[Scheming 'Friends'] Richard wants to rent a basement apartment in Eric's home. Richard threatens to tell Eric's parents that Eric had been arrested for illegally smoking marijuana unless Eric rents the apartment to him for $100 per month. (The information regarding the arrest is true.) Eric reluctantly agrees to rent the apartment to Richard for $100 per month. Richard also wants to buy Eric's car. Eric runs back the odometer on the car before Richard looks at it. Richard is impressed by the low mileage and agrees to buy the car. Eric offers to sell Richard a ring for Richard's fiancée. Eric tells Richard that the ring is a diamond and believes that to be true. After the deal is made, however, a jeweler friend of Eric informs him that the ring is a fake. When Richard shows up with the money, Eric says nothing. He just hands Richard the ring and takes the money. Later, Richard finds out that the odometer was run backwards from another friend in whom Eric confided. Richard also finds out from his girlfriend that the ring is a fake.
-Madison purchased a three-year-old computer from Kami for $300. Kami told her the price seemed fair but she really had no idea what it was worth and just wanted to get rid of it. Madison, who knew little about computers, thought she had a great deal. After Madison returned home, she discovered from a computer expert friend of hers that the computer was not worth as much as she believed. Madison wanted to return the computer claiming that they were both mistaken about value, but Kami said, "No way!" Who should win in the dispute between Madison and Kami and why?
A) Kami should win because Madison's unilateral mistake does not void the contract.
B) Madison should win because there was a mistake of fact at the time the contract was entered.
C) Madison should win because mistaken beliefs about the subjective value of an item can affect the validity of a contract.
D) Madison should win because there was a unilateral mistake of fact.
E) Kami should win because mistaken beliefs about the subjective value of an item do not affect the validity of a contract.
Correct Answer:
Verified
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