Question 1

Fact Pattern 14-B1 
Gert contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Gert is still willing to sell the land, but under these circumstances the deal would adversely affect Hank.
-Refer to Fact Pattern 14-B1. The parties' belief about the adjacency of the property is

Accepted Answer

The answer of Fact Pattern 14-B1 
Gert contracts to sell...

Question 2

Fact Pattern 14-B1 
Gert contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Gert is still willing to sell the land, but under these circumstances the deal would adversely affect Hank.
-Refer to Fact Pattern 14-B1. Because of the parties' belief about the adjacency of the property, their contract is

Accepted Answer

The contract is voidable because there is a mistake regarding a basic assumption made by both parties, and the mistake has a material effect on the agreed-upon exchange. Gert is still willing to sell the land, but the deal would adversely affect Hank. Under these circumstances, Hank has the right to avoid the contract.

Question 3

Local Investment Company and Midstate Properties, Inc., contract for the sale of a retail mall. A mutual mistake of fact will make it possible for ei?ther party to rescind the contract

Accepted Answer

A mutual mistake of fact that is material – meaning it goes to the heart of the contract and affects its value or performance – allows either party to rescind the contract. If the mistake is immaterial, it would not be grounds for rescission.

Question 4

Fact Pattern 14-A2 
Moore Properties, Inc., offers in writing to sell to New Development Corporation a certain half-acre of land for "$112,000." After New Development signs the offer in acceptance and returns it, Moore discovers that the price should have been stated as "$121,000."
-Refer to Fact Pattern 14-A2. The effect of Moore's misstatement of the price will most likely fall on

Accepted Answer

The answer of Fact Pattern 14-A2 
Moore Properties, Inc., offers...

Question 5

Joy induces Kelly to enter into a contract for the purchase of a condominium about which Joy knowingly misrepresents a number of material features. When Kelly discovers the truth, Kelly can

Accepted Answer

Kelly can enforce the contract and seek damages because Joy's misrepresentation of material facts constitutes fraud, allowing Kelly to affirm the contract and sue for damages resulting from the fraud.

Question 6

Great City and Highway Construction Company (HCC) enter into a construction contract that includes si

Accepted Answer

Reformation is an equitable remedy used to correct or modify a written agreement to reflect the true intentions of the parties when there has been a mutual mistake or clerical error.

Question 7

Fact Pattern 14-A1 
Dina, an employee of Eagle Industries, is injured in a work-related accident. Based on the diagnosis of Frank, a doctor, Dina accepts $50,000 from Eagle and waives the right to future claims. Frank's diagnosis later proves to have been wrong.
-Refer to Fact Pattern 14-A1. Dina may, according to the deci?sion in Case 14.1, Roberts v. Century Contractors, Inc.,

Accepted Answer

Dina may set aside the settlement with Eagle due to a mistake of fact, as the diagnosis that led to the settlement was incorrect.

Question 8

Jill and Karl contract for the sale of Jill's horse for $1,000. Unknown to either party, the horse has died. Karl is

Accepted Answer

Both parties were unaware that the horse had died before the sale was agreed upon, so there is mutual mistake. Therefore, Karl is not required to pay for a dead horse.

Question 9

May is a stockbroker. Due to May's statements, Nora believes that the price of OK Goods, Inc. (OKGI), a widely traded stock, is going to in?crease sub?stantially. Nora buys 500 shares of OKGI at $10 per share, but the price soon drops to $2. Nora can successfully recover

Accepted Answer

May's statements were merely beliefs and speculation, and Nora acted without doing her own research or verifying the information. Therefore, Nora assumed the risk of the investment and cannot recover any losses due to her own failure to exercise due diligence.

Question 10

Hillside Homes, Inc., and Ideal Builders, Inc., enter into a construction contract that includes si

Accepted Answer

The presence of mistakes or errors in the plans does not necessarily make the contract irreparably unenforceable, but the parties may still choose to rescind the contract and renegotiate the terms. By allowing the parties to rescind the contract, they have the opportunity to reassess the accuracy and feasibility of the plans and make any necessary changes before resuming construction.

Question 11

Used Car Lot's salesperson Vic offers to sell Will, who is twenty years of age, a car about which Vic intentionally misrepresents several material facts. In reliance on the misrepresentations, Will buys the car. To prove fraud in this transaction, Will would not have to show that

Accepted Answer

Will's age is not a necessary element to prove fraud in this transaction. The other elements of fraud, such as intentional deception and justifiable reliance on misrepresentations, are required to prove fraud.

Question 12

Fact Pattern 14-B2 
Nano Corporation offers to sell a robotic device to Opal Assembly, Inc., but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Opal accepts the written offer.
-Refer to Fact Pattern 14-B2. Nano's best defense against enforcement of the contract is that Opal knew

Accepted Answer

The answer of Fact Pattern 14-B2 
Nano Corporation offers to...

Question 13

Fact Pattern 14-B2 
Nano Corporation offers to sell a robotic device to Opal Assembly, Inc., but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Opal accepts the written offer.
-Refer to Fact Pattern 14-B2. Opal's best argument in favor of enforcement of the contract is that

Accepted Answer

Opal's best argument for enforcement of the contract is that Nano's mistake was a unilateral mistake, which does not typically afford relief from a contract. In order for a mistake to be grounds for relief from a contract, it must usually be a mutual mistake or a mistake by the party seeking relief, and it must also be a mistake as to a material aspect of the contract. In this case, Opal accepted Nano's offer without any knowledge of the mistake, so the mistake is not mutual, and it is generally not sufficient to allow Opal to avoid the contract.

Question 14

Harold believes his old baseball bat has little value, but Murray is con?vinced it is a valu?able collector's item. Harold sells it to Murray for $100 before learning it is worth $1,000. The contract

Accepted Answer

The contract will not be canceled because the mistake relates to the value of the item, which is generally not a basis for rescinding a contract.

Question 15

Fact Pattern 14-A2 
Moore Properties, Inc., offers in writing to sell to New Development Corporation a certain half-acre of land for "$112,000." After New Development signs the offer in acceptance and returns it, Moore discovers that the price should have been stated as "$121,000."
-Refer to Fact Pattern 14-A2. Moore's misstatement of the price is

Accepted Answer

Moore's misstatement of the price is a unilateral mistake since only Moore was mistaken about the price. New Development was not aware of Moore's mistake, and thus did not contribute to the error. Moore cannot rescind the contract due to a unilateral mistake unless it can show that enforcement of the contract would be unconscionable under the circumstances. However, there is no information in the fact pattern to suggest that this is the case.

Question 16

At an auction for the first time, Max bids on an object, believing that the auctioneer requested an amount less than the price actually asked. Max is

Accepted Answer

Max is liable on the bid because, as a bidder, it is their responsibility to understand the auctioneer's request and make an appropriate bid. If Max misunderstood the auctioneer, it is still their responsibility to pay the amount they bid. The auctioneer is not responsible for Max's misinterpretation of the requested bid amount.

Question 17

Rally offers to sell Sophie, who is seventeen years of age, a car about which Rally intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that

Accepted Answer

To prove fraud in this transaction, Sophie would have to show that Rally intentionally deceived her. Misrepresenting material facts with the intent to deceive is an essential element of fraud. Sophie's age and level of knowledge about cars are not relevant to establishing fraud in this case. Additionally, the fact that Rally's statements were exaggerated, but not obviously so, does not necessarily establish fraud.

Question 18

Fact Pattern 14-A1 
Dina, an employee of Eagle Industries, is injured in a work-related accident. Based on the diagnosis of Frank, a doctor, Dina accepts $50,000 from Eagle and waives the right to future claims. Frank's diagnosis later proves to have been wrong.
-Refer to Fact Pattern 14-A1. According to the reasoning of the court in Case 14.1, Roberts v. Century Contractors, Inc., Frank's misdiagnosis is, in terms of its impact on Dina's agreement with Eagle,

Accepted Answer

A mutual mistake of fact occurs when both parties to a contract are mistaken about a material fact that forms the basis of the contract. In this case, both Dina and Eagle were mistaken about the extent of Dina's injuries, which was a material fact that formed the basis of their agreement.

Question 19

Owen, a famous chef, sells to Pat a restaurant that Owen closed years ago. Pat discovers in the restaurant a collection of Owen's recipes, which are considered valuable. In a suit to obtain the recipes, Owen will likely

Accepted Answer

Owen will likely prevail because there was no mutual assent regarding the inclusion of the recipes in the sale. The sale of the restaurant did not explicitly include the recipes, and without mutual agreement on this, Owen retains rights to his intellectual property.

Question 20

Gina induces Hu to enter into a contract for the purchase of a condominium about which Gina knowingly misrepresents a number of material features. When Hu discovers the truth, Hu can

Accepted Answer

Hu can rescind the contract on the basis of fraud because Gina knowingly made false statements about material features in order to induce Hu to enter into the contract. Mistake and undue influence are not applicable in this scenario.

Quiz 14: Mistakes, Fraud, and Voluntary Consent