Multiply Choice
1. Kerry finds a big green ring in the street. She shows it to Leroy, who says, “Wow. That could be valuable.” Neither Kerry nor Leroy knows what the ring is made of or whether it is valuable. Kerry sells the ring to Leroy for $100, saying, “Don’t come griping if it turns out to be worth two dollars.” Leroy takes the ring to a jeweler who tells him it is an unusually perfect emerald, worth at least $75,000. Kerry sues to rescind.
(a) Kerry will win based on fraud.
(b) Kerry will win based on mutual mistake.
(c) Kerry will win based on unilateral mistake.
(d) Kerry will lose.

2. Veronica has a beer and then makes a contract. She continues drinking, and her blood alcohol level eventually rises to .09, which is just above her state’s threshold for drunk driving. She makes a second contract while in this condition. Veronica’s first contract is ___________________, and her second contract is __________________.
(a) Valid; valid
(b) Valid; voidable
(c) Voidable; voidable
(d) Voidable; void

3. Jerry is so mentally ill that he is unable to understand the nature and consequences of his transactions, but he has not been adjudicated insane. Penny has been adjudicated insane, and a court has appointed a guardian to handle her affairs. Jerry’s contracts are _____________, and Penny’s contracts are ______________.
(a) Valid; valid
(b) Valid; voidable
(c) Valid; void
(d) Voidable; voidable
(e) Voidable; void

4. Angela makes a material misstatement of fact to Lance, which he relies on when he signs Angela’s contract. Fraud exists if Angela made the misstatement .
(a) Intentionally
(b) Recklessly
(c) Carelessly
(d) A and B only
(e) A, B, and C

5. Scarborough’s Department Store opens for business on a busy shopping day just before Christmas. A hurried clerk places a sign in the middle of a table piled high with red cashmere sweaters. The sign reads, “SALE—100% Cashmere—$0.99 Each.” The sign, of course, was supposed to read “$99 each.”
This is a ___________ mistake, and customers ______________ be able to demand that Scarborough’s sell the sweaters for 99 cents.
(a) Unilateral; will
(b) Unilateral; will not
(c) Bilateral; will
(d) Bilateral; will not