David Entered into a Contract to Sell Ruth a Parcel

question 38

Multiple Choice

David entered into a contract to sell Ruth a parcel of land fully aware that Ruth's intention of purchase was to construct a high-rise commercial building.David was also aware that the subsurface soil condition of the property would prevent such construction.The soil condition was not readily discoverable in the course of normal inspections or soil evaluations.David did not disclose the existence of the condition to Ruth,nor did Ruth make any inquiry of David as to the suitability of the land for the intended development.David's silence as to the soil condition:

• A) renders the contract voidable at Ruth's discretion.
• B) entitles Ruth only to monetary damages.
• C) makes the contract a case of a mutual mistake.
• D) does not affect the validity of the contract.

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Definitions:

Opportunity Cost

The value of the best alternative that is foregone by choosing a particular action or decision, important in evaluating the cost of choices.

Alternative

An option among a set of choices in decision-making scenarios.

Total Costs

The sum of all expenses incurred by a business in producing goods or services, including fixed and variable costs.

Prime Cost

Direct materials cost plus direct labor cost.