# Business Law Today Study Set 1

Business

## Quiz 11 :Defenses to Contract Enforceability

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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What is the difference between a mistake of value or quality and a mistake of fact?
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The difference between mistake of the fact and mistake of the value is as follows:
• Mistake of fact is a mistake that may happen between both the contracting parties as to certain some sensible fact, whereas mistake of value is more concerned about the market quality in the future or significance of some item of the contract.
• In the case of mistake of the fact, one or the other party may withdraw whereas in case of mistake of value the one or the other party can carry out the contract.

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Oral Contracts. Robert Pinto, doing business as Pinto Associates, hired Richard MacDonald as an independent contractor in March 1992. The parties orally agreed on the terms of employment, including payment to MacDonald of a share of the company's income, but they did not put anything in writing. In March 1995, MacDonald quit. Pinto then told MacDonald that he was entitled to $9,602.17-25 percent of the difference between the accounts receivable and the accounts payable as of MacDonald's last day. MacDonald dis-agreed and demanded more than$83,500-25 percent of the revenue from all invoices, less the cost of materials and out processing, for each of the years that lie worked for Pinto. Pinto refused. MacDonald filed a suit in a Connecticut state court against Pinto, alleging breach of con-tract. In Pinto's response and at the trial, he testified that the parties had an oral contract under which MacDonald was entitled to 25 percent of the difference between accounts receivable and payable as of the date of MacDonald's termination. Did the parties have an enforceable contract? How should the court nile, and why? [MacDonald v. Pinto, 62 Conn.App. 317, 771 A.2d 156 (2001)]
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The court settled that MacDonald was unsuccessful to show the presence of an oral contract, and thus made decision in favor of Pintos. MacDonald further filed petition to a state intermediate appellate court. The court reversed the judgement of the lower court and released the incident for fresh hearing.
As per the appellate court, the applicant did not have to show the presence of the oral contract for the reason that the respondent repetitively confessed to its presence in his response at trial.
Consequently, the court inappropriately concluded that the applicant did not come across his problem of verifying the presence of the oral contract. The parties and the pleadings evidence found that meetings of the minds in the period in which the parties made the oral contract.
Thus, on custody, the court needs to evaluate the trustworthiness of the observers in shaping the conditions of the parties.

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Critical Legal Thinking. Describe the types of individuals who might be capable of exerting undue influence on others.
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Following types of individuals might be capable of exerting undue influence on others:
• Parent can have undue influence over children's
• Solicitor can have undue influence over Client
• Religious advisor can have undue influence over disciple
• Doctor can have undue influence over Patient
• Trustee can have undue influence over beneficiary
Undue influences ascend as a result of relationship between two parties where one party can have influence on the other one. This arises due to fiduciary or personal information. Any agreement that is beneath undue influence lacks honest acceptance and thus is this voidable.

