Ron buys from Karen 1,000 “Smudgy Dolls” for his toy store. Karen knows the dolls’ heads are not properly attached but says nothing. Ron sells all the dolls quickly and then has 1,000 unhappy customers with headless dolls. Ron sues to rescind the contract with Karen and also seeks punitive damages. What is the likely outcome?

a. Ron will be able to rescind, based on fraudulent nondisclosure, but he may not get punitive damages as well.

b. Ron will be able to rescind, based on fraudulent nondisclosure, and may also obtain punitive damages.

c. Ron will lose unless he can show that Karen intended to harm Ron’s business.

d. Ron will win only if he can show that both parties were mistaken about a basic assumption.