Mike Is Given a Bottle of Wine as a Gift

question 120

Multiple Choice

Mike is given a bottle of wine as a gift. Josh, a neighbour, sees it and recognizes it as a very rare bottle. Knowing that Mike doesn't drink, Josh offers him $300 for it, which he believes to be a fair price. Mike happily agrees. Later, when Josh is looking up the price of the bottle on eBay, he realizes that it is not a valuable bottle of wine at all. He had confused it with another vintage. Josh, who is taking a law class, wonders whether or not he could have the contract set aside. Which of the following statements is true?

• A) It will automatically be set aside on the basis of the doctrine of mistake.
• B) It will only be set aside if Josh's mistake rendered the contract illegal.
• C) It is unlikely to be set aside unless Josh could show that it would be unfair or unjust to enforce it.
• D) The contract will only be set aside if Josh's mistake was the result of willful blindness.
• E) A contract can never be set aside where a mistake has been made.

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Definitions:

Floor Constraint

In accounting, a limitation that prevents inventory valuation from falling below a certain point, ensuring that the reported value is not unduly low.

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal, used in accounting to ensure assets are not overstated.

Profit Margin

A financial metric used to assess a company's profitability by dividing net income by net sales, usually expressed as a percentage.

Ceiling

In accounting, it refers to the upper limit placed on the value of an asset or a group of assets, often to prevent overestimation.