! Required information Introduction Read the overview below and complete the activities that follow. Juan Sells His Business Sometimes a person will enter a contract because she relied on false information provided by the other party to the contract. Often in such circumstances it would be unfair to require her to remain bound to the contract, because she did not consent to enter the contract in which she actually finds herself. In this activity we look at a fictional scenario in which one party to a contract makes a false statement to the other about the subject of the contract. The questions that follow the scenario deal with the circumstances under which the contract can be rescinded as a result. CONCEPT REVIEW: Contracts induced by misrepresentation or fraud are generally considered to be voidable. Case Analysis Read the mini case and answer the questions that follow. Juan recently sold his business to Sarita. The business was in poor shape when he sold it to her and she has realized that it is inevitably a losing proposition. Sarita wants a way out of the deal. Assume, for the sake of this question only, the following: The sale of the business included a warehouse building. The contract for the sale of the business indicated that the warehouse was included "in its present condition" or "as is." Shortly after Sarita took possession of the warehouse, she discovered a walled-in basement room that neither she nor Juan had realized was there. The room was packed full of drums of hazardous materials, which (as far as anyone could tell) had been leaking their contents into the ground for a decade or so. Sarita was going to have to clean up the mess at a considerable ongoing expense. If she seeks to rescind the contract based on the doctrine of mistake, which of the following is true? Multiple Choice The contract will be rescinded, because both Juan and Sarita were mistaken as to a basic assumption that the warehouse was free of hazardous waste. The contract will be rescinded due to unilateral mistake, but only if Sarita can prove that Juan caused or had reason to know of Sarita's mistaken belief that the warehouse was free of hazardous waste. The contract will be rescinded, because both Juan and Sarita were mistaken as to a basic assumption that the warehouse was free of hazardous waste. The contract will not be rescinded, because Sarita bore this risk of this mistake. The contract will be rescinded due to unilateral mistake, because the contract would be unconscionable to enforce otherwise