Answer the following: a. What are the two types of fraud and what is the effect of each on the contract involved? b. Give an example of each type of fraud. c. What elements need to be proved to establish each type of fraud?
a. Fraud in the execution is a misrepresentation that deceives the other party as to the nature of the contract. It renders a transaction void. Fraud in the inducement is an intentional misrepresentation of a material fact by one party to another, who consents to enter into a contract in justifiable reliance on the misrepresentation. It renders the contract voidable by the defrauded party.
b. Melody delivers a package to Ray, requests Ray to sign a receipt for it, holds out a simple printed form headed "Receipt," and indicates the line on which Ray is to sign. This line appears to Ray to be the bottom line of the form, but instead it is the bottom line of a promissory note cleverly concealed underneath the receipt. Ray signs where directed without knowing that he is signing a note. This is fraud in the execution. Alice, in offering to sell her dog to Bob, tells Bob that the dog won first prize in its class in the recent national dog show. In fact, the dog had not even been entered in the show. This statement induces Bob to accept the offer and pay a high price for the dog. There is a contract, but it is voidable by Bob because Alice's fraud induced his assent.
c. Fraud in the inducement requires proof of a false representation of a fact that is material and made with knowledge of its falsity and the intention to deceive and that was justifiably relied on. Fraud in the execution requires a misrepresentation that defrauds a person as to the nature of the contract so that he is unaware of entering into it.
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Total spending divided by the money supply equals
A. the reserve requirement. B. the transactions demand for money. C. the money multiplier. D. the velocity of money.
The accounts of Melissa Manufacturing showed the following balances at the beginning of December
Account Debit Raw Materials Inventory $55,000 Work-in-Process Inventory 81,000 Finished Goods Inventory 38,000 Manufacturing Overhead 17,000 The following transactions took place during the month: December 2: Issued direct materials $37,000 and indirect materials $4,000 to production. December 15: Incurred $6,000 and $5,000 toward factory's direct labor cost and indirect labor cost, respectively. What should be the balance in the Work-in-Process Inventory following these transactions? A) $124,000 B) $87,000 C) $75,000 D) $86,000
Of the following statements, which is not an advantage of using credit?
A) Using credit wisely creates stability and allows you to establish a favorable credit history. B) Buying today and paying tomorrow seems ideal, but continual spending can lead to financial problems. C) Using credit is safe since using charge accounts and credit cards when you shop and travel is safer than carrying large amounts of cash. D) Credit cards permit the purchase of goods even when cash funds are low.
Under the securities law, liability for misstatements:
a. can be imposed on securities offerors, but not corporate officials b. can be imposed for overly optimistic statements made by executives that are not soundly grounded c. would not be imposed for misstatements in press releases due to First Amendment protection of media d. none of the other choices e. all of the other choices