Asif Purchased a Business from Olga

question 10

Multiple Choice

Asif purchased a business from Olga. During negotiations leading up to the contract, Olga made an innocent misrepresentation. As a result of that statement, Asif has discovered that the business is far less valuable than he expected. Which of the following statements is TRUE?

• A) Asif is entitled to rescission even if, before entering into the contract, he investigated the true state of affairs that Olga addressed in her innocent misrepresentation.
• B) Asif is not entitled to rescind the contract if, before entering into the contract, he carelessly failed to discover the error contained in Olga's innocent misrepresentation.
• C) Asif is not entitled to rescission unless he can prove that Olga's innocent misrepresentation was the only, or at least the most important, reason for him entering into the contract.
• D) Rescission is not available for an innocent misrepresentation.
• E) none of the above

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Definitions:

Information Gathering

The process of collecting data and information from various sources to make informed decisions or understand situations better.

Principal-agent Relationships

A scenario where one party (the principal) delegates work to another party (the agent), who performs that work on behalf of the principal.

Minimize Profits

The strategy of reducing profits to a minimum, possibly for tax advantages, ethical reasons, or for future strategic positioning.

Maximize Them

The process of making the most or best of certain resources, outcomes, or situations to achieve the highest possible benefit or efficiency.