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Question with Sample Answer-Statute of Frauds. Gemma promises a local hardware store that she will pay for a lawn mower that her brother is purchasing on credit if the brother fails to pay the debt. Must this promise be in writing to be enforceable? Why or why not?
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Fraudulent Misrepresentation. William Meade, Leland Stewart, Doug Vierkant, and David Girard applied for, and were offered, jobs at the El ay Division of Cedarapids, Inc., in Eugene, Oregon. During the interviews, each applicant asked about El-Jay's future. They were told, among other things, that El-Jay was a stable company with few downsizings and layoffs, sales were up and were expected to increase, and production was expanding. Cedarapids management had already planned to close El-Jay, however. Each applicant signed an at-will employment agreement. To take the job at El-Jay, each new employee either quit the job he was doing or passed up other employment opportunities. Each employee and his family then moved to Eugene. When El-Jay closed soon after they started their new jobs, Meade and the others filed a suit in a federal district court against Cedarapids, alleging, in part, fraudulent misrepresentation. Were the plaintiffs justified in relying on the statements made to them during their job interviews? Explain. [Meade v. Cedarapids, Inc., 164 111.3d 1218 (9th Cir. 1999)]
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. In what types of situations might voluntary consent to a contract's terms be lacking?
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What is parol evidence? When is it admissible to clarify the terms of a written contract? ?
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Video Question. Co to this text's Web site at www.thomsonedu.comiwestbuslawfblt and select "Chapter 1." Click on "Video Questions" and view the video titled Mistake. Then answer the following questions. 1. What kind of mistake is involved in the dispute shown in the. video (bilateral or unilateral, mistake of fact or mistake of value)? 2. According to the chapter, in what two situations would the supermarket be able to rescind a contract to sell peppers to Melnick at the incorrectly advertised price? 3. Does it matter if the price that was advertised was a reasonable price for the peppers? Why or why not?
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What contracts must be in writing to be enforceable?
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The Parol Evidence Rule. Carlin Krieg owned a dairy farm in St. Joe, Indiana, that was appraised at $154,000 in December 1997. In August 1999, Krieg told Donald Hieber that he intended to sell the farm for$106,000. Hither offered to buy it. Krieg also told Hieber that he wanted to retain a "right of residency" for life in the farm. In October, Krieg and Hieber executed a "Purchase Agreement" that provided that Krieg "shall transfer frill and complete possession" of the farm "subject to [his] right of residency." The agreement also con-tained an integration clause that stated "there are no conditions, representations, warranties, or agreements not stated in this instalment." In November 2000, the house was burned in a fire, rendering it unlivable. Hieber filed an insurance claim for the damage and received the proceeds, but he did not fix the house. Krieg filed a suit in an Indiana state court against Hieber, alleging breach of contract. Is there any basis on which the court can consider evidence regarding the parties' negotiations prior to their agreement for the sale of the farm? Explain. [Krieg v. Hieber, 8021Ind 938 (Ind.App. 2004)]
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Defenses to Contract EnfOrteability Charter Golf, Inc., manufactures and sells golf apparel and supplies. Ken Odin had worked as a Charter sales representative for six months when he was offered a position with a competing firm. Charter's president, Jerry Montieth, offered Odin a 10 percent commission "for the rest of his life" if Ken would turn down the offer and stay on with Charter. He also promised that Odin would not be fired unless he was dishonest. Odin turned down the competitor's offer and stayed with Charter. Three years later, Charter fired Odin for no reason. Odin sued, alleging breach of contract. Using the information presented in the chapter, answer the following questions. 1. Would a court likely decide that Montieth's employment contract falls within the Statute of Frauds? Why or why not? 2. Assume that the court does find that the contract falls within the Statute of Frauds and that the state in which the court sits recognizes every exception to the Statute of Frauds discussed in the chapter. What exception provides Odin with the best chance of enforcing the oral contract in this situation? 3. Now suppose that Montieth had taken out a pencil, written "10 percent for life" on the back of a register receipt, and handed it to Odin. Would this satisfy the Statute of Frauds? Why or why not? 4. Assume that Odin had signed a written employment contract at the time he was hired to work for Charter, but it was not completely integrated. Would a court allow Odin to present parol evidence of Montieth's subsequent promises?
