Certified Financial Consultant (CFC) Practice Exam

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Prepare for the Certified Financial Consultant Exam. Enhance your understanding with detailed questions, hints, and explanations. Boost your confidence for the CFC test!

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What condition allows an injured party to rescind a contract?

If the contract was signed under duress
If the representation is false in a material point
If both parties agree to rescind
If the contract is deemed void by law

The correct answer is: If the representation is false in a material point

In contract law, an injured party has the right to rescind a contract when a material misrepresentation has occurred. A false representation that affects a significant aspect of the contract can lead the injured party to make a decision they otherwise wouldn’t have made. When the representation is false in a material point, it undermines the basis upon which the contract was formed, allowing the injured party to opt-out or void the agreement since they may have relied on that false information to enter into the contract. This principle helps protect parties from being bound to agreements based on misleading or inaccurate information, ensuring fairness in contractual transactions. The other conditions mentioned do not universally allow for rescission. Signing a contract under duress may also be grounds for rescission, but it involves a different legal concept related to coercion rather than a misrepresentation of facts. Mutual agreement to rescind does not arise from injury but requires both parties to consent. Lastly, a contract deemed void by law is automatically treated as never having been valid, bypassing the need for rescission.