a contract to buy a house after he discovered the house was purported to be haunted, thus lowering its value. ○ Synopsis of Rule of Law: A condition that impairs the value of property, known to the seller and left undisclosed to the buyer can constitute a basis for rescission of the contract. ○ Facts: The Plaintiff moved to a new neighborhood where he contracted to buy a house. The Defendants, Ackley and a real estate agency (Defendants), knew the house they had just sold to the Plaintiff was haunted. This was a widely known fact in the area and the house had even received national press attention. After
Plaintiff discovered this, he sued for rescission. The trial court dismissed his complaint. ○ Issue: Whether an undisclosed condition that impairs the value of the property is a basis for rescission of the contract. ○ Held: Reversed. A house purported to be haunted, which impairs the value of the property and is left undisclosed to the buyer can constitute a basis for rescission of the purchase agreement. Where a condition which has been created by the seller materially impairs the value of the contract and is peculiarly within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care with respect to the sale, nondisclosure constitutes a basis for rescission as a matter of equity. Even an express disclaimer e.g. “as is” will not be given effect where the facts are peculiarly within the knowledge of the party invoking it. ● Beachcomer Coins Inc. V. Boskett ○ (Mutual Mistake) ○ Beachcomber bought a counterfeit coin and demanded a refund. When Boskett, the seller, refused, plaintiff brought this action seeking rescission of the contract ○ The trial judge found that there was a mutual mistake of fact (a mistake as to the coin's genuineness) that would ordinarily justify rescission of the contract. However, a buyer of a coin who was permitted to examine it before purchase "assumed the risk" that it might be counterfeit. He therefore dismissed the action and plaintiff appealed. ○ Since both parties were certain that the coin was genuine the court thus reversed the judgment, and ordered rescission of the contract. Chapter 20 – Sales: Warranties and Products Liability (p. 493-524) The three legal theories available to consumers seeking redress: 1) Warranty – contract theory governed by UCC 2) Negligence – tort theory 3) Strict liability – tort theory WARRANTIES · An assurance or guarantee that goods will conform to certain standards
· If standards are not met, buyer can recover damages from seller, under a breach of warranty theory · CAVEAT EMPTOR – let the buyer beware · Express warranties – those that originate from the words or actions of the seller o Created in three ways: § 1) By an affirmation of fact or a promise relating to the goods · Goods will conform to the specifics the seller set forth · Need to consider buyers frame of reference § 2) By a description of the goods · Descriptive word or phrase could create express warranty § 3) By providing a sample or model of the goods ·
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- Spring '08