Quiz 14: Capacity and Genuine Assent

Business

Fraud would be the act of a salesperson intentionally misrepresenting a product to deceive someone into buying it. In this case the salesman didn't know the history of the product. He did not intend to deceive the buyer, hence not fraud. But the buyer can still sue for negligent misrepresentation which means that the salesman didn't adequate due care into whether his statement was true or not. The salesman could have said "I don't know" or "I will have to check the car history" etc. If the company is found for misrepresentation they will incur cost.

Person H a minor can disaffirm the purchase of a non-necessity good, a motorcycle, regardless of whether she lied about her age. The fact that she was 17 (under age of majority) holds. However, most states have statutes that protect sellers from having to refund the whole amount. For example, if a minor return damaged goods the seller may only have to refund the amount it is worth. In fact, lying about her age may make H liable for fraud. Depending on the state law, H may be better off just keeping the damaged bike.

In this case had the defendant actually lied about one of the conditions of their house such as having a concrete foundation when in fact it was wooden may be constituted as fraud. However, in this case the plaintiff had extensive inspection rights and defendant were not shown to be aware of the found defects. Refer to the case Paden v Murray (523 SE2d 75) Fact: 1) Paden (plaintiff) purchased a house from Murray (defendant). 2) Prior to purchase Paden signed a contract which gives the buyer right for inspection and request for repair. Furthermore, the contract states that buyer will take property "as is" (in condition seen) if they fail to present the issue or request for repair. 3) An inspection company was hired by Paden to inspect the property prior to closing. However, Paden only discussed the defects with the company until after the closing date. 4) Inspection company found only $500 worth of defects. Paden agreed to purchase despite these defects. However, after move in Paden alleged more defects, wooden foundation, improperly sloped roof sections, a tainted water supply, electrical problems, termite infestation, and bat infestation 5) Paden attempted to rescind the contract and sued for fraudulent concealment and breached of sales agreement. 6) Trial court granted summary judgment in favor of Murray, Paden appealed The appeals court affirmed. In this case, the court notes two courses of action "In general, a party alleging fraudulent inducement to enter a contract has two options: (1) affirm the contract and sue for breach; or (2) rescind the contract and sue in tort for fraud." First the court noted that Paden's action failed to show his intention for rescinding the contract. They found Paden conducted many repairs on the house which indicates his acceptance of it. Hence, Paden may not sue for fraud. The breach suit also failed due to i) Paden's extensive right to inspect the property and ii) the defendants having no actual knowledge.

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