Misrepresentation, Fraud, Duress or Undue Influence.

Question 1
Paula is a sixteen-year-old girl. Paula had a child out of wedlock and had just given birth_ to her
child alone and in a maternity home, Darla's Home. Immediately after Paula gave birth, and when
she was still highly emotional from all that was occurring, Paula's counselor at Darla's stormed
Paula's room and encouraged her to give up her baby for adoption. Paula's counselor pressured
her for an hour and a half to give the baby up for adoption and said that there was the utmost
urgency that she agree to it now, without discussing it with any family or friends, for the benefit
of the child. Paula gives in and signs the adoption forms.

May Paula avoid this contract?

(A) Yes, because there is both a "special relationship" and “improper persuasion” in this situation.
(B) Yes, under a theory of duress.
(C) No, if the court finds that the counselor was acting in good faith in recommending that a quick
adoption was in the best interests of the child.
(D) No, if a court finds that the counselor is not in a fiduciary relationship.

Question 2
Pearl, an eighteen-year-old, was working for Doom Construction, Co. at a construction site during
her summer vacation. Pearl was not supposed to be working with heavy-duty equipment, but one
day they were short-handed at the site and had Pearl use a jackhammer. Pearl was seriously
injured while using the jackhammer and was rushed to the hospital.
The adjuster for the company that provided worker's compensation insurance for Doom
Construction, Co. followed the ambulance and confronted Pearl in her hospital room. The
insurance adjuster badgered her for an hour about signing a release promising immediate
payment in return for only one-quarter of the benefits provided for by the insurance policy.
Pearl had no one around to ask for advice, and was unable to leave her hospital room. Eventually,
Pearl gave in and signed. Later, Pearl wants to avoid the release.

May Pearl avoid the release?

(A) No, if a court finds that she unde1·stood the terms of the contract.
(B) No, unless the court finds the insurance adjuster made an "improper threat" that induced
Pearl into signing the release.
(C) Yes, but only if Pearl can prove that the terms were unfair, and the insurance adjuster
threatened her.
(D) Yes, because the insurance adjuster's tactics involved unfair persuasion.

Question 3
Which of the following are factors implicating undue influence?
(A) Discussion or consummation of the transaction in an unusual place or at an unusual time.
(B) Absence of third party advisors for the victim.
(C) Unfair resulting bargain.
(D) All of the above.

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Question 4

If a party to a contract is induced into the contract by means of undue influence from a third
party, who is not a party to the contract, that contract is:
(A) Enforceable, so long as the other contracting party has not engaged in unfair
persuasion.
(B) Voidable, unless the other party to the transaction in good faith and without reasons to
know of the undue influence gives value to, or materially relies on, the transaction.
(C) Voidable by the victim, regardless of the circumstances.
(D) Void.

Question 5
Debbie hired a professional surveyor to measure her property prior to sale. The inspector gave
Debbie a written report certifying her property at 50.2 acres. In reliance on the survey, Debbie
posted the land for sale as 50+ acres. It turns out that the inspector had carelessly measured the
property and the property was not fifty acres, but only forty.
Paula contracted to purchase the land for $100,000, a fair price for fifty acres, but 20% too much
for a forty-acre plot. After the sale, Paula discovered the land was actually only forty acres and
has brought suit. Assume neither Debbie nor Paula is in any way at fault for believing the land
was fifty acres.

Consider the following statements.

I. The contract is voidable by Debbie.
II. Debbie has innocently misrepresented the property size.
III. Paula can recover $20,000.
IV. Debbie has fraudulently misrepresented the property size.
V. The contract is voidable by Paula.

Which of the above statements are correct if Paula sues for breach of contract only?
(A) II, III and V only are correct.
(B) II and V only are correct.
(C) I, II, III and V only are correct.
(D) III, IV, and V only are correct.

Question 6
Dwayne is a famous basketball player who is approached by Paul after a game. Paul hands Dwayne
a piece of paper and asks him for his autograph and says, "Don't mind the other writing on the
paper; it is irrelevant. This is just the only thing I had with me." In fact, what Dwayne was signing
was an agreement to pay Paul 10% of every paycheck he receives from this day forward.
Paul has brought suit to enforce the contract against Dwayne after he refused to make any
payments.

Which of the following statements is most accurate?

(A) The contract is void.
(B) The contract is voidable by Dwayne.
(C) The contract is voidable by Paul.
(D) The contract is enforceable.

