Fred Is a Concert Violinist Who Is Scheduled to Perform

question 45

Multiple Choice

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, although it is a good imitation, which fooled even the dealer. In this case:

• A) Fred has made a unilateral mistake and cannot void the contract.
• B) the dealer has committed fraud in the inducement.
• C) the sale is voidable by the purchaser for mutual mistake.
• D) the sale may be rescinded, because the dealer has made a nonfraudulent misrepresentation.

---

Definitions:

No-action Letters

are statements issued by regulatory agencies indicating that the agency does not intend to take legal action against a specifically proposed activity.

Exempted Offerings

Securities offerings that are released from the registration requirements with the SEC, generally due to their limited nature.

Shareholder Proposals

Suggestions or demands made by shareholders for consideration and action by the company's board of directors.

Rule 10b-5

A regulation enacted by the Securities and Exchange Commission dealing with fraud and manipulation in the securities markets.