Two parties enter into a contract for the sale of a piece of jewelry. The seller believes the jewelry is costume jewelry worth $100, but the buyer recognizes it is an antique piece worth $10,000 and says nothing. Later, the seller discovers the true value of the jewelry and seeks to rescind the contract, claiming there was a mistake. Can the seller succeed?
Yes, because contracts with mistakes are sometimes voidable depending on the situation.
No, because both parties agreed to the terms of the sale.
Yes, because the buyer had reason to know the seller was mistaken and remained silent.
No, because the seller's mistake does not meet the standard for rescission of a contract.
The correct answer revolves around the legal principle of unilateral mistake. Unilateral mistake occurs when only one party to a contract is mistaken about a material fact. Generally, such a mistake does not allow for rescission unless the other party knew or had reason to know of the mistake and actively or inactively exploited it. Here, the buyer, knowing the true value of the jewelry and remaining silent, may be seen as taking advantage of the seller's mistake, which can justify rescission. Incorrect answers fail to address either the specific circumstances of seller exploitation or misstate the legal principles by implying that a mistake inherently voids a contract.
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