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Essentials of Business Law and The Legal Environment 12th Edition Mann Test Bank Full Chapter PDF
Essentials of Business Law and The Legal Environment 12th Edition Mann Test Bank Full Chapter PDF
2. At the marriage of her daughter, Lorna is given papers to sign, which the catering company says are the invoices for the
food, service, and decorations. Underneath the invoices are a carbon and a contract of sale for a portion of the failing
catering business. Lorna signs the papers; her signature is transferred to the sales contract. This is a void contract because
it was entered by fraud in the execution.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
3. Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon.
When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless
asked.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
4. Physical compulsion and improper threats are the two basic types of duress.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
5. Economic coercion that compels a person to enter into a contract renders that contract void.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Analytic
6. The law requires that to form a valid contract the agreement must be voluntary and knowing.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
EBLE.MANN.16.11.02 - 11.02
EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
A-Head: Undue Influence
A-Head: Fraud
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Analytic
8. Harry was told that he had to pay $50 for filing his claim in small claims court. He did. If the fee is really $40, he
cannot recover the $10 because it is a unilateral mistake of fact.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.05 - 11.05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Mistake
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
9. In the case of Rea v. Paulson, the court found no undue influence because the party in the dominant position had
insisted that the weaker party seek independent advice about deeding her house.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.02 - 11.02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Undue Influence
KEYWORDS: Bloom’s: Application
OTHER: AACSB Analytic
10. Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a
confidential relationship.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.02 - 11.02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Undue Influence
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
12. For a misrepresentation to be actionable as fraud in the inducement, it must be a misrepresentation of opinion.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.04 - 11.04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Nonfraudulent Misrepresentation
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
13. Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than he originally
contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding
pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far
superior bike for a lower price at another store. Bob can avoid his contract with Matt because of fraudulent
misrepresentation.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
14. Ty threatened to have Lisa’s father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly
payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward
Lisa’s father rather than Lisa herself.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
15. A voluntary choice of perfectly legitimate alternatives may in some instances constitute economic duress.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
16. To sustain a case of fraud in the inducement, the injured party must prove that he actually relied upon the false
representation.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
17. A famous decision involving mistake in the meaning of contractual terms is Raffles v. Wichelhaus, a case involving
two ships with the same name which were confused by the two parties. Neither party was at fault, and the court held that
no contract existed.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.05 - 11.05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Mistake
KEYWORDS: Bloom’s: Application
OTHER: AACSB Analytic
19. Hal holds a gun to Irving's head and tells him to sign the contract. Irving signs the contract, because he fears for his
personal safety. The contract is void, because it was entered into under duress.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
20. Attorney Geraldine advises her client, Rick, to enter a contract, which ultimately would have benefited Geraldine but
not Rick. The test of whether the contract, if entered, is voidable based on undue influence is whether Geraldine’s advice
would have dominated the thinking of an ordinary, reasonable person rather than whether it dominated Rick’s mind or
emotions.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.02 - 11.02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Undue Influence
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
21. Scienter is the element of fraud that requires that the misrepresentation must have been known by the one making it to
be false and must have been made with an intent to deceive.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
22. The law will carefully scrutinize contracts between Pete, a trustee, and Mason, a beneficiary of the trust, to make sure
there was no undue influence by Pete.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.02 - 11.02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Undue Influence
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Analytic
23. Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000
for it. Al accepts and sells the farm to Betty. Al later realizes that the land was worth more than $160,000. Al can have the
contract avoided based upon fraud.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
24. Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000
for it. Al is suspicious and asks her why she wants to buy the place. She says she would like to live in the country. Al then
asks her if she thinks there might be valuable minerals under the land. Betty laughs and says she doubts that very much, so
Al sells her the farm for $160,000. Al later realizes that the land was worth more than he was paid. Al can have the
contract voided based upon fraud.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
25. Predictions, opinions, and promissory statements ordinarily do not constitute bases of fraud.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
26. To obtain relief for negligent or innocent misrepresentation, the elements of fraud must be present but the
misrepresentation need not be material.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.04 - 11.04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Nonfraudulent Misrepresentation
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
27. For rescission to be available as a remedy for a false statement, a misrepresentation must have been made with
scienter.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.04 - 11.04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Nonfraudulent Misrepresentation
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
28. An arm's length transaction is one in which the parties owe each other no special duties and each is acting in his or her
self-interest.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
29. The test for duress is objective and the act constituting duress must be a tort or a crime in order to be wrongful.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
30. An act that is contrary to public policy or is morally reprehensible may constitute duress.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
31. If the act or threat would affect a person of average strength and intelligence, then and only then will the act constitute
duress.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
32. Fraud in the execution is a fairly common occurrence and involves defrauding a person as to the very nature of the
contract.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Analytic
33. Generally, whether or not the parties deal at arm's length does not affect whether silence alone amounts to fraud.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
35. For a misrepresentation to be material, it must be likely to induce a reasonable person to manifest assent or the maker
must know that it would be likely to induce the recipient to do so.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
