If the opinion is made by someone with special knowledge or expertise Opinion that the P is entitled to rely upon as being based on factual knowledge that they don’t have If the other party is in a position of trust or confidence – special relationship Hill v. Jones (Az. 1986): P agrees to buy home from D for $72K. D was to pay for and place in escrow a termite inspection report stating the property was free from termite infestation. P asked D about a ripple in the wood, D responded it was water damage. Termite report came back clean, realtors told D and P about the report (inspector incidentally missed evidence through no fault of his own). P moved in, and found termite damage and evidence of infestation. D admitted to knowing about the infestation and withholding information. Seller is obliged to disclose facts materially affecting the value of a residence, and termite infestation is a materially affecting fact. If the “duty to disclose” is triggered, then silence is misrepresentation. Integration clause (clause that limits the contract to the words of the contract) cannot be used as a defense against fraud Cites the following: a. Leigh v Lloyd : suppression of a material fact which a party is bound in good faith to disclose is equivalent to a false representation b. State v. Coddington: when one conveys a false impression by the disclosure of some facts and the concealment of others, such concealment is in effect a false representation that what is disclosed is the whole truth c. Johnson v. Davis : where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer d. Lynn v. Taylor : a matter is material if it is one to which a reasonable person would attach importance in determining his choice of action in the transaction in question Court could have instituted rescission, but the buyer still wanted the house, therefore just got damages. See pg. 539 for case law re: arms length dealings, fiduciary duties, and examples. 38
Duress and Undue Influence 1) Definition of Duress: a) Two Types of Duress: (1) A person physically compels conduct that appears to be a manifestation of assent by a party who has no intention of engaging in that conduct. The result of this type of duress is that the conduct is not effective to create a contract (§174). (2) A person makes an improper threat that induces a party who has no reasonable alternative to manifesting his assent. The result of this type of duress is that the contract that is created is voidable by the victim (§175). (i) This latter type of duress is in practice the more common and more important. (ii) Avoidance is precluded if the other party to the transaction has in good faith and without reason to know of the duress either given value or relied materially (§175(2)).
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