FYLSX Defenses to Contract Enforceability 3

Question 1

A seller knowingly misrepresents that a car has never been in an accident.
The buyer, who is an experienced mechanic, could easily detect signs of repair but does not inspect the car.
The buyer later sues for fraud.
Which element is most at issue?

Accepted Answer

Whether the buyer's reliance was justifiable

Answer

Whether the seller made a false statement of fact

Answer

Whether the seller intended to deceive the buyer

Answer

Whether the misrepresentation was material

Question 2

Paul enters a contract to buy a business. The seller fails to disclose that the business is the subject of a pending government investigation. In most jurisdictions, the seller's silence constitutes actionable fraud if:

Accepted Answer

The seller had a duty to disclose due to a confidential relationship or active concealment

Answer

The buyer failed to conduct adequate due diligence before signing

Answer

The information was obtainable through public records

Answer

The parties negotiated at arm's length

Question 3

A contract is formed under physical duress when one party signs only because the other party threatens imminent bodily harm. The legal effect on the contract is:

Accepted Answer

The contract is void because consent was entirely absent

Answer

The contract is voidable at the option of the coerced party

Answer

The contract is enforceable because a signature was obtained

Answer

The contract is void only if the threat is carried out

Question 4

Which of the following is NOT a required element of fraudulent misrepresentation as a defense to contract enforceability?

Accepted Answer

Written communication of the misrepresentation

Answer

A false representation of a material fact

Answer

Intent by the misrepresenting party to induce reliance

Answer

Actual and justifiable reliance by the other party

Question 5

Tom signs a contract believing it to be a receipt, when it is actually a promissory note. The other party fraudulently misled him about the document's nature. Tom's defense is:

Accepted Answer

Fraud in the execution (factum), making the contract void

Answer

Fraud in the inducement, making the contract voidable

Answer

Mutual mistake, making the contract voidable

Answer

Non est factum, making the contract unenforceable for lack of consideration

Question 6

A plaintiff claims she was induced to sign a contract based on the defendant's innocent (non-fraudulent) misrepresentation. Which remedy is available?

Accepted Answer

Rescission of the contract only; no damages for the innocent misrepresentation

Answer

Compensatory and punitive damages

Answer

Specific performance of the contract

Answer

Reformation of the contract to reflect the truth

Question 7

Which contract is unenforceable due to illegality?

Accepted Answer

A contract between two businesses to fix prices in violation of antitrust law

Answer

A contract with a minor for the purchase of food and clothing

Answer

A contract to provide services at a price higher than the market rate

Answer

A contract that requires a party to work overtime without additional pay