Question 1

The domination of one party over the mind of another to such a degree as to deprive the latter of the will to make an independent decision is
A)undue influence.
B)domination.
C)supervision.
D)control.
E)being pushy.

Accepted Answer

Undue influence refers to the excessive pressure or persuasion put on someone that overcomes their free will and undermines their ability to make independent decisions. Domination, supervision, and control all suggest a level of influence or authority but may not necessarily involve the deprivation of independent decision-making. Being pushy is also a form of exerting pressure or influence, but it may not rise to the level of undue influence.

Question 2

Use the fact situation in Q30 to answer the related question that follows. Using the fact situation above,assume that shortly after signing the guarantee,Mary leaves John so that he can no longer abuse her and decides that she really should not have to guarantee John's loan.If Mary acts quickly by bringing a lawsuit against the bank,Mary may succeed because
A)the guarantee is unenforceable.
B)the guarantee is void.
C)the guarantee is voidable at both her option and the bank's option.
D)the guarantee is voidable if Mary acts immediately to repudiate it.
E)all of the above

Accepted Answer

The guarantee is not necessarily unenforceable or void, as it was signed voluntarily by Mary. However, it may be voidable if Mary immediately repudiates it. This means that Mary can choose to cancel the guarantee, but the bank also has the option to accept or reject her repudiation. If Mary acts quickly and the bank accepts her repudiation, the guarantee would become voidable.

Question 3

Use the fact situation in Q33 to answer the related question that follows. Referring to the above fact situation,in a lawsuit by Alice against Marvin,Alice will seek
A)damages in tort.
B)rescission in contract and damages in tort.
C)damages in contract.
D)rescission in tort.
E)rescission in contract.

Accepted Answer

Alice will seek rescission in contract to void the contract due to misrepresentation or fraud and damages in tort for any harm caused by Marvin's actions.

Question 4

McKenzie purchases goods from Dormond.Later McKenzie goes to court and the court declares that the contract between McKenzie and Dormand is void.This means that
A)Dormond has to return all money received from McKenzie,but McKenzie does not have to return the goods.
B)the court has declared that there was a valid contract between Dormond and McKenzie from the date of the purchase until the date of the Court ruling.
C)the court has declared that Dormond breached the contract.
D)McKenzie can return all or the remainder of the goods to Dormond in exchange for reimbursement of payment.
E)McKenzie can keep the goods and can demand his money back from Dormond.

Accepted Answer

When a contract is declared void, it is treated as if it never existed. Therefore, both parties must return what they received under the contract. McKenzie can return the goods to Dormond and get a reimbursement.

Question 5

You innocently have made some misstatements that others are relying on.Legally speaking,you can change your situation from innocent misrepresentation into one of fraudulent or negligent misrepresentation by
A)doing nothing when you learn about the truth.
B)immediately trying to set things right.
C)trying to mitigate the situation.
D)filing a writ of claims with the court.
E)letting the other party know you were in error.

Accepted Answer

Doing nothing when you learn about the truth can change an innocent misrepresentation into a fraudulent or negligent one because it implies a decision to allow the deception to continue once you are aware of it.

Question 6

When a court grants rectification of a contract,it
A)declares a contract to be unenforceable.
B)changes the part of the document that was incorrect in the written document.
C)sets aside the contract.
D)declares the contract to be voidable.
E)interprets the contract for the parties.

Accepted Answer

When a court grants rectification of a contract, it changes the part of the document that was incorrect in the written document. This is typically done to reflect the true intention of the parties at the time the contract was formed. Rectification does not declare the contract to be unenforceable, set it aside, declare it to be voidable, or interpret it for the parties.

