ACCT 2700 UPDATED EXAMS TEST PAPER QUESTIONS AND
ANSWERS SURE A+
✔✔What is a Bilateral (Mutual) Mistake? - ✔✔A mutual misunderstanding by both
parties about the same fact; the contract can be rescinded by either party.
✔✔What is a Mistake of Value? - ✔✔A mistake about the future value or quality of the
object of the contract; generally, the contract remains enforceable.
✔✔What is Fraudulent Misrepresentation? - ✔✔When an innocent party is induced to
enter a contract based on false information, allowing them to rescind the contract.
✔✔What are the required elements for Fraudulent Misrepresentation? -
✔✔Misrepresentation of material fact, intent to deceive, justifiable reliance on the
misrepresentation, and injury to the innocent party.
✔✔What is Misrepresentation by Words? - ✔✔Telling a lie to induce someone into a
contract.
✔✔What is Misrepresentation by Conduct? - ✔✔Taking specific action to conceal a fact
that is material to the contract.
✔✔Are statements of opinion considered fraudulent? - ✔✔Generally, statements of
opinion are not considered fraudulent.
✔✔What is Misrepresentation of Law? - ✔✔Ordinarily does not entitle a party to relief.
✔✔What is Misrepresentation by Silence? - ✔✔Neither party has a duty to disclose
facts unless the seller knows of a material defect that cannot be reasonably discovered
by the buyer.
✔✔What does 'Scienter' mean? - ✔✔Guilty knowledge; it shows when a party knows
their statement is false.
✔✔What is Innocent Misrepresentation? - ✔✔When a person makes a statement they
believe to be true but actually misrepresents facts; the innocent party can rescind but
usually cannot seek damages.
✔✔What is Negligent Misrepresentation? - ✔✔When a party fails to use reasonable
care in disclosing facts.
✔✔What is Justifiable Reliance? - ✔✔The deceived party must have a justifiable reason
for relying on the misrepresentation.
, ✔✔Is injury required to rescind a contract? - ✔✔No, but it is required if the innocent
party seeks to recover damages.
✔✔What is Undue Influence? - ✔✔Occurs when a third party can greatly influence one
of the contracting parties, often in a trusted or fiduciary relationship.
✔✔What presumption arises in cases of Undue Influence? - ✔✔When a contract
enriches the dominant party, the court will often presume undue influence.
✔✔What is Duress in contract law? - ✔✔Entering a contract under fear or threat; the
threatened act must be wrongful or illegal.
✔✔Is the threat of a civil suit considered unlawful duress? - ✔✔No, the threat of a civil
suit is not unlawful.
✔✔What is Economic Duress? - ✔✔Generally not sufficient on its own to constitute
duress.
✔✔What is delegation in contract law? - ✔✔Transfer of contractual duties to a third
party.
✔✔Who is the delegator? - ✔✔The party delegating the duties.
✔✔Who is the delegatee? - ✔✔The party to whom the duties are delegated.
✔✔Is there a special form required for valid delegation of duties? - ✔✔No special form
is required.
✔✔What is the general rule regarding delegation of duties? - ✔✔Any duty can be
delegated.
✔✔Name one exception to the delegation of duties. - ✔✔Duties are personal and
depend on the obligor's skill or talent.
✔✔What happens if performance will vary materially from what is expected by the
obligee? - ✔✔Delegation is not allowed.
✔✔What must the obligee do when a delegation occurs? - ✔✔The obligee must accept
performance from the delegatee.
✔✔Can an obligee refuse performance from a delegatee? - ✔✔Yes, but only if the duty
cannot be delegated.
ANSWERS SURE A+
✔✔What is a Bilateral (Mutual) Mistake? - ✔✔A mutual misunderstanding by both
parties about the same fact; the contract can be rescinded by either party.
✔✔What is a Mistake of Value? - ✔✔A mistake about the future value or quality of the
object of the contract; generally, the contract remains enforceable.
✔✔What is Fraudulent Misrepresentation? - ✔✔When an innocent party is induced to
enter a contract based on false information, allowing them to rescind the contract.
✔✔What are the required elements for Fraudulent Misrepresentation? -
✔✔Misrepresentation of material fact, intent to deceive, justifiable reliance on the
misrepresentation, and injury to the innocent party.
✔✔What is Misrepresentation by Words? - ✔✔Telling a lie to induce someone into a
contract.
✔✔What is Misrepresentation by Conduct? - ✔✔Taking specific action to conceal a fact
that is material to the contract.
✔✔Are statements of opinion considered fraudulent? - ✔✔Generally, statements of
opinion are not considered fraudulent.
✔✔What is Misrepresentation of Law? - ✔✔Ordinarily does not entitle a party to relief.
✔✔What is Misrepresentation by Silence? - ✔✔Neither party has a duty to disclose
facts unless the seller knows of a material defect that cannot be reasonably discovered
by the buyer.
✔✔What does 'Scienter' mean? - ✔✔Guilty knowledge; it shows when a party knows
their statement is false.
✔✔What is Innocent Misrepresentation? - ✔✔When a person makes a statement they
believe to be true but actually misrepresents facts; the innocent party can rescind but
usually cannot seek damages.
✔✔What is Negligent Misrepresentation? - ✔✔When a party fails to use reasonable
care in disclosing facts.
✔✔What is Justifiable Reliance? - ✔✔The deceived party must have a justifiable reason
for relying on the misrepresentation.
, ✔✔Is injury required to rescind a contract? - ✔✔No, but it is required if the innocent
party seeks to recover damages.
✔✔What is Undue Influence? - ✔✔Occurs when a third party can greatly influence one
of the contracting parties, often in a trusted or fiduciary relationship.
✔✔What presumption arises in cases of Undue Influence? - ✔✔When a contract
enriches the dominant party, the court will often presume undue influence.
✔✔What is Duress in contract law? - ✔✔Entering a contract under fear or threat; the
threatened act must be wrongful or illegal.
✔✔Is the threat of a civil suit considered unlawful duress? - ✔✔No, the threat of a civil
suit is not unlawful.
✔✔What is Economic Duress? - ✔✔Generally not sufficient on its own to constitute
duress.
✔✔What is delegation in contract law? - ✔✔Transfer of contractual duties to a third
party.
✔✔Who is the delegator? - ✔✔The party delegating the duties.
✔✔Who is the delegatee? - ✔✔The party to whom the duties are delegated.
✔✔Is there a special form required for valid delegation of duties? - ✔✔No special form
is required.
✔✔What is the general rule regarding delegation of duties? - ✔✔Any duty can be
delegated.
✔✔Name one exception to the delegation of duties. - ✔✔Duties are personal and
depend on the obligor's skill or talent.
✔✔What happens if performance will vary materially from what is expected by the
obligee? - ✔✔Delegation is not allowed.
✔✔What must the obligee do when a delegation occurs? - ✔✔The obligee must accept
performance from the delegatee.
✔✔Can an obligee refuse performance from a delegatee? - ✔✔Yes, but only if the duty
cannot be delegated.
