Crucial Exams

Multistate Bar Examination Practice Question

A seller of a small business provided financial statements to a buyer that overstated the company’s annual revenue by 30%. The seller knew these statements were inaccurate but did not disclose this to the buyer. Relying on these financial statements, the buyer signed a contract to purchase the business. After discovering the discrepancy in the financial statements, the buyer seeks to have the contract rescinded. Which of the following legal principles is most relevant in determining whether the buyer may avoid the contract?

  • Economic duress

  • Fraudulent misrepresentation

  • Unilateral mistake

  • Undue influence

Multistate Bar Examination
Contracts
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