Question 7

Use the fact situation in Q30 to answer the related question that follows. Assume that before Mary signs the guarantee,she sees a lawyer for independent legal advice.Assume also that just before she signs the guarantee,the lawyer asks her if she is signing the guarantee freely and without threat of harm,duress,or undue influence and that Mary replies,"Yes,I am signing it freely and without threat of harm,duress,or undue influence." In these circumstances,if Mary changes her mind and does not want to be bound by the guarantee,
A)she will succeed because the bank cannot rely on the independent legal advice she received.
B)she will succeed because the guarantee is void for duress.
C)she will not succeed because of the doctrine of caveat emptor.
D)she will succeed because the guarantee is voidable for duress.
E)she will not succeed because the bank can rely on the independent legal advice she received.

Accepted Answer

Mary received independent legal advice and confirmed she was signing the guarantee freely, so the bank can rely on this to enforce the guarantee.

Question 8

Jonathan sells crates of tomatoes on board the SS Apapa to Margaret.At the time of the sale,both parties are unaware that the crates were washed overboard.What is the status of the contract between Jonathan and Margaret?
A)Jonathan is still the owner of the shipment.Jonathan bears the loss and will have to refund Margaret's money.
B)Margaret has to pay the agreed price and recover from her insurance.
C)The ownership passed to Margaret,but Jonathan is still in possession,and so he is liable.
D)Margaret is the new owner of the tomatoes and has to bear the loss.
E)Margaret may sue Jonathan for the tort of deceit.

Accepted Answer

The principle of caveat emptor (buyer beware) applies in this situation, since Jonathan did not knowingly sell defective goods. The contract is still valid, but the loss falls on Jonathan as the seller. Margaret is entitled to a refund of her money.

Question 9

Use this fact situation to answer the related questions that follow it. John Jones is an 80-year-old man who lives in Ontario.Two years ago,John made a will in which he left one-third of his entire estate (all of his assets)to each of his three children,Mary,George,and Edward.Harry told the children what he was leaving them just after he made his will.Since that time,Edward has been unhappy about getting only one-third of his father's estate,and for the past two years he has been telling his father that Mary and George really hate their father and cannot wait until he dies.Lately John has become ill,and because Edward is the only son in Ontario,he has been taking care of his father.Each time that Edward sees his father,which is two to three times a week,he reminds him about Mary's and George's feelings towards him and tells John that he is the only child who really loves his father.John,seeing how much care Edward is giving him,begins to believe Edward and decides to make a new will in which he leaves his entire estate to Edward and nothing to Mary and George.
George's changing his will under these circumstances is a classic example of
A)duress by Edward.
B)fraud by Edward.
C)deceit by Edward.
D)undue influence by Edward.
E)misrepresentation by Edward.

Accepted Answer

John's decision to change his will and leave his entire estate to Edward was influenced by Edward's constant reminders about Mary and George disliking their father, and the fact that Edward was taking care of him. This is a classic example of undue influence, where someone with a position of power or authority over the testator (John in this case) uses their influence to manipulate or coerce them into changing their will or estate plan.

Question 10

If an incident of misrepresentation is neither fraudulent nor negligent,yet it resulted in harm,then
A)a claim of tort can only be made with evidence the victim relied on the misrepresentation.
B)the victim's one hope is to show that a provision in the contract was misrepresented.
C)it is innocent misrepresentation,which has no legal significance
D)it does not qualify for a tort action.
E)the victim is guilty of having unreasonable reliance on the misrepresentation.

Accepted Answer

The answer of If an incident of misrepresentation is neither...

Question 11

Both rescission and damages are available remedies for misrepresentation only when the misrepresentation is
A)fraudulent or negligent.
B)innocent or fraudulent.
C)innocent only.
D)innocent,negligent,and fraudulent.
E)innocent or negligent.

Accepted Answer

Both rescission and damages are available remedies for misrepresentation only when the misrepresentation is fraudulent or negligent. Innocent misrepresentations do not usually give rise to a right to rescind or claim damages.

Question 12

If a party to an existing contract discovers he or she had made an incorrect statement during the contract negotiations,then he or she should
A)rescind the contract immediately.
B)declare the contract voidable at the option of the other party.
C)call his or her lawyer before he or she is sued for negligent misrepresentation.
D)inform the other party of the true situation as soon as possible.
E)offer to make allowances for any misunderstandings.

