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Laidlaw v. Organ - 15 U.S. (2 Wheat.) 178 (1817)

Rule:

The vendee is not bound to communicate to the vendor of goods the intelligence of extrinsic circumstances, which might influence the price of the commodity, and which is exclusively within the knowledge of the vendee, particularly where the means of intelligence are equally accessible to both parties.

Facts:

Hector M. Organ purchased 111 hogsheads of tobacco from Laidlaw & Co. (“Laidlaw”) on the morning of February 18, 1815. A few hours later, a peace treaty was announced between the United States and Britain, ending the War of 1812. Organ knew that the war had ended because his brother had informed him earlier that morning. This meant that the trade embargo would be lifted. This would instantly increase the price of tobacco by 30 to 50 percent.

Laidlaw was not aware of the news, and this resulted to a financial hit to Laidlaw. Laidlaw sued Organ in Federal District Court, seeking recovery of the damages from Organ for failing to disclose a material fact in a contract. The district court jury ruled in favor of Organ, stating that the deal between Organ and Laidlaw was a valid contract and should be enforced. Laidlaw appealed the trial court's decision.

Issue:

Was buyer Organ bound to disclose to seller Laidlaw intelligence of extrinsic circumstances, which might influence the price of the commodity, and which was exclusively within the knowledge of Organ?

Answer:

No

Conclusion:

The Supreme Court of the United States held that Organ was not bound to communicate it. It would be difficult to circumscribe the contrary doctrine within proper limits, where the means of intelligence are equally accessible to both parties. But at the same time, each party must take care not to say or do any thing tending to impose upon the other. The court thinks that the absolute instruction of the judge was erroneous, and that the question, whether any imposition was practiced by Organ upon Laidlaw ought to have been submitted to the jury. For these reasons the judgment was reversed, and the cause remanded to the district court of Louisiana, with directions to award a venire facias de novo.

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