Jerry contracted with Sally to purchase Sally’s Restaurant for $50,000. Jerry did not inspect the books, but Sally told Jerry that the restaurant was profitable. After the sale was executed, Jerry examined the books and discovered that the restaurant was not profitable. He contacted Sally, threatened a suit for fraud, and she agreed to amend the sales price to $25,000. Jerry had an audit of the books performed. The audit uncovered bookkeeping errors and that the restaurant was immensely profitable and worth $200,000. Sally discovered the audit results, and sought rescission of the sale to Jerry on the grounds of mistake.
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