Multistate Bar Examination Practice Question

The principle of fraud applies in this scenario because the consultant knowingly made a false statement of fact (fabricated client success) with the intent to induce the startup into entering the contract. This misrepresentation materially influenced the startup's decision, and the startup reasonably relied on it when agreeing to hire her. Misrepresentation or fraud in the inducement is a justification to render a contract unenforceable.

As for the incorrect answers:

• Mistake applies to errors related to facts made by one or both parties, but here, only one party knowingly misrepresented facts.
• Duress involves coercion or threats that leave one party with no reasonable alternative but to agree to the contract, which didn’t happen here.
• Undue influence refers to taking advantage of a special or trust-based relationship in a way that unfairly persuades another party, but there’s no evidence of such a relationship in this scenario.