1. Stating that the appliance was the best bet available, Elmo, a door-to-door salesman, entered into a contract to sell the Walton family home freezer unit on credit. The total price with interest was $900, although the freezer had a retail value of approximately $300. The Waltons later learned that Elmo had failed to purchase a city license to make door-to-door sales, and refused to pay him. The city only required salesman to pay $1,000 in order to obtain the license. The Waltons’ best argument against the enforcement of the contract would be:
a. The contract is unconscionable
b. The salesman violated a regulatory statute designed to control the competency of salesman
c. The salesman breached a fiduciary duty
d. The contract, in essence, was a gambling agreement
2. Usury statutes:
a. Establish the amount of interest the lender must charge
b. Set a maximum rate of permissible interest which may be agreed upon between the parties
c. Are enacted to protect the lender
d. Are not applicable if the lender and borrower have equal bargaining power
3. A lack of capacity generally renders the contractual obligation:
a. Voidable at the option of the person lacking capacity
b. Totally void
c. Enforceable
d. Voidable at the option of the person possessing capacity
4. Sylvia, an elderly widow who is almost deaf, owned her own home. Her closest confidant for business transactions was her son-in-law, Ron. Ron offered to purchase her home for $35,000. The home had been appraised at $66,000, but Sylvia agreed to sell when Ron persisted in making the offer. If Sylvia later desired to set aside that sale, her best defense would be:
A. Fraud
B. Innocent misrepresentation
C. Undue influence
D. Duress
5. Beachcomber Coins purchased a dime purportedly minted in 1916 at Denver for $500. The seller also believed that the coin was of this rare Denver vintage. It was later discovered that the “D” on the coin signifying Denver vintage was counterfeited.
a. Beachcomber can rescind the sales contract for mutual mistake of fact.
b. Beachcomber cannot rescind the sale because the transaction involved a unilateral mistake.
c. Beachcomber cannot rescind the sales contract because it was fully executed on both sides.
d. Beachcomber cannot rescind the contract because there was consideration on both sides.
6. Subcontractor submits a bid that contains a mathematical error.
A. This is the sort of unilateral mistake that the law always considers sufficient to grant relief.
B. A resulting contract would be voidable by S if the other party was aware of the error when it accepted the bid and is a significant error.
C. There is a contract because the mistake was a mutual mistake of value.
D. There is no contract because the mistake was mutual.