38. Ben and Kate had been negotiating Ben's employment contract in conversations over the phone for a couple of weeks.
Finally, they agreed on some contract terms. Kate offered to create a draft of the contract for Ben to read over. On the
same day Ben was fired from his job. Afraid he would be unemployed, Ben signed Kate's draft without reading it. In this
example Ben:
a. can avoid the contract because of mistake by failure to read.
b. can avoid the contract because he was the victim of economic duress.
c. cannot avoid the contract because of economic duress or failure to read.
d. may rescind the contract because of unilateral mistake.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
39. Relationships that may lead to a court’s careful scrutinization of contracts between the parties to make sure undue
influence was not present include all but:
a. agent and principal.
b. salesperson and customer.
c. parent and child.
d. doctor and patient.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.02 - 11.02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Undue Influence
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Analytic
41. James threatens to hit Kenneth in the head with a baseball bat unless Kenneth signs a contract agreeing to pay James
$400 for his saw. Because of the threat, Kenneth signs the contract.
a. This contract is voidable at Kenneth's option.
b. James has committed physical duress against Kenneth.
c. This is an example of economic duress.
d. All of these.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
44. Under the Restatement, if the parties to a contract attach materially different meanings to their manifestations and
neither party knows or has reason to know the meaning attached by the other:
a. and neither party is to blame, there is no contract at all.
b. and both parties are to blame, there is no contract at all.
c. and one party is to blame, that party will be held responsible, but the contract is not void.
d. All of these.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.05 - 11.05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Mistake
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
45. A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to
either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed
in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the
ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued
for breach of contract. The court found:
a. the seller was in breach and must pay damages.
b. the seller was guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain
the goods.
c. no contract existed due to mistake in meaning of terms.
d. none of these.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.05 - 11.05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Mistake
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
46. Sam wants to sell his golden retriever to Al. Sam tells Al that the dog is three years old and that he will point, back,
and retrieve. Al relies on these statements and purchases the bird dog. Although the dog is three years old and will point at
birds, he will not back (honor another dog's point). The buyer has most probably been a victim of:
a. duress.
b. undue influence.
c. fraud in the inducement.
d. fraud in the execution.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
47. Tom tries to sell his Aston-Martin to Victoria for $12,000. Tom tells Victoria, "I paid $12,000 for the car in 1978 and
it's worth twice that today." Tom really paid $8,000 for the car in 1978. If Victoria buys the car, basing her decision on
Tom's statement, which of the following correctly states the situation?
a. Tom's statements amount to puffing only.
b. Tom's statements provide grounds to set the contract aside.
c. Tom's statements are actionable only if intentional.
d. Tom's statements amount to fraud in the execution.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
48. Contracts induced by threats of __________ are voidable, regardless of whether the coerced party has committed an
unlawful act.
a. civil prosecution
b. criminal prosecution
c. tortious conduct
d. a lawsuit to recover a debt
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
49. By holding a knife to his back, Ed compelled Sean to sign a contract advantageous to Ed. This contract was entered
under:
a. physical duress.
b. improper threats.
c. undue influence.
d. false representation.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
50. Adam wants to buy a six-passenger car. The salesman tells him that the two-seat sports car Adam sees on the car lot
would be just perfect for six people. Adam test drives the car and then buys it.
a. Adam has a valid cause of action for fraud.
b. Adam is not entitled to relief based on fraud because he was not justified in relying upon the salesman's
representation that the car would seat six people.
c. The element of scienter is missing in this fact situation.
d. The salesman is in a confidential relationship with Adam.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
52. Which of the following, if any, are requisites for fraud in the inducement?
a. False representation of a fact that is material.
b. Representation is made with knowledge of its falsity and the intention to deceive.
