An auction house puts a painting up for sale, which they think to be Pablo Picasso's "Acrobat and Young Harlequin." A Japanese businessman purchases the painting for $50 million. The businessman appraises the painting for insurance purposes and discovers that it is a clever fake that is worth only a few thousand dollars. Which of the following statements is true of the scenario?

Question

Quizplus · Accepted Answer

A mutual mistake is one where both parties were acting under a mistaken belief about a material fact. It is always a basis for granting rescission of the contract at the request of either party. Clearly, no meeting of the minds took place and therefore no true contract was ever formed. In this scenario, the buyer can rescind on the basis of mutual mistake.

An Auction House Puts a Painting Up for Sale, Which