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Law School Case Brief

Foster v. Cross - 650 P.2d 406 (Alaska 1982)

Rule:

In order to void the purchase agreement, the sellers must show that the buyers, or their agent, made a false representation of a material fact that was actually and justifiably relied upon.

Facts:

James Foster seeks specific performance of a purchase agreement against Robert and Arlene Cross, the owners of an 80 acre tract of land in southeastern Anchorage. The trial court found for the owners on the grounds that Sanders, the realtor involved, was the buyers' agent, that he made misrepresentations as to the buyers' development expertise and financial condition, and that those misrepresentations made the purchase agreement voidable at will.

Issue:

Did the trial court err in refusing to grant the buyer specific performance of a purchase agreement against the Crosses?

Answer:

No

Conclusion:

On appeal, the court stated that the purchase agreement would be deemed void if the owners showed that the buyer's agent Sanders made a false representation of a material fact, which was actually and justifiably relied upon. The applicable standard for justifiable reliance in this land sale case was as follows: A seller of land, relying on an innocent misrepresentation, is barred from recovery only if the seller's acts in failing to discover defects were wholly irrational, preposterous, or in bad faith. While the owners' behavior may not have been that of a prudent man, it was not wholly irrational, preposterous, or in bad faith. An actionable misrepresentation having been found, the purchase agreement was voidable at the will of the owners.

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