to the threatened party.
d. only the alternatives available to the threatened party.
____ 15. The two key elements in showing undue influence are
a. the relationship and the wrongful or unfair persuasion.
b. the relationship and the mental capacity of the person influenced.
c. the amount in question and the wrongful or unfair persuasion.
d. none of these.
____ 16. A mistake resulting from a failure to read a contract before signing it will render the contract
a. void.
c. valid.
b. voidable.
d. rescindable.
____ 17. A mutual mistake of fact as to the identity of the subject matter of the contract will render the contract
a. void.
c. valid.
b. voidable.
d. none of the above.
____ 18. Fraud renders the contract ____ by the victim.
a. void
c.
b. voidable
d.
valid
none of the above
____ 19. Disclosure is required in contractual negotiations when a statement
a. omits important information about a material fact.
b. is made false by subsequent events.
c. both a and b.
d. none of these.
____ 20. To prove misrepresentation the reliance placed on the untrue statement must be
a. absolute.
c. reasonable.
b. immediate.
d. none of these.
____ 21. If legal duress is proven the contract is rendered
a. void.
c.
b. voidable.
d.
valid.
none of the above.
____ 22. When both parties have an incorrect belief about material facts relating to a contract, what may result?
a. unilateral mistake
c. bilateral mistake
b. mutual mistake
d. both b and c
____ 23. Which of the following need not be shown to prove misrepresentation?
a. resultant injury
c. reliance on the statement by the victim
b. materiality of the statement
d. untruthful nature of the statement
____ 24. In the case of fraud, what remedies are available to the injured party?
a. rescission only
b. rescission and compensatory damages only
c. rescission, compensatory damages, and punitive damages
d. no remedies are available at civil law but must be sought under the criminal code
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Name: ________________________
ID: A
____ 25. Ima has a neighbor named Judy, who works for Kevin. Ima threatens Judy that she will tell Kevin that Judy
lied about her job experience on her resume unless Judy buys the $1,000 vacuum cleaners Ima sells. Ima's
threat is an example of
a. duress.
c. ratification.
b. undue influence.
d. unilateral mistake.
____ 26. Which of the following makes a contract voidable?
a. mutual mistake of fact
c. innocent misrepresentation
b. mutual mistake of law
d. ratification
____ 27. Which of the following would be a statement of fact that, if untrue, would base a misrepresentation lawsuit?
a. "Our chocolate is the finest in the world!"
b. "The tires were replaced after 30,000 miles."
c. "The engine is in top shape."
d. "These collectibles will increase in value at least 15 percent next year."
____ 28. Michelle was a victim of fraud. The $40,000 portion of her court award that Michelle received in order to
punish the party who committed fraud against her is known as
a. actual damages.
c. nominal damages.
b. compensatory damages.
d. none of the above.
____ 29. Because of her allergies, it is important for Isabel to have her carpet steam-cleaned regularly in her leased
apartment. Prior to signing an apartment lease, Isabel is shown a contract that verifies that the apartment
manager at one complex pays for carpet to be steam-cleaned twice a year. Based upon this information, Isabel
signs a two-year lease with that complex. What has occurred in this contract situation?
a. reasonable reliance
c. rescission
b. ratification
d. renunciation
____ 30. Zambo bought a corner lot in a residential area in hopes of putting in a drive-thru restaurant. She did not
mention her plans in the bargaining sessions for fear that the seller would raise the asking price. Afterwards,
she discovered that the legal zoning of the lot prohibits any retail establishment. Her mistake is best
described as a(n)
a. unilateral mistake of fact
c. mutual mistake of fact
b. unilateral mistake of law
d. mutual mistake of law
Completion
Complete each statement.
31. Bob and Susan are selling their house, but the foundation is unstable. Instead of fixing the foundation before
they put the house on the market, Bob and Susan merely paint over the crack that runs through the ceiling in
the living room of the home. Bob and Susan are guilty of a type of misrepresentation called
____________________.
32. Esteban has negotiated with a wholesale lumber dealer for a specific price per bundle of lumber needed in his
apartment building construction plans. Weeks after the negotiations, the manager at the wholesale lumber
company learns of the number of apartment buildings Esteban will be building and wants to capitalize on
Esteban's success. So, he threatens to withhold Esteban's lumber supply unless he agrees to pay $20 more per
bundle. This threat is an example of ____________________.
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Name: ________________________
ID: A
33. On her first day of employment with an advertising firm, DeShawn received an employment contract which
she carelessly read. Two weeks later DeShawn's employer notifies her that she will be relocated according to
the terms of her employment contract. DeShawn believes the contract is voidable because she did not read
the relocation clause in the contract. A court, noting DeShawn's ____________________ mistake, would
hold that the contract was valid.
34. Tania agrees to purchase one of Kim's formal dresses for $45 to wear to her company's Christmas party. The
next day she is fired and will, therefore, not need the dress. She agrees to return the dress, and Kim returns
the $45. Their actions are an example of the contract remedy of ____________________.
35. After Patricia's husband died, her neighbor persuaded her to sell her husband's motorcycle for 70 percent of
its real value. For more than a year she accepted her neighbor's monthly payments. By her acceptance of
these payments she has ____________________ their agreement, which, as a consequence, cannot be
rescinded.
36. If fraud is proven, an additional remedy beyond rescission becomes available to the injured party. That
remedy is ____________________.
37. Two years ago, Hope purchased a car from her friend. At the time of the purchase, the odometer reading was
30,000 miles. Hope drove the car for a year and put an additional 15,000 on the vehicle, and then sold the car
to Miguel. Miguel later learned that the car had 60,000 on it. Because Hope did not know the original owner
had altered the odometer reading, her original statement regarding the odometer reading is an example of
_________________________.
38. While working for Joe as a legal secretary, Doris discovers that Joe has taken a piece of land in lieu of a
client's payment for legal fees. Joe, however, notifies the other partners in his law firm that this client's legal
fees are uncollectible. The firm then absorbs the loss resulting from the uncollectible fees. Joe later sells the
land for $80,000 and secretly pockets the money. Doris then threatens Joe into giving her a pay raise of
$25,000 to "keep her mouth shut." If Joe does so, Doris' new employment contract would be voidable due to
legal ___________________.
39. ____________________ occurs when one party to a contract is in a position of trust and wrongfully
dominates the other party in determining the terms of the contract.
40. Johnston owns two cars. One is a 2000 Thunderchicken and the other a 2004 model Thunderchicken.
Thompson, not knowing that Johnston has two Thunderchickens, makes an offer to buy "Johnston's
Thunderchicken." Johnston accepts thinking from the size of the offer that Thompson is referring to his 2000
Thunderchicken. The resulting contract is void due to the parties' ____________________ mistake of fact.
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