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Law
Q:
Identify the true statement regarding the idea of public policy.
A. The court's view of public policy is determined by what the court believes is in the best interests of society.
B. Public policy is resistant to any social or economic change.
C. Courts have limited discretion in determining what constitutes a violation of public policy.
D. The limited discretionary powers provide the legal system minimal flexibility which ensures a strict adherence to policies.
Q:
Mayor Magnus wants to recruit a Harvard economist, Milton, to be the Chief Developer for the Small Town's economic development division. The legal cap on the job of Chief Developer is $60,000. Mayor Magnus offers Milton $100,000. The contract is:
A. unconscionable based on unequal bargaining power.
B. injurious to public service.
C. exculpatory.
D. enforceable.
Q:
Which of the following statements is true for contracts to influence fiduciaries?
A. This doesn't apply to agreements by fiduciaries that favor the interests of a third person at the expense of their principals' interests.
B. Agreements contrary to public welfare are included under this provision.
C. They operate as duress on the principal or beneficiary who is entitled to the fiduciary's loyalty.
D. Such contracts may be enforced upon full disclosure to, and agreement of, beneficiary.
Q:
Regulatory statutes are designed primarily to:
A. raise money.
B. protect the public.
C. define a public employee's personal interests and public duties.
D. provide the legal system with a degree of healthy flexibility.
Q:
Statutes that require proof of character and skill are considered to be:
A. regulatory.
B. usury.
C. wagering.
D. revenue-raising.
Q:
Failure to pay for a license which is required for revenue-raising purposes:
A. affects the legality of the unlicensed person's agreements and it will be considered void.
B. results in generally unenforceable contracts.
C. does not affect the legality of the unlicensed person's agreements.
D. generally imposes a nominal fine for violation.
Q:
Which of the following statements is true for contracts made illegal by statutes?
A. Barbers and beauty operators do not require licenses for working.
B. Blue laws do not regulate the sale of alcohol.
C. Agreements violating wagering statutes are regarded illegal only in certain states.
D. Forfeiture of excess or all interest is a common penalty for violation of usury laws.
Q:
Blue laws:
A. prohibit performing certain acts on Sunday.
B. regulate betting.
C. regulate interest charged for the use of money.
D. regulate licensing activities.
Q:
Ali enters into a contract with Billy's Brewpub to be a bartender. Ali does not know that Billy's does not have a liquor license. Under these circumstances:
A. Ali can recover only for emotional distress.
B. Ali can recover the wages for bartending before she learned of the violation.
C. Ali can recover the wages for bartending for the entire term of her employment.
D. Ali cannot recover any of her wages as illegality makes the contract void.
Q:
When a person, whom a regulatory statute seeks to protect, enters into an agreement in violation of the statute, the protected person:
A. is only allowed to enforce the agreement.
B. may recover only for economic loss.
C. cannot recover for any loss but may enforce the agreement.
D. may either enforce the contract or recover any consideration he/she has parted with.
Q:
A party which enters into an illegal contract may recover any consideration given when:
A. the illegal act has been performed and the party has reported the illegality to law enforcement.
B. the party rescinds the contract before any illegal act has been performed.
C. the illegal act has been performed and the party demonstrates an unequal bargain thereof.
D. the party rescinds the contract immediately after the illegal act has been performed.
Q:
If a part of a divisible contract is illegal:
A. the whole contract is void.
B. the illegal parts will be removed and the legal parts remain in force.
C. the whole contract will be unenforceable.
D. the whole contract is still enforceable.
Q:
____ is an example of an illegal wager.
A. Stock transactions
B. Betting on the performance of a stock
C. Commodity transactions
D. Risk shifting agreements
Q:
Which of these laws prohibit charging more than a stated amount of interest for the use of money?
A. Rent control law
B. Antitrust law
C. Usury law
D. Blue law
Q:
When one or both parties to an illegal bargain are ignorant of the facts that made the bargain illegal, courts will:
A. never allow either party to recover damages for breach of the agreement.
B. allow recovery for performance rendered before the parties learned of the illegality.
C. declare the bargain unconscionable.
D. regard the contract a serious threat to public welfare and declare it void.
Q:
A contract of adhesion is not in violation of public policy.
Q:
The courts have no power over unconscionable contracts.
Q:
Which of the following reasons is applicable for voiding a contract based on illegality?