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Fraudulent Misrepresentation. Larry offered to sell Stanley his car and told Stanley that the car had been driven only 25,000 miles and had never been in an accident. Stanley hired Cohen, a mechanic, to appraise the condition of the car, and Cohen said that the car probably had at least 50,000 miles on it and probably had been in an accident. In spite of this information, Stanley still thought the car would be a good buy for the price, so he purchased it. Later, when the car developed numerous mechanical problems, Stanley sought to rescind the contract on the basis of Larry's fraudulent misrepresentation of the auto's condition. Will Stanley be able to rescind his contract? Discuss.
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What elements must exist for fraudulent misrepresentation to occur?
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Fiandulent Misrepresentation. According to the student hand-book at Cleveland Chiropractic College (CCC) in Missouri, academic misconduct includes "selling... any copy of any material intended to he used as an instrument of academic evaluation in advance of its initial administration." Leonard Verni was enrolled at CCC in Dr. Aleksandr Makarov's dermatology class. Before the first examination, Vemi was reported to be selling copies of the test. CCC investigated and concluded that Venn had committed academic misconduct. Verni was dismissed from CCC, which informed him of his right to an appeal. According to the handbook, at the hearing on appeal a student could have an attorney or other advisor, present witnesses' testimony and other evidence, and "question any testimony... against him/her." At his hearing, however, Vemi did not bring his attorney, present evidence on his behalf, nor question any adverse witnesses. When the dismissal was upheld, Verni filed a suit in a Missouri state court against CCC and others, claiming, in part, fraudulent misrepresentation. Verni argued that because he "relied" on the handbook's "representation" that CCC would follow its appeal procedure, he was unable to properly refute the charges against him. Can Verni succeed with this argument? Explain. [Verni v. Cleveland Chiropractic College, 212 S.W.3d 150 (Mo. 2007)]
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A Question of Ethics. The law Finn of Traystman, Cork and Keramidas represented Andrew Daigle in a divorce in Norwich, Connecticut. Scott McGowan, an attorney with the firm, handled the proceedings' two-day trial. After the first day of the trial, McGowan told Daigle to sign a promissory note in the amount of $26,973 (the amount that Daigle then owed to the firm), If Daigle did not sign the note, McGowan said that he would withdraw front the case, forcing Daigle to get another attorney or continue to trial by himself. Daigle said that he wanted another attorney, Martin Rutchik, to see the note. McGowan urged Daigle to sign it and assured him that a copy would be sent to Rutchik. Feeling that he had no other choice, Daigle signed the note. When he did not pay, the law firm filed a suit in a Connecticut state court against him. Daigle asserted that the note was unenforceable because he had signed it under duress. [Traystman, Curie and Keramidas v. Daigle, 84 Conn.App. 843, 855 A.2d 996 (2094)1 1. What are the requirements for the use of duress as a defense to a contract? Are the requirements met here? 2. Mat might the law firm argue in response to Daigle's assertion? Did the law firm act unethically? Explain. Essay Answer: Tags Choose question tag Case Problem with Sample Answer. Novell, Inc., owned the source code for DR DOS, a computer operating system that Microsoft Corp. targeted with anticompetitive practices in the early 1990s. Novell worried that if it filed a suit, Il Microsoft would retaliate with further unfair practices. Consequently, Novell sold DR DOS to Caldera, Inc., the predecessor in interest to Canopy Croup. The purposes of the sale were to obligate Canopy to bring an action against Microsoft and to allow Novell to share in the recovery with-out revealing its role. Novell arid Canopy signed two documents: a contract of sale, obligating Canopy to pay$400,000 for rights to the source code, and a temporary license, obligating Canopy to pay at least \$600,000 in royalties, which included a percentage of any recovery from the suit. Canopy settled the dispute with Microsoft, deducted its expenses, and paid Novell its percentage. Novell filed a suit in a Utah state court against Canopy, alleging breach of contract for Canopy's deduction of expenses. Canopy responded that it could show that the parties had an oral agreement on this point. On what basis might the court refuse to consider this evidence? Is that the appropriate course in this case? Explain. [Novell, Inc. v. Canopy Group, Inc., 2004 UT App. 162, 92 P.3d 768 (2004)]
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The following multiple-choice question is representative of the types of questions available in one of the four sections of oillnis°n owi ThomsonNOW for Business Law Today. ThomsonNOW also provides feedback for each response option, whether correct or incorrect, and refers to the location within the chapter where the correct answer can be found. Misrepresentations of material facts can be made by a. actions alone. B) words alone. C) words or actions. D) writings alone.
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Genuineness of Assent. Jerome is an elderly man who lives with his nephew, Philip. Jerome is totally dependent on Philip's support. Philip tells Jerome that unless Jerome transfers a tract of land he owns to Philip for a price 30 percent below market value, Philip will no longer support and take care of him. Jerome enters into the contract. Discuss fully whether Jerome can set aside this contract.
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