Contracts Questions Flashcards
On December 1, Gem orally contracted with Mason for Mason to manage Gem’s restaurant for one year starting the following January 1. They agreed that Gem would pay Mason $40,000 and that Mason would be allowed to continue to work for Gem if “everything worked out.” On June 1, Mason quit to take a better-paying job, alleging that the contract violated the statute of frauds. What will be the outcome of a suit by Gem for breach of contract?
A.
Gem will win because the contract was executory.
B.
Gem will win because the contract was for services, not goods.
C.
Gem will lose because the contract could not be performed within one year.
D.
Gem will lose because the contract required payment of more than $500.
The correct answer is C.
Since the contract could not be performed within one year, the oral contract would not be enforceable in court. Employment contracts are difficult to enforce. The employee cannot be forced to continue working for the employer, as that would be involuntary servitude, prohibited by the 13th Amendment of the U.S. Constitution.
To prevail in a common-law action for innocent misrepresentation, the plaintiff must prove:
A.
the defendant made the false statements with a reckless disregard for the truth.
B.
the misrepresentations were in writing.
C.
the misrepresentations concerned material facts.
Incorrect D.
reliance on the misrepresentations was the only factor inducing the plaintiff to enter into the contract.
The correct answer is C.
A misrepresentation would involve fraud. Fraud in the inducement is a false representation of a material fact intentionally made, justifiably relied upon, and resulting in injury. If the misrepresentation is innocent and not made with the intent to deceive, the injured party may rescind the contract but cannot obtain damages for the tort of deceit. Deceit is the tort equivalent to fraud in the inducement for contracts.
What type of conduct generally will make a contract voidable?
A.
Fraud in the execution
B.
Fraud in the inducement
C.
Physical coercion
D.
Contracting with a person under guardianship
The correct answer is B.
Fraud in the inducement is a false representation of a material fact intentionally made and relied upon, causing injury to the other party. Contracts resulting from such fraud are voidable.
