FYLSX - Baby Bar Defenses to Contract Enforceability Questions and Answers

Question 1

A homeowner, anxious to sell his house, tells a potential buyer that the roof is 'in perfect condition' and was fully replaced last year. In reality, the homeowner only had a few shingles replaced and knows the roof has a significant leak. The buyer, relying on this statement, purchases the house and discovers the leak after the first major rainstorm. Which of the following defenses is the buyer most likely to successfully raise to rescind the contract?

Accepted Answer

Fraudulent Misrepresentation

Answer

Fraudulent misrepresentation occurs when a party knowingly makes a false statement of material fact, intending to induce the other party to enter the contract, and the other party justifiably relies on that statement to their detriment. [14, 15] Here, the homeowner knowingly lied about the roof's condition (a material fact), intending for the buyer to rely on it, which the buyer did, resulting in damages. Unilateral mistake is incorrect because the buyer's error was induced by the seller's false statement, not a simple mistake on the buyer's part. [8, 10] Duress is inapplicable as there was no threat or coercion. [2, 3] The Statute of Frauds is irrelevant because a contract for the sale of land is in writing.

Question 2

An elderly woman, who is physically frail and completely dependent on her in-home caregiver for all her daily needs, is persuaded by the caregiver to sell her valuable antique car to him for a fraction of its market value. The caregiver had repeatedly told her that if she didn't sell him the car, he might not be able to continue providing care. The contract is in writing and signed. What is the woman's strongest defense to the enforceability of this contract?

Accepted Answer

Undue Influence

Answer

Undue influence occurs when a dominant party in a confidential or dependent relationship uses excessive pressure to overcome the will of the weaker party. [7, 17] The relationship between the elderly woman and her sole caregiver creates a presumption of undue influence, and the unfair terms of the deal further support this defense. Economic duress typically involves an improper threat to a person's financial interests, which is less fitting than undue influence here. [3] Incapacity would require showing she lacked the mental ability to understand the contract, which isn't the primary issue described. Mutual mistake is incorrect as there was no shared, mistaken belief about a fundamental fact. [28]

Question 3

A building contractor submits a bid for a large construction project. Due to a clerical error in adding up the costs of subcontractors, the contractor's bid is $100,000 lower than intended. The property owner, who had received other bids that were all at least $90,000 higher, immediately accepts the contractor's bid. If the contractor seeks to void the contract, which defense would be most applicable?

Accepted Answer

Unilateral Mistake

Answer

A unilateral mistake can be a basis for rescission if the non-mistaken party knew or should have known of the other party's mistake and sought to take advantage of it. [10, 20] Here, the significant difference between the contractor's bid and all other bids should have alerted the property owner to the likelihood of a material error. This knowledge prevents the owner from snapping up the offer. Mutual mistake is incorrect because only one party was mistaken. [8] Fraudulent misrepresentation requires a false statement of fact, which did not occur. [4, 5] Unconscionability focuses on oppressive terms and unequal bargaining power at the time of formation, which is less precise than the doctrine of unilateral mistake in this scenario. [18]

Question 4

Which of the following oral agreements would be unenforceable under the Statute of Frauds?

Accepted Answer

An agreement to act as a consultant for a company for a term of 18 months.

Answer

The Statute of Frauds requires certain types of contracts to be in writing to be enforceable. One such category is contracts that, by their terms, cannot be performed within one year from the date of their making. [30, 31, 34] An 18-month consulting agreement cannot be completed within one year, so it must be in writing. The landscaping contract can be completed within a year. The one-year lease is performable within one year from its start date, and the rule measures from the date of making, but many jurisdictions have a specific rule for one-year leases. However, the 18-month service contract is squarely within the one-year provision. The computer sale is for goods under $500, so the UCC Statute of Frauds does not apply.

Question 5

A contract will be rendered void, rather than merely voidable, if it is entered into under which of the following circumstances?

Accepted Answer

Physical compulsion duress

Answer

While most defenses to formation (like fraud, economic duress, and undue influence) make a contract voidable at the option of the wronged party, a contract entered into under physical compulsion duress is considered void from its inception. [11, 17] This is because there is no true assent; the person signing is treated as a 'mere mechanical instrument.' Fraud in the inducement, economic duress, and undue influence all involve some level of assent, even if improperly obtained, making the resulting contracts voidable. [7, 14, 32]

(FYLSX) Baby Bar Exam Practice Test

(FYLSX) Baby Bar Exam Practice Test

FYLSX - Baby Bar Defenses to Contract Enforceability Questions and Answers