Samuel and Ben Are Negotiating the Sale of a Sailboat

question 25

Multiple Choice

Samuel and Ben are negotiating the sale of a sailboat.Samuel expresses an interest in the boat but emails Ben a list of five questions that he wants answered before agreeing to purchase it.Ben responds with full answers to four of the questions.Samuel emails back and says he will buy the boat on Saturday as long as his remaining question (about the state of its hull) checks out okay.Ben promises to check with his boat mechanic and respond before they are scheduled to meet on Saturday.Both men get busy.Ben checks with his mechanic but innocently forgets to report back to Samuel that there is a crack in the hull.Samuel forgets that there was one question outstanding.Saturday comes and the transaction takes place.If it turns out that there is a significant problem with the hull of the boat, which of the following is TRUE?

• A)If he sues, Samuel will likely obtain a damage award.
• B)If he sues, Samuel will likely succeed in a tort action.
• C)Samuel is certainly stuck with the boat.
• D)Ben may have to take the boat back and return Samuel's money.
• E)Ben may seek to get his boat back even if Samuel wants to keep it.

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Definitions:

Exchange Rate

The price at which one currency can be exchanged for another, often fluctuating based on market conditions.

Consolidated Balance Sheet

A financial statement that combines the assets, liabilities, and equity of a parent company and its subsidiaries into one document.

Acquisition Consideration

The total value transferred by a company to acquire another company, which may include cash, assets, or stock.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, and in which it typically generates and expends cash.