Yates ch08 - test bank PDF

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Business Law in Canada, 11e (Yates) Chapter 8 Factors Affecting the Contractual Relationship1) With regard to the law concerning misrepresentation, which of the following is true? A) The case law provides a remedy for a wildly exaggerated claim, such as "This is the best car ever built.&...

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Business Law in Canada, 11e (Yates) Chapter 8 Factors Affecting the Contractual Relationship 1) With regard to the law concerning misrepresentation, which of the following is true? A) The case law provides a remedy for a wildly exaggerated claim, such as "This is the best car ever built." B) A statement of opinion can be a one-sided mistake. C) A misrepresentation can be a false assertion of fact that induces (persuades) the party to contract, and need not be an assertion about a term of the contract. D) For fraudulent misrepresentation, the buyer could ask only for the equitable remedy of rescission. E) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that the misrepresentation was true. Answer: C Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 2) A fraudulent misrepresentation which induces another person to enter into a contract can result in which of the following remedies? A) Rescission and/or damages B) Rescission only C) Damages only D) Rectification E) There is no remedy available for fraudulent misrepresentation. Answer: A Diff: 1 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge

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3) Damages as a remedy will not be available in which of the following situations? A) Jones, although being careful, makes an innocent misrepresentation persuading Smith to enter a contract with him. B) Jones makes a fraudulent misrepresentation, persuading Smith to enter a contract with him. C) Jones makes a negligent misstatement, persuading Smith to enter a contract with him. D) A false statement made by Jones becomes a term of the contract. E) Jones makes an intentional misrepresentation of fact in order to get Smith to sign the agreement. Answer: A Diff: 1 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 4) Often a party to a contract wants to avoid his obligations by arguing that the contract was entered into because of a mistake, misrepresentation, undue influence, or duress. Which of the following is false with regard to these areas of the law? A) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that his misrepresentation, which persuaded the buyer to buy, was true. B) If a seller persuades a person to buy something by a fraudulent misrepresentation, the buyer could ask for rescission and/or damages for the tort of deceit. C) A person can successfully argue non est factum and avoid his obligations under a contract only if he was misled about the very nature of the document and was not careless. D) Independent legal advice given to a person who wants to give a gift to a dominant person (e.g., his doctor) is good evidence to rebut a presumption of undue influence. E) Where, because of a mistake, a written document does not embody the unchanged term of the original oral agreement, a party to the contract could ask the court for the equitable remedy of rectification. Answer: A Diff: 3 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge

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5) The office manager of a real estate agency was at an office supply store to replace a filing cabinet when he saw a demonstration of a new Xerox copier. Undoubtedly, the agency would benefit from the copier, especially since it had the capability of enlarging the original—a good feature when dealing with the small print of contracts. The next day, he called the manager of the store to discuss the machine further. The seller said that it was "ten years ahead of the competition," that it "was rated as maintenance-free by an independent consumer research group," and that he had "sold five to other real estate agencies in this area" and "had only one left." The agency, relying on these statements, asked to have it delivered. When it arrived, the office manager had learned that every statement made by the seller had been false. Furthermore, the seller did not send out the machine discussed, but the old model. Which of the following is true? A) The agency would have to keep the machine, but could sue the seller for damages for the tort of deceit. B) This is a "buyer beware" situation and the buyer has no remedy. C) The agency would have a remedy for breach of contract, but no remedy for other statements that merely persuaded it to enter the contract. D) The agency could have returned the machine even if it had been sent the right model, since the remedy of rescission was available to it for misrepresentations made. E) Had the office supply store sent the right machine, the agency would have had no remedy. Answer: D Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 6) Jenny went to the store and asked to see a Bluetooth headset. The salesman brought out a set that he said had all the features that she wanted. After looking at the price tag and little else, she said she would think about it. The salesman said that this was the most popular model sold, that they sold 1000 of them during the World Series alone, that it had the highest rating in Consumer Reports, and that he only had that one left. Jenny bought it. Later she found out that all the statements made to her by the salesman were false, including the statement that the headset had all the features that she wanted, because it did not have noise suppression. Which of the following is true? A) Jenny could obtain the remedy of rescission only if the statements made to induce her to contract were fraudulent. B) The statements of the salesman are fraudulent only if the salesman knew they were false. C) Jenny would only have a remedy for breach of contract. D) The equitable remedy of rescission is available only if Jenny were able to restore the headset to the seller. E) Jenny could return this headset to the seller only if she could prove undue influence. Answer: D Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 3 Copyright © 2017 Pearson Canada, Inc.

