a contract to buy a house after he discovered the house was purported to be

A contract to buy a house after he discovered the

  • University of Texas
  • LEB 323
  • Test Prep
  • kellmargs2
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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
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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
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· 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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