Trent Purchased a Car from Veritas Motors

question 43

Multiple Choice

Trent purchased a car from Veritas Motors. The sales agent stated that the car was new, although, in fact, it had been used as a demonstrator for three weeks. Two days after the purchase was completed, Trent learned that the car had previously been in an accident while a customer was test driving it. The sales agent had known all of this but had not informed Trent of it. Two weeks later, a problem arose with the brakes, which necessitated repairs on three occasions. After the first repair, Trent wrote to Veritas claiming rescission of the contract and asked for a refund of his payment. Veritas refused. Two months later, Trent sued Veritas for rescission of the contract and damages equal to the amount he had spent on the car.

• A) Trent will succeed because of innocent misrepresentation.
• B) Trent will succeed because of fraudulent misrepresentation.
• C) Trent will obtain rescission but is not entitled to receive any damages.
• D) Trent will succeed because of innocent misrepresentation and will obtain rescission but is not entitled to receive any damages.
• E) None of the responses are correct.

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Definitions:

Planning Budget

A forward-looking budget that outlines the financial plans, objectives, and resources over a specific timeframe, often used for guiding the operations and evaluating performance.

Actual Results

The real outcomes or data recorded from operations or activities, compared to projections or budget expectations.

Net Operating Income

A company's income after operating expenses are deducted, but before income taxes and interest expenses are subtracted.

Flexible Budget

A budget that adjusts or varies with changes in the volume or activity level of a company.