Assume, for the sake of this question only, the following: The sale of the business included a warehouse building. The contract for the sale of the business indicated that the warehouse was included "in its present condition" or "as is." Shortly after Sarita took possession of the warehouse, she discovered a walled-in basement room that neither she nor Juan had realized was there. The room was packed full of drums of hazardous materials, which (as far as anyone could tell) had been leaking their contents into the ground for a decade or so. Sarita was going to have to clean up the mess at a considerable ongoing expense. If she seeks to rescind the contract based on the doctrine of mistake, which of the following is true?

Question Completion:

Multiple Choice

The contract will be rescinded, because both Juan and Sarita were mistaken as to a basic assumption that the warehouse was free of hazardous waste.

The contract will be rescinded due to unilateral mistake, but only if Sarita can prove that Juan caused or had reason to know of Sarita's mistaken belief that the warehouse was free of hazardous waste.

The contract will not be rescinded, because Sarita bore this risk of this mistake.

The contract will be rescinded, because both Juan and Sarita were mistaken as to a basic assumption that the warehouse was free of hazardous waste.

The contract will be rescinded due to unilateral mistake, because the contract would be unconscionable to enforce otherwise.

The contract will be rescinded, because both Juan and Sarita were mistaken as to a basic assumption that the warehouse was free of hazardous waste.

Explanation:

This mistake is a common mistake because both Juan and Sarita were not aware nor suspected the presence of leaking hazardous waste in the warehouse. In law, a common mistake arises where the mistake is shared by both parties, in this case, Juan and Sarita.  A common mistake is fundamental in a contract and directly affects the basic definition of the contract terms.

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