Winona Enters into a Contract with Peyton to Buy Peyton's

question 12

Multiple Choice

Winona enters into a contract with Peyton to buy Peyton's land based on Peyton's assertion that the land is legally open to development. After the sale,Winona learns what Peyton knew previously-only a small section of the land can be built on. A local law prohibits construction on the rest of the property. Winona can

• A)not avoid the contract because persons are assumed to know the law.
• B)avoid the contract due to a mutual mistake.
• C)avoid the contract due to a mistake in value.
• D)avoid the contract due to fraud.

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Definitions:

Merchandise Inventory

Goods held by a business for the purpose of sale to customers in the ordinary course of business.

Forward Contract

A non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Ordering Merchandise

The process of purchasing goods for sale, typically from suppliers or manufacturers, by a retail or wholesale business.

Spot Rate

The spot rate refers to the current exchange rate at which a currency can be bought or sold for immediate delivery.