1.        Fraudulent Misrepresentation: Division West Chinchilla Ranch made numerous TV advertisements that induced listeners to go into the business of raising chinchillas. The advertisements stated that, for a payment of $2,150 or more, Division would send one male and six female chinchillas and - for an additional sum - cages, feed, and supplies. Division's representations were that "chinchilla ranching can be done in the basement, [and] spare rooms, ...with minor modifications" and that chinchillas were "odorless and practically noiseless" and "a profitable pastime that can explode into a FIVE FIGURE INCOME." All statements would lead one to believe that no special skill was needed in the raising of chinchillas. Based on these representations, Adolph Fischer and others purchased chinchillas from Division. None of the purchasers was a sophisticated businessperson or highly educated. It soon became apparent that greater skill than that advertised was required to raise chinchillas and that certain statements made by Division's sales representatives as to the value of the pelts were untrue. None of the purchasers had financial success with their growing (ranching) of chinchillas over a three-year period. They all seek to rescind the contracts to get their money back, claiming fraud on the part of Division. Discuss whether Division's statements constitute fraud

2.    Economic Duress: In July, Loral Corp was awarded a $6-million contract to produce radar sets for the Navy. To fulfill the contract, Loral had to purchase 40 precision gear parts. Loral awarded Austin Instruments, Inc., a subcontract to produce 23 of the 40 gear parts. The following May, Loral won a second Navy contract to supply more radar sets. Loral again solicited bids for 40 more gear parts. Austin submitted a bid for all 40, but was told by Loral that the subcontract would be awarded only for items for which Austin was the lowest bidder. Austin's president told Loral that it would not accept an order for less than forty gear parts and, one day later, told Loral that Austin would cease deliveries on the existing contract unless (1) Loral awarded Austin a contract for all forty gear part units and (2) Loral consented to substantial increases for the prices of all gear parts under the existing contract. Ten days later Austin ceased making deliveries. Loral tried to find other suppliers to furnish the gear parts, but none were available. Because of deadlines and liquidated damage clauses (clauses providing for money damages to be paid in the event of delays) in the Navy contract, plus the possible loss of reputation by Loral with the government, Loral agreed to Austin's terms. After Austin's last delivery, Loral filed suit to recover the increased prices Austin had charged on the grounds that the agreement to pay these prices was based on duress. Discuss Loral's claim

3.    Fraudulent Misrepresentation: William and Lilly Adams were in the process of obtaining a divorce and began the process of dividing their property. They inventoried their worldly possessions and decided that certain property would go to Mrs. Adams and the remainder, including the debts on the community property, would remain with Mr. Adams. Mrs. Adams later testified in legal proceedings that Mr. Adams had consistently told her that she must take the property as offered and agree not to seek alimony, that Mr. Adams had threatened to declare bankruptcy and force her to accept the responsibility for her share of the community debts if she did not agree, and that Mr. Adams frequently cursed her but did not in any way threaten physical harm. Mrs. Adams also testified that she had examined the subsequent formal community property settlement and that she basically understood it. At that time, she had casually spoken to two different attorneys about the settlement contract, but because both attorneys said that they would need time to investigate before giving advice, she went ahead and signed it. She now claims that she had signed the agreement under duress and because of fraudulent misrepresentation. Discuss whether Mrs. Adams can rescind the settlement contract on these grounds.

4.        Duress: William Schmalz was hired by the Hardy Salt Co. under an employment contract that stated that he was entitled to six months' severance pay in the event that he was laid off. Under the terms of the contract, the company would not have to pay in the event of any voluntary separation or involuntary termination for other reasons, such as for poor performance or for cause. In mid-1983, Schmalz was asked to resign after having an affair with the chairman's executive secretary. Schmalz was told that if he did not resign he would be fired but that if he did resign the company would keep him on the payroll for another six weeks. Schmalz resigned and signed an agreement releasing Hardy Salt from any liability for breach of the employment contract. Schmalz later claimed that he had signed the release under duress and sued Hardy Salt for the six months' severance pay under his employment contract. Discuss whether Schmalz's claim for duress should succeed.