c. The representation is justifiably relied on.
d. All of these.
e. Two, but not all of these.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
53. A contract induced by threatening to bring a civil suit against an individual is prohibited:
a. if the threat is an abuse of process.
b. if the suit is to recover a debt, whether the debt is valid or in controversy.
c. under no circumstances.
d. Two answers are correct.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Knowledge
OTHER: AACSB Analytic
54. In the Berardi v. Meadowbrook Mall Company case, the court found:
a. plaintiffs must produce subjective evidence of their duress to win a case of economic duress.
b. duress is readily accepted by the courts as a reason to avoid a contract.
c. economic duress must leave the plaintiff no reasonable alternative but to acquiesce to the terms of the contract.
d. plaintiffs who prove economic duress may void the transaction, and this is their complete remedy.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
56. If incorrect, which of the following would probably be considered a misrepresentation of a material fact?
a. "This is the one that I think is the best buy."
b. "This is the best computer on the market."
c. "This car has new brakes."
d. "These tires will wear like iron."
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Reflective Thinking
58. Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph
County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed.
In this case:
a. there is a mistake of law, which in some states is treated no differently than a mistake of fact. In such states,
since this mistake relates to a basic assumption on which the parties made their contract and it has a material
effect on their agreement, the contract is voidable.
b. since everyone should know the law, Stewart is liable to Will for any losses he may incur.
c. Stewart is obligated to buy land elsewhere and have the complex constructed on property zoned for
apartments.
d. Will is liable to Stewart since Will is a contractor.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.05 - 11.05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Mistake
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
60. Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses to read
typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is
a "standard" contract for this type of situation. Is the contract which Thomas signed binding upon him?
a. No, because he did not read it.
b. No, because he entered into it based upon fraud in the execution.
c. Yes, because he has made a unilateral mistake of law.
d. Yes, because he was negligent in not ascertaining its contents.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
61. Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Bob wasn't sure as to the nature of the
stone, but told Albert he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert
found out the stone was an uncut diamond worth about $700. The sales contract:
a. is a valid contract that should be enforced by the law, because neither party knew the exact nature of the stone
at the time of the sale.
b. can be voided based upon fraud in the execution.
c. can be voided based upon fraudulent misrepresentation.
d. can be voided based upon mistake as to the identity of the subject matter.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.04 - 11.04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Nonfraudulent Misrepresentation
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
62. Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is told is a
Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius.
He later learns the violin is an imitation, although it is a good imitation, which fooled even the dealer. In this case:
a. Fred has made a unilateral mistake and cannot void the contract.
b. the dealer has committed fraud in the inducement.
c. the sale is voidable by the purchaser for mutual mistake.
d. the sale may be rescinded, because the dealer has made a nonfraudulent misrepresentation.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.04 - 11.04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Nonfraudulent Misrepresentation
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
63. Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after Jill has
bought the car, she finds out that Linda isn't interested in buying it. Jill:
a. cannot void the contract.
b. can rescind the agreement.
c. could rescind the agreement if she was mistaken in her estimate of the value of the auto.
d. can sue Linda for detrimental reliance.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.05 - 11.05
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Mistake
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
64. Ralph sold a motel to Steve by stating that he had paid $250,000 for it and that his net average annual profit from the
business has been $40,000. In reality he paid $100,000 for the motel and has earned a net average annual profit of only
$30,000. Steve made no attempt to verify the statements until after the transaction was completed. In this case:
a. Ralph has committed fraudulent misrepresentation.
b. Steve is bound by the contract, because he failed to verify the statements which were made to him.
c. Ralph has used economic duress to compel the sale.
d. All of these.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Application
OTHER: AACSB Reflective Thinking
65. Which of the following would be considered to be a misrepresentation of a material fact for purposes of establishing
fraud in the inducement?
a. A statement of value, such as "This is the best car in town for the money."
b. “This style of jacket is going to be the most popular style next year.”
c. “This car has a new radiator.”
d. “In my opinion, this is the best buy for the money.”