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Question 7
Drew negotiated with Patricia for painting services. To help seal the deal he said, "In my opinion
we provide the fastest and best quality work." In fact, Drew knew that he could not paint very
well or very quickly, and that almost every job he undertook ended up with a customer
complaining. Patricia reasonably did not know of Drew's poor reputation and, based on what he
said during the negotiations, she contracted with him.
Shortly after contracting with Drew, Patricia went online and found out the truth about Drew's
painting skills. She tells Drew she no longer wants his services. Drew says okay, but sues her for
breach of contract, seeking the profits he would have made under the contract.

Assuming Patricia was not at fault in failing to discover Drew's reputation before contracting,
which of the following statements is most correct if Patricia defends by asserting
misrepresentation?

(A) The contract is void.

(B) The contract is voidable by Drew.
(C) The contract is voidable by Patricia.
(D) The contract is enforceable because Drew's statements were merely opinions and not
statements of fact.

Question 8
During negotiations, merchant Seller told Buyer, the owner of a grocery store chain, "Our grape
jelly is the best on the market." Buyer tasted the jelly, thought it was pretty good, and contracted
with Seller to purchase twenty cases.
After signing the contract, Buyer sampled another company's grape jelly, and believed it to be
much better than Seller's. Buyer felt that Seller had deceived him and refuses to go forward with
the contract to purchase the twenty cases of Seller's jelly, saying the contract is voidable on
misrepresentation grounds.

Which of the following statements is correct?

(A) Buyer is in breach for refusing to purchase the jelly.
(B) Buyer is not in breach, and may avoid the contract, based on misrepresentation.
(C) Buyer is in breach because he waived any misrepresentation defense by tasting the jelly.
(D) Buyer would be able to avoid the contract under the standards for merchant sellers under the
UCC.

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Question 9
Seller plans to sell his home but knows that the value would be severely reduced if a buyer knew
of the many holes in the walls, which would cost $25,000 to fix correctly. Instead of fixing them
correctly, he decided to hide them, by using white paper and glue to cover the holes, and then
painting over the paper. The "patching" is very cleverly done and a reasonable person in the
position of a buyer would not notice the holes or their being covered.
Buyer viewed the house and reasonably did not notice the patching. Seller was very careful to not
say anything one way or the other about the walls. Buyer bought the house for $200,000 cash,
which was somewhat of a bargain, since the fair market value according to his appraiser was
$210,000.
Buyer discovers the holes shortly after taking title to the home and is furious. He has brought suit
to void the contract.

In Buyer v. Seller, Buyer will likely:

(A) Prevail, and is entitled to $210,000 in damages from Seller.
(B) Lose, because Seller never made any assertion about the walls.
(C) Lose, but is entitled to collect $25,000 from Seller to fix the walls.
(D) Prevail, and is entitled to only $200,000 in damages from Seller.

Question 10
Seller knows his refrigerator is missing the cooling system that all refrigerators must be equipped
with to cool food. Essentially, it is just the body of the refrigerator, but looks like a complete
refrigerator from the outside. Seller did not remove the cooling system-when he got it, it was
missing the system. Seller sold the refrigerator to Buyer for $500.
Buyer did not ask about the cooling system because he assumed when someone sells a
refrigerator it comes with the cooling system. But he did say to Seller, "I don't understand how
refrigerators work. I mean, how does a bunch of wires make something cool? But I am sure glad
it does. The guy who invented it should get a Nobel prize or something" Seller said nothing in
response. The refrigerator without the cooling system has a fair market value of $50. Buyer would
now like to bring suit to void the contract.
Assume Buyer was reasonable m not discovering the missing cooling system.

In Buyer v. Seller, Buyer will likely:

(A) Prevail, because Buyer has a valid claim for misrepresentation.
(B) Prevail, because Seller took an affirmative action to conceal a fact.
(C) Lose, because Buyer did not ask about the cooling system.
(D) Lose, because Seller never said anything regarding the cooling system.

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Question 11
Debbie is an asset manager for Penny, and has managed Penny's assets for many years. Debbie
knows Penny has an unimproved piece of property that Penny is looking to sell in an area where
an amusement park plans to build a new Disneyland-type park. The park has been slowly and
secretly buying all the other pieces of property in the neighborhood and Debbie learns of the
amusement company's plans from another client. Debbie is pretty sure that when the amusement
park makes its offer for Penny's property, it will be for a multiple of its current fair market value.
Debbie offers to purchase Penny's property for the fair market value, as it exists without the
presence of the amusement park. Debbie never mentions the amusement park's plans during her
negotiations with Penny. Penny is delighted to get rid of the property and agrees to the sale. A
week later Penny learned Debbie was planning to sell the property for four times what she paid
Penny for it to the amusement park.

Which of the following statements is most accurate as to the Debbie-Penny transaction?