A. It requires the commission of a misdemeanor.
B. It is in violation of the Code alone; not the common law.
C. It is contrary to public policy.
D. It protects the interests created by the contract to a reasonable measure.
Q:
Statutes that impose a significant license fee and allow anyone who pays the fee to obtain a license are classed as regulatory.
Q:
Agreements that create a conflict between a public employee's personal interest and public duties are illegal and contrary to public policy.
Q:
Exculpatory clauses are generally enforceable if they do not involve a duty to the public.
Q:
Agreements designed solely to restrict trade are legal.
Q:
Rent control laws have been implemented to limit the exercise of unequal bargaining power.
Q:
Blue laws are uniform across all states in the country.
Q:
A party to an illegal contract who is fully aware of the contract's illegality can fully recover damages.
Q:
The courts allow recovery if one or both of the parties to an illegal bargain are ignorant of the facts that made the bargain illegal.
Q:
One of the primary reasons for not enforcing illegal contracts is to deter people from entering into such agreements in the first place.
Q:
A person who rescinds an illegal contract before any illegal act has been performed can usually recover any consideration he has given the other party.
Q:
Wagering, risk-shifting, and speculative bargaining agreements are all regarded illegal by statutes.
Q:
The violation of usury laws may require the forfeiture of interest and principal.
Q:
When might a court grant relief for a unilateral mistake even if it is negligent?
Q:
An agreement is illegal if it calls for behavior that violates a statute, but not a general rule of public policy.
Q:
Explain the difference between duress and undue influence.
Q:
How do cases of mistake differ from fraud and misrepresentation?
Q:
Sargent put $5,000 worth of stocks and bonds into an asset management account at Fido Investments. One month later, his account statement indicated that he had a balance in his account of $5 million. Sargent quickly withdrew this amount from his account and put it into a Swiss bank account. Can Fido rescind its payment of $5 million to Sargent on the grounds of mistake?
A. No, because Sargent had given value consideration.
B. Yes, because even though Fido was at fault, Sargent was well aware of Fido's mistake in crediting the extra amount to his account.
C. No, because Fido should have exercised reasonable care while crediting the amount to Sargent's account.
D. Yes, because Fido stands to suffer huge material loss without the rescission.
Q:
There is no voluntary consent in a mutual mistake if:
A. there is a confidential relationship.
B. the mistaken party is able to rescind under certain conditions.
C. the plaintiff is induced to make an unfavorable agreement.
D. there is untrue belief by both parties about a material fact.
Q:
Harry owns a Cadillac and a Porsche. Bob has always wanted a Porsche and knows Harry owns one. Harry decides to sell his Cadillac and buy a BMW. A mutual friend of Bob and Harry tells Bob, "Harry's selling his car." Thinking Harry is selling the Porsche (he does not know he also has a Cadillac), Bob calls Harry and says, "I'll give you $9,500 for your car." Harry, thinking Bob is talking about the Cadillac, says, "You've got a deal." On what grounds is the above agreement open for rescission?
A. Mutual mistake
B. Fraud
C. Misrepresentation
D. Unilateral mistake
Q:
Why do courts require justifiable reliance in misrepresentation and fraud?
Q:
Williams bought a house from Smith. He was not told before the sale that a woman and her four children had been murdered there 10 years ago. He learnt about this from a neighbor after the sale. Williams sued Smith and his real estate agent, seeking to rescind the sale. Can he rescind the contract?
Q:
An auction house puts a painting up for sale, which it believed to be and represented as Pablo Picasso's "Acrobat and Young Harlequin." An anonymous Japanese buyer, also believing it to be Picasso's original work, bought it for $50 million. Sometime later the buyer had the painting appraised for insurance purposes, and the appraiser discovered that it was a forgery worth only a few thousand dollars. Can the buyer rescind the contract? If so, on what basis?
A. The buyer cannot rescind because his mistake was negligent; he should have investigated the authenticity of the work before bidding on it.
B. The buyer can rescind on the basis of unilateral mistake.
C. The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting.
D. The buyer can rescind on the basis of mutual mistake.
Q:
Bully Corporation contracted to sell Wimp Corporation materials, that Wimp needed to fulfill a contract it had with a third party. Knowing that Wimp was in desperate need of the materials, Bully called Wimp the day before delivery was due and threatened to withhold delivery unless Wimp agreed to pay a higher price. Because Wimp could not get the materials elsewhere and would suffer a huge financial loss without them, it agreed to pay the higher price. Wimp later asserts that its promise to pay the higher price is unenforceable because it was the product of duress. Which of the following is a true statement with regards to this situation?