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
66. The law would most likely impose a duty of disclosure in a transaction between:
a. a salesperson and customer.
b. business partners.
c. a contractor and a homeowner seeking bids on repairing a roof.
d. a seller of real property and a potential buyer who knows the property has greater value than the seller realizes.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.02 - 11.02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Undue Influence
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Reflective Thinking
67. Which of the following need NOT be proved in order to establish the defense of economic duress?
a. That one side involuntarily accepted the terms of another.
b. That circumstances permitted no other alternative.
c. That one party explicitly made the economic threat.
d. That the circumstances leading up to the contract were the result of coercive acts of the opposite party.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Analytic
68. Which of the following can meet the scienter requirement to establish fraud in the inducement?
a. Actual knowledge.
b. Lack of belief in the statement's truthfulness.
c. Reckless indifference as to a statement's truthfulness.
d. All of these meet the requirement.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Analytic
71. Which of the following results in a void, rather than voidable, agreement?
a. Duress by improper threat.
b. Fraud in the execution.
c. Fraud in the inducement.
d. Undue influence.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Comprehension
OTHER: AACSB Analytic
72. What are the two types of fraud and what is the effect of each on the contract involved? Give an example of each type
of fraud.
ANSWER: Fraud in the execution is a misrepresentation that deceives the other party as to the nature of
a document evidencing the contract. For example, Melody delivers a package to Ray,
requests Ray to sign a receipt for it, holds out a simple printed form headed "Receipt," and
indicates the line on which Ray is to sign. This line appears to Ray to be the bottom line of
the form, but instead it is the bottom line of a promissory note cleverly concealed underneath
the receipt. Ray signs where directed without knowing that he is signing a note. This is fraud
in the execution. It renders the transaction void. Fraud in the inducement is a
misrepresentation regarding the subject matter of a contract and inducement of the other
party to enter into it. For example, Alice, in offering to sell her dog to Bob, tells Bob that the
dog won first prize in its class in the recent national dog show. In fact, the dog had not even
been entered in the show. This statement induces Bob to accept the offer and pay a high price
for the dog. There is a contract, but it is voidable by Bob because Alice's fraud induced his
assent.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Communication | AACSB Reflective Thinking
75.
a. What are the two types of duress and what is the effect of each on the contract
involved?
b. Give an example of each type of duress.
Who does the law intend to protect by reason of the defense of duress? Why does the
c.
law protect this type of person?
ANSWER: a. The first is called physical duress and it occurs when a party is compelled to manifest
assent to a contract through actual physical force. It renders the agreement void. The
second type of duress involves the use of improper threats or acts, including economic or
social coercion, to compel a person to enter into a contract. The threat may be explicit or
it may be inferred from words or conduct. It makes the contract voidable.
b. Pointing a gun at a person or taking a person's hand and compelling him to sign a written
contract is an example of physical duress. An example of improper threats: If Ellen, a
landlord, induces Vijay, an infirm, bedridden tenant, to enter into a new lease on the
same apartment at a greatly increased rent by wrongfully threatening to terminate Vijay's
lease and evict him, Vijay can avoid the new lease by reason of duress.
c. The law intends to protect persons of a weak or cowardly nature because they are the
very ones who need protection; the courageous can usually protect themselves. Timid
and inexperienced persons are particularly subject to threats, and the law protects them
from the unscrupulous who want to impose their will on such persons on the ground of
the victim's infirmities.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: EBLE.MANN.16.11.01 - 11.01
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Duress
KEYWORDS: Bloom’s: Evaluation
OTHER: AACSB Communication | AACSB Reflective Thinking
76. Identify whether the following statements could result in actionable fraud and why or why not.
a. A statement by an art dealer to a potential buyer, “I think this painting is underpriced
because the artist is now gaining national recognition.”
b. A vacuum cleaner salesperson’s statement, “This machine is the best available for the
cost.”
c. A city councilman’s statement to a fellow councilman that, “If we vote for that action,
the resulting consolidation will be illegal.”
ANSWER: a. This is a statement of opinion because it expresses the dealer’s judgment as to value of
the painting. Ordinarily a statement of opinion is not a basis for actionable fraud. Here,
however, the statement is made by one with superior knowledge, so it could be the basis
of actionable fraud if the buyer sustains loss by reasonable reliance on the statement. In
close cases of determining fact versus opinion, it is a question for a jury.
b. This statement is merely “puffing” or sales talk and would not result in actionable fraud.
