Sara Sou is "bearish" and is of the opinion that the price of Muggle Company stock will drop within a few weeks; Stefan Gordon is "bullish" and thinks the price will go up. Sara sells her 1,000 shares of Muggle Co. stock to Stefan for $100 a share. If, within a few weeks, the price of a share of Muggle Co. stock
A)does not change, both Sara and Stefan can legally rescind because of their mutual mistake as to the value of the stock.
B)drops sharply to $1, Stefan alone can rescind because of Sara's fraud.
C)rises sharply to $200 a share, Stefan can rescind because of his unilateral mistake
D)None of the above is correct. Different expectations of the future value of a good (e.g., the Muggle Co. stock)do not affect the validity of a contract for its sale.

Question

Sara Sou is "bearish" and is of the opinion that the price of Muggle Company stock will drop within a few weeks; Stefan Gordon is "bullish" and thinks the price will go up. Sara sells her 1,000 shares of Muggle Co. stock to Stefan for $100 a share. If, within a few weeks, the price of a share of Muggle Co. stock​
A)does not change, both Sara and Stefan can legally rescind because of their mutual mistake as to the value of the stock.
B)drops sharply to $1, Stefan alone can rescind because of Sara's fraud.
C)rises sharply to $200 a share, Stefan can rescind because of his unilateral mistake
D)None of the above is correct. Different expectations of the future value of a good (e.g., the Muggle Co. stock)do not affect the validity of a contract for its sale.

Quizplus · Accepted Answer

Different expectations about the future value of a stock do not constitute a valid reason for rescinding a contract. The contract's validity is not affected by the parties' speculative beliefs about future market movements.

Sara Sou Is "Bearish" and Is of the Opinion That