(A) The contract is void due to misrepresentation.
(B) The contract is voidable by Penny.
(C) The contract is not voidable by either party.
(D) The contract is voidable by Debbie.

Question 12
Derek applied for life insurance from Pristine Policies ("Pristine"). The application asks whether
Derek had ever been diagnosed with cancer. Derek had not been diagnosed with cancer and
truthfully answered "no" to the question. The end of the application had a statement that
prominently provided, "This is an application only. Insurance policy will not be in force until
Pristine accepts the application, which could take three to four weeks."
A few days after submitting the application, and before hearing from Pristine, Derek was
diagnosed with cancer as a result of a routine check-up. Derek failed to inform Pristine of the
subsequent cancer diagnosis and there was no further communication from Pristine other than
the approval of Derek's application a few weeks later.

Which of the following statements is correct?

(A) The insurance contract is voidable by Pristine under a misrepresentation theory.
(B) Derek has not committed an actionable misrepresentation because at the time he answered
the application he had never been diagnosed with cancer.
(C) The contract is not voidable because Pristine did not further inquire about, or condition its
acceptance on, the absence of any subsequent diagnoses before it issued the policy.
(D) Derek has only committed an actionable misrepresentation if Pristine can show Derek
implicitly agreed to inform them of any subsequent diagnosis.

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Question 13
The meeting of City's Road Commission was open to the public, but almost nobody went to the
sessions. Rookie Reporter, however, was assigned to the latest meeting of the Commission and
learned there that the local interstate was going to be extended into City. Reporter began
researching who owned the land around the interstate, believing that the extension of the road
would make the land valuable for fast food restaurants, gas stations and the like. Reporter found
out that it was owned by Businessman.
Reporter made an offer to purchase the land from Businessman for $40,000. Businessman asked,
"Why do you want to buy it? Is that interstate thing actually going to happen?" Reporter answered
"Look, do you want to sell it or not." Businessman agreed and a contract was signed. Businessman
later found out about the interstate and refused to go through with the deal, claiming the contract
was voidable because of misrepresentation.

In Businessman v. Reporter to avoid the contract, Businessman will likely:

(A) Prevail, because Reporter misrepresented a material fact by silence.
(B) Lose, because Reporter did not have a duty to disclose facts about the road.
(C) Prevail, because Reporter cannot use information he obtained while working in his job for
personal use.
(D) Lose, because Businessman did not inquire about the record of the Road Commission
meeting.

Question 14
Seller offers his home for sale. Buyer is interested in the home and while he walks around the
house, he notices some brown spots on the third floor ceiling. He asks Seller about it and Seller
replies, "A year ago there were some loose tiles on the roof which caused some water leakage,
which are the spots you see, but they're all fixed now." In fact, there are big holes in the roof,
which Seller knows about. The holes would be easy to see if Buyer got to the roof, but there is no
easy way to get up there. The holes are not visible from an external inspection in the front or back
of the house.
Buyer decided not to go on the roof and bought the home. He sought to avoid the transaction
when he discovered the holes.

Assume there was no custom of a pre-buyer inspection by a professional home inspector in the
pertinent jurisdiction. Which of the following statements is most accurate?

(A) The contract is voidable by either Buyer or Seller.

(B) Buyer will not be able to successfully assert a misrepresentation claim because he did not
inspect the roof.
(C) Buyer will be able to raise a misrepresentation claim only if the court determines that the
absence of holes in the roof was a material part of the transaction.
(D) Buyer will be able to avoid the contract by virtue of misrepresentation.

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15. Dawn is dying to purchase Portia's season tickets to her favorite basketball team, the Pouncing
Poodles. Portia has no desire to sell the tickets and has repeatedly turned down Dawn's many
offers. Dawn realizes that Portia will never take money for the tickets, so instead threatens to
poison Portia's husband, Albert, if Portia does not sell the tickets to Dawn. Portia finally agrees to
sell the tickets for face value to Dawn in order to save Albert's life. Assume that face value is the
price the tickets are selling for on the open market.

The contract between Portia and Dawn is:

(A) Void.
(B) Voidable.
(C) Enforceable.
(D) Unconscionable.

16. Damon, a bank manager, believes Penelope, a teller, has embezzled $15,000. Damon
threatens to turn Penelope over to the police unless she signs an agreement to "repay" the
$15,000. Penelope signs the agreement because she is frightened of having to undergo a police
investigation.

The agreement between Penelope and Damon is:

(A) Void.
(B) Voidable, but only if Penelope did not embezzle money.
(C) Voidable, whether or not Penelope embezzled money.
(D) Enforceable, so long as Damon was reasonable in believing Penelope embezzled money.

