[Sale of KyRo's Toys] Ky and Roland owned KyRo's Toy Distributors together for many years. After years of arguing about sharing an office, they decided they no longer wanted to work together, even though each wanted to remain in the toy distribution business. They asked their accountant, Delia, to separate the accounts equitably, and she prepared a spreadsheet showing the value of KyRo's accounts, and an equitable division of those accounts. Ky and Roland reviewed the division of accounts and signed a separation agreement that included a phrase that the accounts would be divided 50-50 as per Delia's spreadsheet attached to the agreement. Both Ky and Roland signed a disclaimer that stated that they had reviewed the attachment. Six months later, when commissions arrived for the two separate companies, Ky noticed that he was making substantially less than one-half of what he made with KyRo, and upon investigation, realized that some of the financial information on which Delia had relied in preparing the spreadsheet had been outdated, and the accounts, were in fact, not divided equally. Ky now wants to rescind the separation agreement, claiming that all three elements of mutual mistake are present, and that the mistake about the division of accounts had a material effect on the agreement because it was not what was intended.
-What effect might the disclaimer have on Ky's claim?
A) The disclaimer would prevent Ky's claim because he signed it.
B) The disclaimer would prevent Ky's claim because Ky affirmed that he had reviewed the spreadsheet.
C) The disclaimer would likely not prevent Ky's claim because the spreadsheet was based on erroneous information and Ky did not affirm that the information in the spreadsheet was correct.
D) The disclaimer would have no effect since disclaimers in contracts are against public policy.
E) The disclaimer would likely prevent Ky's claim but only if the disclaimer was mutual.
Correct Answer:
Verified
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