Mrs Sharp, the Owner of a Restaurant, Induced the Morissons

question 174

Multiple Choice

Mrs. Sharp, the owner of a restaurant, induced the Morissons to buy the business by a misrepresentation; the invoices made her costs appear less than they actually were, and thus her profits more than they actually were. On these facts, which of the following is False?

• A) The cause of action could be for the tort of deceit, if there was evidence that Mrs. Sharp intended to deceive them.
• B) The court could not award the equitable remedy of rescission if evidence showed that Mrs. Sharp really believed the invoices were accurate.
• C) The court could award the equitable remedy of rescission if the evidence showed she had fraudulently misrepresented the costs.
• D) The court could terminate the contract for breach of contract if the accurate statement of costs and profit were essential terms of the contract.
• E) The court could not award the equitable remedy of rectification because the argument is not about rectifying an erroneous written version of a previous oral contract.

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Definitions:

Classified Balance Sheet

A detailed financial statement that separates assets and liabilities into current and long-term categories, providing a clearer picture of a company's financial position.

Effective Interest Rate

The realized return on a bond or loan, taking into account the effect of compounding interest as opposed to the nominal rate.

Amortization

The process of spreading out a loan or intangible asset cost over its useful life, thereby reducing it on the balance sheet over time.

Journal Entry

A recording of a transaction or adjustment in the accounting ledger that includes the accounts and amounts to be debited and credited.