Please help me solve the following questions given in the study materials. I feel the answers given are wrong.
1. A contracts with B to buy a necklace, believing it is made of pearls whereas in fact it is made of imitation pearls of no value. B knows that A is mistaken and takes no steps to correct the error. Now A wants to cancel the contract on the basis of fraud. Which of the following statement is correct?
a. A can cancel the contract alleging fraud.
b. A cannot cancel the contract.
c. A can cancel the contract alleging undue influence.
d. A can claim damages.
According to me the answer is (a) since B was aware that A was mistaken and he does not do anything to correct that error. Therefore this cannot be a case of unlateral mistake of fact but an active concealment of a material fact by B that amounts to fraud. Am I right? Or is the answer(b) as given in the study mat. Plzzz respond
CAclubindia
