BUS311_chapter_05

When vic discovers the problem he will have a

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Unformatted text preview: aud, if Bad Guy owed victim a fiduciary duty (discussed previously), silence might be fraud. Another situation where silence can be fraudulent is when Bad Guy’s original statement, though true at the time, ends up giving Victim a mistaken impression. Example 5.12. Bad Guy tells Victim, who is considering buying BG’s house, “According to the last inspection, there is no sign of termites.” This is true, but before Vic makes an offer, BG discovers termites in the house. Because it was BG’s statement that has given Vic the idea the house is termite free, BG is committing fraud by not giving Vic an update. Silence can also be fraud if there is active concealment of information; in other words, if Bad Buy is doing something to cover up a material fact. Example 5.13. Bad Guy’s house has a bad fire. Rather than make real repairs, BG takes the insurance money and makes cosmetic repairs, painting over the smoke damage, installing some new sheetrock, but not replacing burnt out support beams. Vic buys the house, and...
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