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Exam 14: Voluntary Consent

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Question 1

Multiple Choice

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Analytics LLC processes misinterpreted data furnished by Botched Services to propose a marketing plan for Clientele Inc. Analytics and Clientele are both ignorant of the mistaken data. Their contract can be rescinded on the basis of

A) a bilateral mistake.
B) a mistake of quality.
C) a unilateral mistake.
D) none of the choices.

E) A) and B)
F) None of the above

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A

Question 2

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Health Source, Inc., offers to buy Medico Equipment & Supplies Corporation. On June 1, Medico gives Health Source copies of Medico's financial statements for the previous year. The statements show an inventory of $10 million. On June 15, Medico discovers that the previous year's inventory is overstated by $500,000, but does not inform Health Source. On July 1, Health Source, relying on the financial statements, buys Medico. On July 10, Health Source discovers the inventory overstatement. Can Health Source succeed in a suit against Medico? Explain.

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Yes, Health Source can succeed in a suit...

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Question 3

True/False

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Reliance on a misrepresentation is justified even if the innocent party knows the true facts.

A party who can show that he or she did not genuinely agree to the terms of a contract has a defense against its enforcement.

In general, a person should not rely on a non-lawyer's statement about a point of law.

In the context of fraudulent misrepresentation, an opinion is objective and verifiable, whereas a fact is subject to debate.

Even if the defects on a piece of property are obvious, the buyer can justifiably rely on the seller's misrepresentations concerning those defects.

Ken, a real estate agent, assures Lily that a certain parcel of commercial property fronts on the most highly trafficked street in Metro City. Lily buys the property and then discovers that the street has no more traffic than any other in its vicinity. Lily may recover damages for

Carlos and David contract for the sale of five hundred head of Carlos's cattle for $195 per head. Unknown to either party, an unforeseen storm has struck the herd and many of the cattle have died. David is

Edna is induced by her guardian Fran to sign a contract to invest funds in Gold Inc. through Fran's investment firm. Unknown to Edna, Fran realizes a commission from the investment. Most likely, Edna can rescind the contract on the basis of

County Title Company processes information furnished by others to transfer title to real estate from Dale to Ezra. The furnished information is mistaken. The contract between Dale and Ezra may be rescinded

At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is

Huey, a tennis pro, convinces Ian, who has no athletic ability, that he has considerable skill and induces him to pay $1,000 for tennis lessons. This is most likely

Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl

A contract that includes a bilateral mistake may be rescinded if the mistake involves

When both parties to a contract are mistaken about the same material fact, a unilateral mistake has occurred.

Dana believes that a new phone to be sold by Ear Fruit Inc. will become the most popular phone in the market. Dana enters into a contract to buy 500 shares of Ear Fruit stock, anticipating an increase in its value. The phone does not become popular, and the price of the stock does not rise. Dana can recover

The first element of proving fraud is to show that the innocent party is not easily fooled.

Forcing a party to enter into a contract under the fear of threats constitutes undue influence.

Fess convinces Gwyn to enter into a contract for the purchase of a Falafel Waffle Food Cart by knowingly misrepresenting a number of material features about the facility and the business. Most likely, Gwyn can rescind the contract on the basis of