Accepted Answer

The party should inform the other party of the true situation as soon as possible. This is the ethical and responsible thing to do and will enable the parties to try and work out a mutually beneficial solution. The other options may not be necessary or appropriate, and seeking legal advice should only be considered if necessary.

Question 13

Use the fact situation in Q28 to answer the related question that follows. Change the fact situation by assuming that Edward's conduct towards his father is designed to make his father enter into a contract with a third party.Also assume that Mary and George convince John that what Edward has been telling him about how they feel about him was a lie.In this situation,the contract is
A)valid but unenforceable by the third party.
B)void.
C)voidable at the option of John only.
D)voidable at the option of the third party.
E)voidable at the option of John,Mary,and George.

Accepted Answer

The contract is voidable at the option of John only because Edward's conduct was intended to manipulate John into entering the contract, which can be considered undue influence or misrepresentation.

Question 14

Use this fact situation to answer the related questions that follow it. Marvin is an investment counsellor.Alice is one of Marvin's clients.Alice has no investment experience and relies on Marvin's advice in making her investments.Last night,while he was sleeping,Marvin had a dream that the shares of Very Big Company (VBC)would go up a great amount in value.As a result,without even checking to ensure that VBC was a good company to invest in,this morning Marvin called Alice and told her to put all of her money into VBC,which Alice did.Later that day VBC declared bankruptcy and Alice lost all of her money.
In these circumstances,Marvin's advice to Alice is
A)an example of undue influence.
B)an innocent misrepresentation.
C)a fraudulent misrepresentation.
D)a mistake.
E)a negligent misrepresentation.

Accepted Answer

Marvin had a duty of care towards Alice as her investment counsellor and he did not properly fulfill that duty by giving advice without even checking whether VBC was a good company to invest in. This could be considered as negligent misrepresentation.

Question 15

James purchases an antique chair at a garage sale for $150.00.Later he sells it to Jacqueline for $300 and makes a nice profit.A few months later the Antiques Road Show comes to town and Jacqueline takes the chair to the show to be valued.She is advised that the chair dates as far back as 1866 and is worth approximately $5000.Which of the following is true?
A)James made a mistake about the value of the chair and so the contract will be set aside by a court.
B)James did not make a legal mistake because he was careless in determining the right price.
C)James can plead non est factum.
D)James did not make a mistake about the value of the chair because the radically different price is one of the risks expected in the contract.
E)If Jacqueline sells the chair,the court will order that Jacqueline pay a portion of the proceeds of sale to James because James made a mistake.

Accepted Answer

James did not make a mistake about the value of the chair because the radically different price is one of the risks expected in the contract. In contract law, the principle of caveat emptor (buyer beware) applies. It means that the buyer takes the risk of the quality, value, and condition of the item purchased. James sold the chair to Jacqueline at a price that was agreeable to both parties, and he was not under any legal obligation to disclose the true value of the chair. Therefore, he did not make a mistake, and the contract is valid.

Question 16

If,at the time a contract was made,the subject matter did not exist,without the knowledge of the seller,the contract is
A)a mistake in terms of fact and not assumption.
B)subject to the tort of deceit.
C)void,according to the Sale of Goods Act as well as under the common law.
D)valid;the purchaser stands the loss.
E)voidable at the option of the court.

Accepted Answer

Both the Sale of Goods Act and common law state that a contract is void if the subject matter does not exist at the time of the contract. This is because the contract cannot be fulfilled if the subject matter does not exist, and therefore the contract lacks consideration. Additionally, the lack of knowledge on the part of the seller is irrelevant in this case.

Question 17

A pleas of non est factum
A)is applicable only where both parties have made a mistake.
B)means it is not my doing.
C)is not a good defence against third parties.
D)means the contract is not correct.
E)can only be raised if there is a misrepresentation.

