Larson Entered Forrester's Auto Mart to Purchase a Used Car

question 31

Multiple Choice

Larson entered Forrester's Auto Mart to purchase a used car.Larson found a vehicle with a sales price of $11,000.After Forrester answered all of Larson's questions,Forrester and Larson agreed to a sale.As Larson was leaving to get the money to pay for the car,Forrester told Larson that he thinks Robert Redford formerly owned the car.Larson later learned that Robert Redford had never owned the car.If Larson seeks to rescind the deal based on Forrester's statement,Larson will

• A)win because he relied on the misrepresentation.
• B)win because there was a misrepresentation of a material fact.
• C)lose because he will not be able to prove reliance on the misrepresentation.
• D)lose because Forrester made a unilateral mistake.

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Definitions:

Sales Warranty Accrual Method

An accounting method where a company estimates the cost of warranty claims expected to arise from current sales and records this as an expense when the sale occurs.

Warranty Expense

The estimated cost of honoring product warranties, which companies recognize to match expenses with related revenues.

Estimated Warranty Costs

Projected expenses that a company expects to incur to repair or replace products during a warranty period.

Estimated Liability

A financial obligation that is expected to occur but has not been finalized in amount or timing.