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BUSA 690 (31)
Lecture 8

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Business Admin
BUSA 690
Peter Younkin

- A contractual term  is a promissory statement - A pre-contractual representation  can be made by words or conduct - A misrepresentation is  actionable if it induces a contract by falsely characterizing the consequences of a law - Reeni was interested in purchasing a car. After searching the classified ads, she found a car in which she was interested, being sold by Ethan whom she had never met. Ethan knew that his car was in need of new tires, a new muffler, and would soon need a new clutch and a brake job. Consequently, he was hoping that, when they met, Reeni wouldn't ask too many questions. When she wanted to go for a test drive, Ethan gave her the keys and said that he trusted her to go alone and that doing so would allow her to test it in a less inhibited fashion. Really, he just didn't want her to ask about any of the car's problems. Reeni took the car by herself and, on the basis of its performance, bought it at Ethan's listed price, no questions asked. Which of the following statements is most likely TRUE?  Ethan is not required to disclose the car's problems during pre-contractual negotiations - When will silence distort a previous assertion  whenever a change in circumstances does not affect the accuracy of a representation - The possible consequences of actionable misrepresentation include  the remedy of rescission - In order to get Susannah to buy his cottage, Paul tells her that he has recently spent $100 000 in repairs that make its foundations flawless. In love with the cottage and in reliance on Paul's representation, Susannah impulsively trades her condo in the city for the cottage without asking for a home inspection. Two months after she moves into the cottage, Susannah hears a creaking noise during a windy evening. The next morning, she has a home inspector over to take a look. He tells her that there have been no repairs on the house in the last twenty years and that the foundation is in a dangerous state of disrepair. She calls Paul to try to get her condo back but finds out that he has sold the unit and has moved to Bermuda with all of his assets. In seeking an order for restitution  Susannah will most likely fail because courts are unlikely to grant rescission when the rights of third parties are a
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