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Question 1
Howard is looking to buy a house in the Brookline area of Boston. Howard contacts Brian, a realtor, and arranges to see several houses that are on sale. After picking out the house he likes, Howard asks the owner, Harrow, if the house has a termite problem. The house does have a termite problem but Harrow, knowing that Howard will not buy the house if he knows about the termite problem, tells Howard that there is no termite problem. Howard and Harrow sign a contract by which Howard will buy the house for $250,000. After the contract is signed, Howard finds out about the termite problem. Howard refuses to pay the purchase price for the house and Harrow sues Howard for breach of contract. Harrow will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct If a party to the contract relies on the fraudulent misrepresentation and enters into a contract based on that misrepresentation, the contract is voidable by the innocent party. In this case, the contract will be voidable by Howard because Harrow made a fraudulent misrepresentation that Howard relied on and, based on that misrepresentation, Howard entered into the contract. Therefore, Harrow will not be able to recover from Howard and D is the correct answer.
Incorrect! If a party to the contract relies on the fraudulent misrepresentation and enters into a contract based on that misrepresentation, the contract is voidable by the innocent party. In this case, the contract will be voidable by Howard because Harrow made a fraudulent misrepresentation that Howard relied on and, based on that misrepresentation, Howard entered into the contract. Therefore, Harrow will not be able to recover from Howard and D is the correct answer.
Question 2
Howard is looking to buy a house in the Brookline area of Boston. Howard contacts Brian, a realtor, and arranges to see several houses that are on sale. After picking out the house he likes, Howard asks the owner, Harrow, if the house has a termite problem. The house does have a termite problem but Harrow, not being aware of the problem, tells Howard that there is no termite problem. Howard and Harrow sign a contract by which Howard will buy the house for $250,000. After the contract is signed, Howard finds out about the termite problem. Howard refuses to pay the purchase price for the house and Harrow sues Howard for breach of contract. Harrow will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct A material misrepresentation is a misstatement of fact that will induce a reasonable person to enter into a contract. If a misrepresentation is material to the contract, the contract will be voidable by the relying party even if the misrepresentation is not fraudulent. Here, although the misrepresentation that Harrow made was not fraudulent, it was still a material misrepresentation that Howard relied on. That being the case, Howard can void the contract and C is the correct answer.
Incorrect! A material misrepresentation is a misstatement of fact that will induce a reasonable person to enter into a contract. If a misrepresentation is material to the contract, the contract will be voidable by the relying party even if the misrepresentation is not fraudulent. Here, although the misrepresentation that Harrow made was not fraudulent, it was still a material misrepresentation that Howard relied on. That being the case, Howard can void the contract and C is the correct answer.
Correct
Incorrect!
Question 3
Howard is looking to buy a house in the Brookline area of Boston. Howard contacts Brian, a realtor, and arranges to see several houses that are on sale. After picking out the house he likes, Howard asks the owner, Harrow, how much he would sell the house for. Harrow names a price of $250,000 and Howard agrees. Harrow does not tell Howard that the house is only worth $150,000. After the contract is signed, Howard finds out that the house is worth only $150,000. Howard refuses to pay the purchase price for the house and Harrow sues Howard for breach of contract. Harrow will win:
Correct True. In general, parties that propose contracts are not required to disclose facts regarding the subject matter of the contract. Therefore, Harrow was not obligated to disclose the true value of the house to Howard and TRUE is the correct answer.
Incorrect! True. In general, parties that propose contracts are not required to disclose facts regarding the subject matter of the contract. Therefore, Harrow was not obligated to disclose the true value of the house to Howard and TRUE is the correct answer.
Correct
Incorrect!
Question 4
Ben and Jerry and Moo Juice have agreed that Moo Juice will ship 10,000 gallons of milk to Ben and Jerry's ice cream manufacturing plant every month for two years and that Ben and Jerry will pay $2 per gallon. Moo Juice leases a fleet of refrigerated trucks and transports the first shipment of milk the one hundred miles between its farm and the ice cream plant. It costs Moo Juice $5,000 per month to lease the trucks for the duration of the contract. Ben and Jerry know that if they do not accept the milk once it arrives at the plant, Moo Juice will not have time to truck the milk back to their farm and find a new buyer before the milk spoils. With that in mind, Ben and Jerry contact Moo Juice and tell them that they will not accept the milk unless Moo Juice agrees to change the contract price from $2 per gallon to 50 cents per gallon. Moo Juice, seeing as their choices are between selling the milk for $5,000 per month and breaking even on the deal or suffering a total loss, accepts the deal. However, after Moo Juice collects the $5,000 from Ben and Jerry, it finds another ice cream company to sell its milk to for $2 per gallon. Moo Juice contacts Ben and Jerry and tells them that it will not be selling milk to them anymore. Ben and Jerry immediately sue Moo Juice for breach of contract. Ben and Jerry will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct Economic duress will make a contract voidable if one party threatens to commit a wrongful act that would put the other party's property or financial well being in jeopardy and there is nothing the other party can do to avoid the threat other than enter into the contract. Here, Ben and Jerry threatened to breach their contract with Moo Juice, which would have financially harmed Moo Juice, unless Moo Juice agreed to the new terms that Ben and Jerry laid out. The only way for Moo Juice to avoid suffering the financial harm that Ben and Jerry were threatening was to accept the new terms. That being the case, the contract was voidable by Moo Juice. Therefore, Ben and Jerry cannot recover from Moo Juice and D is the correct answer.
Incorrect! Economic duress will make a contract voidable if one party threatens to commit a wrongful act that would put the other party's property or financial well being in jeopardy and there is nothing the other party can do to avoid the threat other than enter into the contract. Here, Ben and Jerry threatened to breach their contract with Moo Juice, which would have financially harmed Moo Juice, unless Moo Juice agreed to the new terms that Ben and Jerry laid out. The only way for Moo Juice to avoid suffering the financial harm that Ben and Jerry were threatening was to accept the new terms. That being the case, the contract was voidable by Moo Juice. Therefore, Ben and Jerry cannot recover from Moo Juice and D is the correct answer.