A. If the court agrees that Wimp's promise to pay the higher price was the product of undue influence, the contract will be ruled to be void.
B. Under modern contract law, Bully's threat to cause Wimp economic harm could be considered duress and the contract may be considered to be voidable.
C. Bully's threat could not be considered duress because Bully had a legal right to seek a higher price for its goods.
D. Under modern contract law, Bully's threat to cause Wimp economic harm may be undue influence but not fraud.
Q:
In a duress, there is no voluntary consent if:
A. either party can rescind.
B. there is a confidential relationship between the parties.
C. the plaintiff's free will has been overcome.
D. the mistaken party is able to rescind under certain conditions.
Q:
Most cases charged with undue influence involve:
A. force or threat of injury resulting in economic damages.
B. misstatements about the content or legal effect of something usually contained in a form or preprinted contract.
C. unilateral or mutual mistakes resulting in serious injustice.
D. long-time advisers of elderly/sick people, who are alleged to have gotten the victim to make gifts/sales at unfair prices.
Q:
The heirs of Mavis, a victim of Alzheimer's, found on her death that she had sold her house to her lawyer for $50,000, a week before her death. The market value of the house at the time of the sale was $500,000. These heirs may attempt to have the sale set aside, arguing that it was the product of:
A. undue influence.
B. duress.
C. fraud.
D. misrepresentation.
Q:
Mutual mistakes may arise:
A. only when parties unintentionally use terms in their contract that are ambiguous.
B. only when parties are mistaken about the subject matter of their agreement.
C. when parties intentionally use terms in their contracts that are ambiguous which leads to mistaken notions regarding the subject matter of the agreement.
D. when there is unintentional usage of ambiguous terms in the agreement and when the matter of the agreement is not properly understood by either party.
Q:
The difference between duress and undue influence is:
A. their remedy.
B. the interference with a party's ability to resist entering into an agreement.
C. the relationship between the parties at the time of the contract.
D. the type of threat used.
Q:
To prove a case of duress, modern courts require evidence of:
A. only physical injury.
B. only a wrongful threat.
C. both threat and injury.
D. statements amounting to puffery.
Q:
Which of the following statements is true for duress?
A. The reason behind the idea of duress is that mistake may prevent the "meeting of the minds" required by contract law.
B. The basic idea behind duress is to protect the old, the timid, and the physically or mentally weak from those who gain their confidence and attempt to take advantage of them.
C. The term duress is used in contract law to describe the situation in which one or both of the parties to an agreement acted under an untrue belief about the existence or nonexistence of a material fact.
D. Generally, the threat of a well-founded civil suit is not duress.
Q:
Which of the following is a remedy for fraud?
A. Rescission of the contract by the buyer.
B. Disaffirming the contract and then suing in tort for damages resulting from the fraud.
C. Ratification of the contract by the buyer.
D. Restitutionary damages.
Q:
The practical difference between the remedies for misrepresentation and fraud is that:
A. a victim of misrepresentation can only sue for punitive damages.
B. a victim of fraud can sue for punitive damages as well as for damages from the tort of deceit.
C. a victim of fraud cannot sue for punitive damages.
D. a victim of misrepresentation can only rescind the contract.
Q:
One difference between fraud and misrepresentation is that:
A. there is no requirement of materiality in fraud cases.
B. in fraud cases, the injured party has the additional option of suing in a tort action for the resulting damages.
C. misrepresentation requires knowledge of the falsity of the misstatement, but fraud doesn't.
D. false statements of opinion can be fraud, but not misrepresentation.
Q:
When Steve convinces Tom to buy a pre-owned car from him while withholding the fact that the car has a mechanical problem, it indicates:
A. undue influence.
B. duress.
C. mutual mistake.
D. scienter.
Q:
Today, many courts recognize which of the following about the doctrine of "caveat emptor"?
A. That it is a necessary step to prevent a contract from being created.
B. That it enables the seller to rescind a contract.
C. That it often produces unfair results.
D. That it is wholly the duty of the buyer to be aware of all material facts about the subject of the contract.
Q:
"Caveat emptor" is the basic principle of:
A. scienter.
B. fraud by silence.
C. fraud in the execution.
D. undue influence.
Q:
In the sale of real estate:
A. many courts are holding that sellers have a duty to disclose defects that seriously undermine the value of the home.
B. the Truth in Lending Act puts the burden on the buyer to discover defects.
C. the doctrine of caveat emptor applies without exception.
D. courts are increasingly protecting developers, sellers, and their agents.
Q:
On the first day of class, Jane's history professor passes around a blank sheet of paper claiming that she had not yet received the official class roster. All 21 students in the room sign it. That night, she types on the bottom of the roster sheet, "We, the above-signed parties, hereby promise to pay to the order of professor, $50,000 on demand." A month later, when the class pools their money and buys a winning lottery ticket worth $100,000, the professor presents the instrument and demands her money. Which of the following statements is true?