17. Dane hired Parker to repaint only the outside of his home. When Parker is finished, Dane is
very pleased with the paint job. However, believing he can bully Parker, Dane threatens to sue
Parker for breach of contract and tie him up in court for a long time unless Parker agrees to paint
the interior of Dane's home as well.
Parker has other jobs waiting and does not want to paint the interior of Dane's home, even though
Dane has said he will pay Parker a reasonable price for the job. Nevertheless, Parker agrees to do
the interior painting job in order to avoid the expense and hassle of litigation.

The contract between Parker and Dane is:

(A) Void.
(B) Enforceable, because Dane is paying Parker a reasonable price for the job.
(C) Enforceable, because Parker had the choice of whether or not to take and complete the
job to paint the interior.
(D) Voidable.

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18. Doreen is a landscaper. She has a contract to completely redo the landscaping at Peter's home
for $5,000. When Doreen is halfway through, she threatens not to finish the job unless Peter also
allows her to landscape Peter's vacation home as well. Peter agrees to pay Doreen to landscape
his vacation home as well.

The contract between Peter and Doreen is:

(A) Enforceable, as long as Doreen charges a reasonable price for the vacation home job.
(B) Void, but only if the price to landscape the vacation home price was unfair.
(C) Voidable, regardless of whether the price to landscape the vacation home was unfair.
(D) Enforceable, because Doreen is "terminable at will."

19. David is friends with Phoebe and knows that Phoebe has been having an extra-marital· affair
for the past several months. David threatens to expose Phoebe's affair unless Phoebe agrees to
sell her $3,000 watch to David for $20. Phoebe agrees because she is so terrified that news of her
indiscretion will leak to the public.

Is Phoebe enforceably obligated to sell David her watch for $20?

(A) No, only because the price for the watch is so low.
(B) No, because Phoebe can avoid the contract due to duress by improper threat.
(C) Yes, because Phoebe agreed to the contract, knowing of its terms.
(D) Yes, because courts do not inquire into the disparity between the price and value of an
item under the "peppercorn" theory of consideration.

20. For the past five years, Betty's Bakery has delivered 100 cinnamon rolls to Paula's Diner for
$90 on the 25th of every month. The cinnamon rolls were made from scratch and had made
Paula's famous. Many of Paula's customers came in regularly to order them. On July 26, the local
restaurant owner's association was set to meet at Paula's for the fast time. At 4:30 p.m. on July
25, Betty calls Paula and tells her she refuses to deliver the cinnamon rolls unless Paula pays
$1,000 for the normal 100 cinnamon roll delivery. Paula is out of cinnamon rolls and wants the
meeting to go well, so she agrees.

The contract between Betty's and Paula's is:

(A) Void.
(B) Voidable, due to a threat that is a breach of good faith and fair dealing.
(C) Voidable, due to the fact that prior dealing between the parties significantly increases the
effectiveness of Betty's threat.
(D) Enforceable, because Paula did not have to purchase the cinnamon rolls for her meeting.

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21. David wants to purchase Phyllis's mountain bicycle. David tells Phyllis: "sign this contact to
sell me your bike for $200, or I will stab you with this knife." Phyllis is terrified and signs the
contract. Both David and Phyllis are adults.

The contract between Phyllis and David for Phyllis's bike is:
(A) Void.
(B) Voidable, only if $200 is an unreasonable price for the bike.
(C) Voidable, whether or not $200 is an unreasonable price for the bike.
(D) Enforceable if later ratified by Phyllis.

22. Darren tells Patricia that if she does not sell him her car for $6,000, he will murder her
husband, Aaron. Patricia immediately agrees. The two sign a contract and Darren gives Patricia
$6,000, and Patricia gives Darren the title and keys to her car. $6,000 is a fair price for the car.
About two months later Patricia timely avoids the contract due to duress by improper threat.
While in Darren's possession, the car suffered depreciation, reasonable wear and tear and some
damage, not exceeding $6,000.

At this time:
(A) Darren must give Patricia back the car; but Patricia does not have to give Darren back the
$6,000.
(B) Darren must give Patricia back the car; Patricia must give Darren back the $6,000.
(C) Darren must give Patricia back the car; Patricia must give Darren back $6,000, less any
reasonable amount for depreciation, wear and tear, and any other damage caused by the use of
the car while Darren was in possession of it.
(D) Darren must give Patricia back the car; Patricia must give Darren back the full $6,000, but
she has a valid claim against Daren for the reasonable amount for depreciation, wear and tear,
and any other damage caused by the use of the car while Darren was in possession of it.