Busn 420

Critical Legal Thinking Cases

Shahed Abed

BUSN 420

11/23/2015

13.5 Innocent Misrepresentation

After reading this case, it is evident that there is an Innocent Misrepresentation. “Innocent misrepresentation is one of the three recognized varieties of misrepresentations in contract law. Basically, it is a misrepresentation made by someone who had reasonable grounds for believing that his false statement was true”, according to Legal Match. An example of Innocent Misrepresentation is selling a car and marketing it as new car even though it was used for three years.

It is important to have relevant grounds for rescind of contract between W. F. Yost, who owned the Red Barn Barbecue Restaurant (Red Barn) who listed it for sale and the buyer Richard and Evelyn Ramano of Rieve Enterprises, Inc. (Rieve). The seller of the property should present the right information to the buyer. Also, the buyer should investigate thoroughly to make sure the information that was presented to him is accurate.

However, in this case the information and facts that were provided by the W.F. Yost that “the premises will pass all inspections to conduct the business” were found false in an inspection by the Board of Health after their routine inspection. Therefore, the restaurant was not accepted to be in accordance with compliance for conducting business.

The seller of the restaurant W.F. Yost knew that the restaurant should be in compliance with the Board of Health before selling. The restaurant was previously founded breach of compliance. The buyer which is Rieve group trusted the false statement was given by W.F. Yost. However, misrepresentations made by W.F. Yost, innocently or knowingly, caused financial loss to Reive Group. It has the same legal effect. Therefore, Rieve can rescind the contract as the purchase agreement was about the falsity of the facts provided by seller.

20.1 Cure 

After reading this case, it shows...