Question 1

You are going to lend money to a corporation owned by Mr. X. You are requiring that Mr. X and his wife, Ms. Y, sign personal guarantees agreeing to be responsible in case of default. Why might you be concerned about your ability to enforce the guarantee against Ms. Y, and how should you protect your position?

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Question 2

What remedies are available to the innocent parties if they are the victims of an innocent misrepresentation? What is the remedy if they are the victims of a fraudulent misrepresentation?

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Question 3

What effect does undue influence or duress have upon a contract and what steps must a person subject to the undue influence or duress take in order to exercise her remedy?

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Question 4

Linda's lawyer took a city lot in payment for services rendered. Now Linda is claiming undue influence and suing to get the land back. What must she prove and what must the lawyer try to prove?

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Question 5

Jack is sailing on Crystal Lake when he notices Cathy, an acquaintance, in obvious distress. He sails close to her and quickly learns that her boat has sunk and she does not have a life preserver. Jack quickly assesses the situation and offers to sell her his life preserver for
$2,400. Cathy agrees, and Jack delivers the life preserver. Later that day Jack goes to Cathy's residence to collect his $2,400. Cathy refuses to pay. What basis would Cathy have to refuse to pay and what remedies is Jack entitled to?

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Question 6

When an event could reasonably be expected to influence the decision of a party to enter a contract, that event may be said to be "material".

Accepted Answer

This is a commonly accepted definition of materiality in contract law. Materiality refers to information or events that are significant enough to influence a party's decision to enter into a contract. For example, if one party is aware of a pending lawsuit that could impact the subject matter of the contract, that would likely be considered a material fact that should be disclosed to the other party before the contract is signed.

Question 7

Mr. Chessman, an elderly man, is asking a prominent businessman, Mr. Ross, to sign a contract for the restoration of a downtown tenement which Mr. Ross owns and Mr. Chessman lives in. During the ensuing discussion, Mr. Chessman states ". and if you don't
sign your children may suffer". Mr. Ross reluctantly signs. Will this contract be enforceable against Mr. Ross? Explain.

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Question 8

Explain why an insurance contract needs the utmost good faith.

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Question 9

In the sale of goods, usually the seller guarantees clear title to the buyer. With land, why is it that the seller need not guarantee clear title to the buyer?

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Question 10

Define undue influence and distinguish undue influence from duress.

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Question 11

Benny, who owns a classic car, lives in an apartment with a disabled roommate. Benny is approached by Dick Albert who advises Benny that if he does not sell his classic car for $2,000 (a fraction of its value), the roommate "will have both his arms broken". Benny then signs the contract and Dick pays him the $2,000. Benny was never threatened at any time during the transaction. What remedies can Benny pursue and what must he do in order to pursue those remedies? What is the likelihood of success?

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Question 12

When describing the car he had for sale, Jack told Jill it had genuine cowhide seat covers. The car in fact had imitation leather seat covers. Jill decided to buy the car, in part because she liked cowhide seat covers. The written contract made no mention of the type of seat covers. When Jill took possession of the car she discovered that the seat covers were not cowhide and asked you the following questions:
a. What is the name of all potential causes of action that Jill has against Jack?
b. What remedy or remedies can Jill seek?
c. What elements must Jill be able to prove in order to be successful?
Answer the above questions providing reasons for your answers. Express an opinion about the probable outcome of Jill's action.

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Question 13

Donna Brown owned a flower shop which she was anxious to sell. Charles Blue visited her shop and discussed a possible purchase. During those discussions Donna stated that she was sure 1998 sales would exceed $400,000 and that sales for 1997 were more than $360,000. Charles was impressed with those figures and offered to purchase the flower shop for $110,000 cash. The sale was completed one week later (November 24, 1997) and was documented with a brief written agreement which did not include anything about past sales. In April 1998, Charles had the 1997 financial statement for the flower shop prepared and actual sales for 1997 were $320,000. In addition, Charles knew that 1998 sales were 5% below sales for the same period a year earlier. Charles confronted Donna with those figures and Donna was evasive and refused to accept any responsibility, saying only that the written agreement contained no mention of sales figures. Charles asks you the following questions:
a. Do I have a right to sue Donna and if so, what is the legal basis for my action? What must I prove and what are my chances of success?
b. What remedies could I seek and do I have different remedies from which I can choose?

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Question 14

What is a material event?

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Question 15

Distinguish between negligent and fraudulent misrepresentation.

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Question 16

James has an old car for sale. Betty views the car and in response to a question about the age of the car, James replies, "I think it is a 1929 Ford." Betty purchases the car but the written contract makes no mention of the year of the car. Actually the car is a 1932 Ford. What remedy does Betty have? What defenses are available to James?

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Question 17

Name the three types of misrepresentation and describe the one that is dealt with only by the Law of Contract.

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Question 18

Ryan Thompson is a lawyer and was approached by a client who wished to sell him shares in a business he owned. Ryan accepted the offer by purchasing the shares. The business is a tremendous success. Later the client claims that he sold the shares to Ryan because of Ryan's undue influence over him. What must the client prove in order to be successful in his action?

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Quiz 9: Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress