Reference no: EM13485974

1. Pimples signs a contract to purchase a parcel of land. The contract recites that 44 acres are being sold. It turns out that tract of land has only 43.999 acres in it. Neither seller nor buyer was aware of the discrepancy. When Pimples discovers the error, can he avoid the contract?

Yes, because this is clearly a material mistake.
Yes, because all bilateral mistakes can be avoided.
No, because this is an immaterial mistake.
No, because the parties could have hired a surveyor to determine an exact number.

2. Fluffy wants to buy a puppy. She sees an advertisement in the newspaper for purebred chocolate labradors for sale at $50 each. When she contacts the seller, she asks why the price is so low for purebred dogs. The seller informs Fluffy that the puppies in this litter do not have papers from the American Kennel Club or they would be sold for at least $400. Fluffy purchases one of the puppies for $50. Two weeks later, the seller discovers that the litter in fact had papers from the American Kennel Club and seeks to avoid the contract with Fluffy. The seller had received the papers from the American Kennel Club a few weeks ago and had filed them in his desk without reading them. Who wins?

The seller, because this is a bilateral mistake of fact.
Fluffy, because the seller made a mistake of value.
Fluffy, because the mistake is unilateral.

3. Fluffy wants to buy a puppy. She sees an advertisement in the newspaper for purebred chocolate labradors for sale at $50 each. When she contacts the seller, she asks why the price is so low for purebred dogs since purebred labradors are currently selling for at least $400. The seller informs Fluffy that he is applying to the American Kennel Club for papers on the litter but is not sure whether he can get them. He wants to sell the puppies in case the papers are denied and he needs some quick cash for a few bills he owes. Fluffy purchases one of the puppies for $50. Two weeks later, the American Kennel Club decides to give the seller the papers. The seller sues to avoid the contract with Fluffy. Who wins?

Fluffy
The seller

4. Pimples is negotiating for a job at a local corporation. The person who interviews Pimples tells him that the job will start at $70,000 per year with full benefits. But Pimples is not told that the job for which he is interviewing is on a short list of jobs which might be eliminated in the near future because the corporation is planning to downsize. The interviewer is aware of the short list. Is this fraud?

Yes
No

5. Pimples and Fluffy are negotiating to purchase an already established business. The owner of the business presents them with financial statements for the past three years. A few days later the owner discovers that the financial statements have seriously overstated income for the last year. A correct statement indicates the business has lost money. If Pimples and Fluffy purchase the business based on the financial statements, can they subsequently avoid the contract?

Yes, because the owner had a duty to speak once he knew that the financials were wrong.
Yes, because this is fraud.
Yes, because the owner knew that Pimples and Fluffy were relying on the financials.
All of the above.

6. Pimples and Fluffy are negotiating to purchase an already established business. The owner of the business presents them with financial statements for the past three years. Pimples and Fluffy are concerned that the statements contain inflated income flows. They take the financial statements to their accountant. The accountant looks at the financial statements for a few minutes, does not ask to see the books and records of the seller, and conducts no other examination to see if the financials are correct. The accountant then opines that the financial statements are, in his opinion, correct. Pimples and Fluffy purchase the business, only to suffer large losses because the financials were erroneous. They sue the accountant for fraud. What result?

The accountant wins because his statement was merely an opinion.
The accountant wins because it was the seller of the business who lied.
Pimples and Fluffy win because they had a right to rely on their accountant.

7. Pimples has a salaried position with a large corporation where he is in charge of making investments for its pension fund. An audit of the pension funds discloses a shortfall in money. There is evidence that Pimples may be responsible for the shortfall. Pimples is informed that he may either resign or be fired. If he resigns, his suspected involvement in the shortfall will not be noted on his employment records and he will receive two weeks severance pay. But if he is fired, his employment records will show the shortfall and a suspicion that Pimples was involved. At no time does anyone suggest that Pimples might be sued in civil court for the shortfall or anyone might contact the criminal authorities regarding possible embezzlement. Pimples executes a formal resignation. Subsequently another employee is found to be responsible for the shortfall. Can Pimples avoid his resignation due to duress?

Yes
No

8. Pimples has a salaried position with a large corporation where he is in charge of making investments for its pension fund. An audit of the pension funds discloses a shortfall in money. There is evidence that Pimples may be responsible for the shortfall. Pimples is informed that his employer will file embezzlement charges with the police unless Pimples immediately resigns. Pimples chooses to resign. Subsequently another employee is found to be responsible for the shortfall. Can Pimples avoid his resignation on the grounds of duress?

Yes
No

9. Pimples has a salaried position with a large corporation where is in charge of making investments for its pension fund. An audit of the pension funds discloses a shortfall in money. There is evidence that Pimples may be responsible for the shortfall. The country prosecutor causes a warrant to be issued for the arrest of Pimples on grounds of embezzlement. Pimples is arrested and then released on a bail bond. Immediately after his release, four vice-presidents of the employer ask Pimples to voluntarily resign. Pimples is told that in exchange for a resignation the corporation will contact the prosecutor and ask to have the criminal charges reduced to a misdemeanor instead of the current felony charges. Pimples is also promised severance pay equal to a month's salary, which he clearly needs for the legal fee of his criminal defense attorney. When Pimples says that he wants to talk to his attorney, the vice-presidents inform Pimples that an immediate decision must be made or the corporation's offers will be withdrawn. Pimples resigns. Subsequently the prosecutor dismisses the embezzlement charges for lack of evidence. On what grounds, if any, can Pimples revoke his resignation?

Undue influence.
Duress
Mistake
None of the above