Accepted Answer

A plea of non est factum means "it is not my deed," and is used as a defense when a party claims that they did not understand the document they were signing, and therefore did not truly consent to the agreement. It is not applicable when both parties have made a mistake or when there is a misrepresentation. Furthermore, it is a defense against the other party, not third parties.

Question 18

The parking enforcement officer gave Jim a parking ticket.But as it turns out,the NO PARKING sign had been placed in error on private property.Can Jim recover damages in a tort action?
A)No,he can't,since damages are not of a pecuniary nature.
B)Yes,he can,since he was terribly inconvenienced by this affair.
C)Yes,he can,because the ticket was totally misrepresented.
D)Yes,he can,because no negligence or fraud is present.
E)No,he can't,since there was no fraud nor carelessness on the part of the parking enforcement officer.

Accepted Answer

Jim cannot recover damages in a tort action because the issuance of the parking ticket, although based on an erroneously placed NO PARKING sign, does not constitute fraud or negligence on the part of the parking enforcement officer. The officer acted within their duties, and the mistake regarding the sign's placement does not imply wrongful intent or a breach of duty towards Jim.

Question 19

Use this fact situation to answer the related questions that follow it. John lives with his wife,Mary,and regularly beats her,leaving Mary in a constant state of fear when John is around.John needs to borrow some money for his business,and so he goes to his bank and meets with the manager,who agrees to loan him the money,but only if both John and his wife sign a guarantee of the loan.John signs the guarantee in front of the manager and then takes it home to be signed by Mary.At home,John tells Mary to sign the guarantee "or else you know what will happen to you," so Mary signs the guarantee.
Mary's signing the guarantee under these circumstances is a classic example of
A)assault.
B)fraud.
C)duress.
D)undue influence.
E)diminished capacity.

Accepted Answer

Mary's signing the guarantee under duress, or the threat of harm, is an example of coercion, which can invalidate a contract.

Question 20

When will the courts presume that there has been undue influence in the signing of a contract that favours the dominant party?
A)Where the parties stand in a special relationship to each other;one party possessing a special skill,position or knowledge causing the other to place confidence and trust in him,the one against whom the undue influence is alleged.
B)In all contracts made between a husband and wife.
C)The courts will never presume undue influence.The party alleging undue influence must always prove it has occurred.
D)Only when the contract is oral.
E)none of the above

Accepted Answer

The courts will presume undue influence in cases where the parties have a special relationship, and one party possesses special skill, knowledge, or position that causes the other party to trust them. In such cases, the burden of proof shifts to the dominant party to prove that the other party entered into the contract freely and knowingly.

Quiz 9: Grounds Upon Which a Contract May Be Set Aside: Mistake and Misrepresentation

The domination of one party over the mind of another to such a degree as to deprive the latter of the will to make an independent decision is

Use the fact situation in Q33 to answer the related question that follows. Referring to the above fact situation,in a lawsuit by Alice against Marvin,Alice will seek

McKenzie purchases goods from Dormond.Later McKenzie goes to court and the court declares that the contract between McKenzie and Dormand is void.This means that

You innocently have made some misstatements that others are relying on.Legally speaking,you can change your situation from innocent misrepresentation into one of fraudulent or negligent misrepresentation by

When a court grants rectification of a contract,it

Jonathan sells crates of tomatoes on board the SS Apapa to Margaret.At the time of the sale,both parties are unaware that the crates were washed overboard.What is the status of the contract between Jonathan and Margaret?

If an incident of misrepresentation is neither fraudulent nor negligent,yet it resulted in harm,then

Both rescission and damages are available remedies for misrepresentation only when the misrepresentation is

If a party to an existing contract discovers he or she had made an incorrect statement during the contract negotiations,then he or she should

If,at the time a contract was made,the subject matter did not exist,without the knowledge of the seller,the contract is

A pleas of non est factum

The parking enforcement officer gave Jim a parking ticket.But as it turns out,the NO PARKING sign had been placed in error on private property.Can Jim recover damages in a tort action?

When will the courts presume that there has been undue influence in the signing of a contract that favours the dominant party?