Question

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?
A. The buyer cannot rescind because the auction house did not intentionally mislead him about the authenticity of the painting.
B. The buyer cannot rescind because he was negligent; he should have investigated the authenticity of the work before bidding on it.
C. The buyer can rescind on the basis of mutual mistake.
D. The buyer can rescind on the basis of unilateral mistake.

Answer 1

Answer:

C. The buyer can rescind on the basis of mutual mistake.

Explanation: A bilateral mistake, also referred to as a mutual or common mistake, such mistake occurs when both parties are misinformed about the facts. A mistake of fact can lead to a requirement of a voided contract. This is the contract Will be nullified

Answer 2

Answer:

B. The buyer cannot rescind because he was negligent; he should have investigated the authenticity of the work before bidding on it.

Explanation:

Here, I assume the mistake is of the Japanese Buyer who bought the painting by the bidding process as he was the one who has been bidding as high as the price of the painting went.

Even if the painting was fake, the buyer should have properly investigated further before going for such a big amount which no one forced him to.

Hope this helps.

Good luck and Cheers.