A. The professor is guilty of a misrepresentation because she knowingly said it was a roster sheet, not a potential negotiable instrument.
B. The professor is guilty of undue influence because she induced the students to sign the sheet by virtue of her superior position as the professor.
C. The professor is guilty of a fraud in the execution because she took advantage of her students' trust in her and intentionally said it was a roster sheet.
D. The professor is guilty of causing economic duress because she could have had any student who failed to sign the sheet removed from the class with tuition and other monetary implications arising; so students were forced to sign.
Q:
Which of the following is an element of fraud?
A. Opinion
B. Undue influence
C. Duress
D. Scienter
Q:
All the elements of misrepresentation, and the fact that the misrepresentation was knowingly made with the intent to deceive, have to be established to prove _____.
A. scienter
B. duress
C. fraud
D. unilateral mistake
Q:
Jimmy J sells Mary an old station wagon and tells her that it is in excellent condition, although he did not bother to check out the statement of the previous owner that the car was idling fast and backfiring a lot. Under these circumstances, Mary could probably contest the agreement on the grounds of:
A. mutual mistake.
B. duress.
C. fraud.
D. misrepresentation.
Q:
If Gilles tampers with the odometer of a car he is trying to sell, he is guilty of:
A. fraud with intent to deceive.
B. fraud by silence.
C. duress.
D. caveat emptor.
Q:
Which of the following is an example of scienter?
A. A party to a contract disclosing to the other party all the material facts he/she knows about the subject of the contract.
B. Plaintiff knowingly making a misstatement to a defendant who was likely to rely on it.
C. Defendant admitting that he made a false statement with the intent to deceive.
D. Plaintiff taking action to reveal a misstatement.
Q:
Scienter:
A. involves misstatements about the content of something contained in a form.
B. refers to the mental state of the defendant.
C. pertains to an actionable misrepresentation that concerns a present or past fact.
D. is a causal connection between a misrepresentation and the complaining party's entry into the contract.
Q:
The subject of misrepresentation must be:
A. a statement about the future.
B. a statement that amounts to puffing.
C. a knowable fact.
D. a statement of opinion.
Q:
Which of the following statements is true for justifiable reliance?
A. Misrepresentation of public facts amounts to justifiable reliance.
B. It cannot lead to rescission of a contract if the victim was aware of the truth.
C. It can lead to rescission of a contract if there is no connection between a misrepresentation and the complaining party's entry into the contract.
D. It is an important element of unilateral mistake.
Q:
Intentional misrepresentation:
A. is otherwise known as duress.
B. requires that the misrepresentation be made by using a threat.
C. is the only element needed to prove fraud.
D. requires intent to deceive.
Q:
A mutual mistake is always a ground for rescission of the contract at the request of either party.
Q:
A negligent unilateral mistake is always a ground for rescission.
Q:
"One who waits too long to complain has indicated satisfaction with the agreement despite the initial lack of true consent" is the idea behind the doctrine of:
A. ratification.
B. forbearance.
C. rescission.
D. emancipation.
Q:
A person who claims to have been victimized by a misrepresentation may cancel the contract only if he/she can show some detriment as a result of the misrepresentation.
Q:
The intent to deceive is also known as capacity.
Q:
The elements of fraud are the same as the elements for the tort of deceit.
Q:
The victim of a fraud may be able to recover punitive damages.
Q:
A contract is voidable even if duress and undue influence are both exerted much later after the contract has been entered into.
Q:
Statements of opinion serve as a basis for rescission.
Q:
A contract entered into involuntarily is enforceable if present in writing.
Q:
Undue influence renders a contract voidable and is a ground for rescission.
Q:
A person who discovers that he is a victim of fraud has an indefinite amount of time to report his grievance.
Q:
The basic idea of misrepresentation is that one of the parties to a contract created in the mind of the other party a mistaken impression about an important fact or facts concerning the subject of the contract.
Q:
Misrepresentation cannot result from an honest mistake.
Q:
When entering into a contract, parties are expected to exercise reasonable judgment.