Alessandro Needs to Raise Money Quickly in Order to Save

question 12

Multiple Choice

Alessandro needs to raise money quickly in order to save his business from bankruptcy. A friend of his tells him of an investment which promises big returns and cannot go wrong. In a moment of weakness he decides to get his aunt, an illiterate elderly widow, who only speaks Italian, to sign a deed transferring the property of her house to him by telling her that she is merely witnessing his signature in relation to a business deal. In order to secure the money needed for the investment, Allessandro mortgages the house to a bank. The investment turns out to be a failure and Allessandro is unable to pay off the mortgage. The bank seeks to repossess the house from his aunt. Can the aunt prevent the bank from evicting her?

• A) No, a signature is at all times binding. The bank may take possession of the house.
• B) No, the bank has acquired rights innocently and for value.
• C) Yes, the aunt was mistaken as to the nature of the document she signed.
• D) Yes, the contract is voidable for misrepresentation.

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Definitions:

Barter

The direct exchange of one product for another without using money.

Medium Of Exchange

Anything that is widely accepted as a means for the payment of goods and services and repayment of debts.

Opportunity Cost

Represents the value of the best alternative that must be given up in order to pursue a certain action or decision.

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