7) A salesman innocently misrepresented a fact to a customer about a new printer. He honestly believed his statement was true and was not careless. Although this fact was not about a term of the contract, it did induce the customer to buy that printer. The next day, the customer learned the true facts and wanted to return the printer. If the store refused to take it back and the customer sued, which of the following would be the most likely result? A) An award of damages B) The buyer's case dismissed C) An order of specific performance D) An order of rescission E) An injunction Answer: D Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 8) When Gary went into Computer Heaven, Ltd. to get a better manual for the program he was trying to master, he was caught by a demonstration of a computer created by StarSystem Inc. He was fascinated by its performance. The salesman, Ross, told Gary that he should have this machine; that "it was the last computer, no other will ever be better"; that "UBC, Simon Fraser University, and BCIT just ordered over 1000 of them"; that he only had "a few left and the demand is so great it will take almost a year for the next shipment to arrive." When Gary said he needed a computer with at least 1 terabyte of hard drive space, Ross said this model had 2.5 terabytes. Gary was persuaded and contracted for it. Later Gary learned that every statement made by the salesman Ross was untrue, including the statement about the memory capacity. The model only had 400 gigabytes. On these facts, which of the following is true? A) Gary could be awarded the equitable remedy of rescission even if Ross, the salesman, honestly believed everything he said was true. B) Only if Ross, the salesman, knew that all the statements he made were false could Gary get a remedy. C) Merely the exaggerated claim "it was the last computer, no other will ever be better" is enough, according to the case law, to allow Gary to get out of the contract. D) Statements that induced Gary to contract, but that are not the terms of the contract, are not significant enough for the courts to award a remedy by case law or by statute. E) Such misrepresentations could only result in contractual remedies, legal or equitable, but not in tort remedies. Answer: A Diff: 3 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge

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9) The contract for an Oakville property had been signed by both parties. Which of the following is necessary for the contract to be set aside on the grounds of misrepresentation? A) The misrepresentation must have been a false statement of a fact; false statements of opinion are never misrepresentations. B) The misrepresentation must have been a term of the contract. C) The misrepresentation must have induced the party to enter the contract. D) The misrepresentation must have been in writing. E) The misrepresentation must have been made recklessly or wilfully. Answer: C Diff: 1 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 10) It came to your attention that your great-grandmother had signed a contract pursuant to which she would be paying $5000 for an electronic organ that retails in reputable stores for $3000. Furthermore, the interest being charged is 18%, even though today's rate fell to a 20-year low. This debt is totally out of line with her pension income. It is apparent that she was misled by the door-to-door salesman who came to her place. On these facts, which of the following laws is the most likely to help her? A) Undue influence only B) Unconscionability only C) Misrepresentation only D) Non est factum E) Both unconscionability and misrepresentation Answer: E Diff: 1 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge

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11) Mrs. Sharp, the owner of a restaurant, induced the Morissons to buy the business by a misrepresentation; the invoices made her costs appear less than they actually were, and thus her profits more than they actually were. On these facts, which of the following is false? A) The cause of action could be for the tort of deceit, if there was evidence that Mrs. Sharp intended to deceive them. B) The court could not award the equitable remedy of rescission if evidence showed that Mrs. Sharp really believed the invoices were accurate. C) The court could award the equitable remedy of rescission if the evidence showed she had fraudulently misrepresented the costs. D) The court could terminate the contract for breach of contract if the accurate statement of costs and profit were essential terms of the contract. E) The court could not award the equitable remedy of rectification because the argument is not about rectifying an erroneous written version of a previous oral contract. Answer: B Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 12) The major problem with ________ is the need to establish that the person being sued knowingly misled the victim. A) fraudulent misrepresentation B) innocent misrepresentation C) negligent misrepresentation D) undue influence E) deceit Answer: A Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge

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13) Which of the following constitutes a misrepresentation that would not allow the courts to award the equitable remedy of rescission? A) A man who contracted for an insurance policy did not state on the application form that he had been treated for cancer. He died from the cancer two months later. B) The seller concealed the broken drawer of the desk from the buyer. He would not be able to see it until he got it home. C) The seller was persuaded to buy the car by a misrepresentation that it had the fewest repairs of any car of its class. After the buyer learned of the truth, he kept the car for three weeks to get some benefit from it before taking it back. D) The seller persuaded the buyer to buy the car by misrepresenting it as having just been serviced and passing emissions tests. Neither had been done, but the seller honestly believed both had been done. E) None of the above. Answer: C Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 14) A computer salesman innocently misrepresented a fact about a StarSystem computer to a customer. Although this fact was not about a term of the contract, it did induce the customer to buy the computer. The customer has now learned the true facts and wants to return the computer. If the store refuses to take it back, the customer would ask the court for which equitable remedy? A) Damages B) Rescission C) Rectification D) Restitution E) Injunction Answer: B Diff: 1 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge

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15) Mary has a little scam most everywhere she goes. She sells by saying anything. Her buyers just have woes. Which of the following is true with regard to misrepresentation? A) There are several remedies available in case law for an exaggerated claim made by Mary. B) If Mary induces the buyer to buy by making a misrepresentation that she honestly thought was true, the buyer has no remedy in law or in equity. C) A misrepresentation can be made about a term of a contract and result in an award of rescission and/or damages. D) In some types of misrepresentation there are no remedies available. E) For fraudulent misrepresentation, the buyer can be granted the equitable remedy of only rescission. Answer: C Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 16) With regard to the law concerning misrepresentation, which of the following is true? A) The case law allows a remedy for an opinion given by a non-expert. B) A misrepresentation can be a true assertion of fact that induces (persuades) the party to contract. C) If the buyer realizes the seller persuaded him to contract by a misrepresentation, he will not be able to get the remedy of rescission if he was tainted with wrongdoing himself, (i.e., not coming with "clean hands"). D) Damages as a remedy are not available where the misrepresentation becomes part of the contract. E) Rescission is available as a remedy for misrepresentation only if it is innocent misrepresentation. Answer: C Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge

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17) Keri went to Crandon's computer outlet with her brother Paul, who was buying a laser printer. While she was waiting for him, she saw a poster saying the store was collecting funds for a special computer for a student recently disabled in an accident. The seller induced Paul to buy the model "X" printer by stating as a fact that the printer could interface with his iMac. Paul paid $400 for the printer. Also, Keri gave $15 to the student fund after the seller confirmed he was collecting for the student's computer. Later Paul and Keri learned that neither statement was true —the printer didn't work with Paul's computer and the store was doing nothing for the student— and that the seller didn't believe that either statement was true when he made them. On these facts, which of the following is true? A) Keri could sue for damages due to a misunderstanding. B) Paul could sue for damages due to an innocent misrepresentation. C) Paul could sue for rescission because of the misrepresentation. D) The court would rescind Paul's contract only with proof that the seller knew his statement was false. E) Only Keri has a remedy because she had been fraudulently misrepresented. Answer: C Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 1. Distinguish innocent, fraudulent, and negligent misrepresentation. Bloom's Taxonomy: Knowledge 18) If Mills agreed to sell Boothe a used Nissan automobile, which in the contract was described as a 2012 Nissan Murano with a rebuilt transmission, Boothe could sue for ________ if the vehicle turned out to be a 2010 Murano and the transmission was used, not rebuilt. A) rescission B) compensation C) breach of contract D) damages E) the tort of deceit Answer: C Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Applied Objective: Chapter 8: 2. Identify the remedies available for each type of misrepresentation. Bloom's Taxonomy: Knowledge

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19) Damages are available as a remedy where the misrepresentation has become a term of the contract that is breached, where the misrepresentation is ________, and where there is negligence. A) innocent B) fraudulent C) negligent D) material E) actionable Answer: B Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 2. Identify the remedies available for each type of misrepresentation. Bloom's Taxonomy: Knowledge 20) Victims of misrepresentation who have affirmed the contract are bound by the affirmation and cannot later insist on A) rescission. B) remedies. C) breach. D) original positions. E) quantum meruit. Answer: A Diff: 1 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 2. Identify the remedies available for each type of misrepresentation. Bloom's Taxonomy: Knowledge 21) The victim of ________ can seek monetary compensation as well as rescission for any loss incurred. A) innocent misrepresentation B) negligent misrepresentation C) fraudulent misrepresentation D) misrepresentation E) deceit Answer: C Diff: 2 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 2. Identify the remedies available for each type of misrepresentation. Bloom's Taxonomy: Knowledge

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22) ________ attempts to return both parties to their original positions. The subject matter of the contract must be returned to the original owner, and any monies paid under the contract must also be returned. A) Damages B) Remedies C) Recession D) Compensation E) Avoidance Answer: C Diff: 1 Type: MC Page Ref: 247 Topic: Ch. 8 - Misrepresentation Skill: Recall Objective: Chapter 8: 2. Identify the remedies available for each type of mi...