Contracts and Sales Multistate Bar Practice Exam

How does reasonable reliance differ from reasonable care in investigating a contract?

1. Reasonable reliance requires no evaluation of the information

2. Reasonable reliance involves checking underlying facts

3. Reasonable care refers to the knowledge of law concerning contracts

4. Reasonable reliance assesses trust based solely on statements made

The correct answer is: Reasonable reliance requires no evaluation of the information

Reasonable reliance and reasonable care serve different purposes within contract law, particularly when assessing the validity of claims or the enforceability of agreements. Reasonable reliance focuses on the aspect of trust in information provided by one party to another, where a party may take actions based on representations made without necessarily conducting an in-depth investigation. The concept of reasonable reliance implies that a party can justifiably depend on the accuracy of information presented by another party, assuming that the information is trustworthy. This does not always require rigorous evaluation or verification of the underlying facts. In contrast, reasonable care refers to the due diligence that a party should undertake when evaluating the circumstances surrounding a contract or transaction. It involves actively seeking out factual verification and ensuring that the information relied upon is accurate and reliable. By understanding the distinction, it becomes clear why the answer that states reasonable reliance requires no evaluation of the information is accurate. Reasonable reliance allows for a presumption of truth in representations without necessitating an exhaustive inquiry, concentrating instead on the confidence placed in the communicated statements.