c. Historically, courts held that representations of law were statements of opinion rather
than fact. Presently a statement of law may have the effect of a statement of either fact or
opinion. If the statement is to the legal consequences of a set of facts, it is considered a
statement of opinion and probably not actionable.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: EBLE.MANN.16.11.03 - 11.03
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Fraud
KEYWORDS: Bloom’s: Evaluation
OTHER: AACSB Communication | AACSB Reflective Thinking
77. Define undue influence and name some of the relationships that would be affected.
ANSWER: Undue influence is the unfair persuasion of a person by a party generally in a dominant
position based upon a confidential relationship. Some of the relationships that would be
affected would include: guardian-ward, trustee-beneficiary, principal-agent, spouses to one
another, parent-child, attorney-client, physician-patient, and clergy-parishioner.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.02 - 11.02
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Undue Influence
KEYWORDS: Bloom’s: Synthesis
OTHER: AACSB Communication
79.
a. Name two types of nonfradulent misrepresentation and define each one.
b. What remedies may be available for nonfraudulent misrepresentation?
ANSWER: Negligent misrepresentation is a false representation that is made without due care in
a. ascertaining its truthfulness. Innocent misrepresentation is a false representation made
without knowledge of its falsity but with due care.
The remedies that may be available for nonfraudulent misrepresentation are rescission
b.
and damages.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: EBLE.MANN.16.11.04 - 11.04
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - OH - AICPA: BB-Legal
TOPICS: A-Head: Nonfraudulent Misrepresentation
KEYWORDS: Bloom’s: Analysis
OTHER: AACSB Communication
G o s e w y n , voluit G o d e s w i n , beteekenende: G o d s v r i e n d .
Deze naam komt in verschillende vormen en verkortingen voor, als
G o e s w y n (G o e s w y n ) H e i l w i g h e n s o e n v a n
G h e r w e n (1389), en G o e s w y n S c h u e r m a n s (1419); als
G o s w y n (G o s w y n ) W e v e r s (1402); samengetrokken als
G o e s s e n , heden ten dage G o o s s e n : G o e s s e n S c o r t e n
(1460).
G h e v a r t , dat is G e v a r t of G e e v a e r t , Hoogduitsch
G e b h a r d .—G h e v a r t L u t e n s o e n (1401). [189]
Y s b o u t , I s b a l d .—Y s b o u t D i r x S n o e x s o e n v a n d e r
Z a n t v o e r t (1416).
R a b o u t , voluit R a d b o u t , R a d b o l d of R e d b a l d .—Met
eenige verwondering, maar tevens met veel genoegen vinden wij
dezen schoonen, tamelijk zeldzamen, Oud-Frieschen koningsnaam
nog in de 15e eeuw in Brabant (of in Limburg? Neder-Rijnland?) in
gebruik: R a b o u t h e e r e n R a b o u t s s o e n v a n
V l o e d o r p (1425). Dit V l o e d o r p is toch zeker het
hedendaagsche V l o d o r p of V l o d r o p in Limburg, bij Roermond,
op de grens van Neder-Rijnland.
L u y t g a r t of L u y t g a e r d e , L u t g a r d i s , een welluidende en
liefelijke naam, de naam van S i n t e - L u u t g a a r d e van Tongeren,
bij de Roomsch-Catholyken bijzonderlijk als Beschermheilige der
Nederlandsche (Dietsche, Vlaamsche) taal vereerd, wier gedenkdag
op den 16den Juni valt. L u y t g a e r t H o u b e n (1394), wier naam
in den jare 1400 als L u y t g a r t H u b e n d o c h t e r voorkomt.
W a n d e l , ook W e n d e l , W e n d e l a .—W a n d e l J a n
E m b r e c h t s d o c h t e r (1419).
H e i l w i g . —H e i l w i g d o c h t e r w i l e n H e r m a n s D i r c s
G u e d e l e n s o e n s (1443). De oude naam G u e d e l e ,
G o e d e l a , G u d u l a , in deze benaming voorkomende als eigen
aan de grootmoeder of overgrootmoeder van H e i l w i g , is mede
een Oud-Nederlandsche naam, te Brussel welbekend.
Het Friesche volk heeft zich, van ouds her en tot op den dag van
heden, door vele eigenaardigheden in taal, zeden, kleeding, enz.,
steeds bijzonder onderscheiden van andere, naburige en
stamverwante Germaansche volken. De bijzondere namen der
Friezen, zoowel hunne vóórnamen als hunne geslachts- en
plaatsnamen, die grootendeels van de vóórnamen zijn afgeleid,
nemen onder die eigenaardigheden almede eene eerste plaats in.