Cousineau v. Walker

613 P.2d 608 (Alaska 1980)

 

RULE:

Materiality is a mixed question of law and fact. A material fact is one to which a reasonable man might be expected to attach importance in making his choice of action. It is a fact which could reasonably be expected to influence someone's judgment or conduct concerning a transaction. A misrepresentation may be grounds for voiding a contract if it is either fraudulent or material.

FACTS:

After closing the sale, appelant buyers discovered a shortage in the highway frontage and not as much gravel on the property as had been indicated by appellee sellers. The buyers filed a suit and the court ruled in favor of sellers.  Appellants sought review and the decision was reversed and remanded.




ISSUE:

Did the trial court err in its determination that the buyers did not rely on the sellers' representations? 

ANSWER:

Yes.

CONCLUSION:

The court held that an innocent misrepresentation could be the basis for rescinding a contract. The court found it was relevant whether the buyer relied on the statements, whether the statements were material to the transaction, and whether their reliance was justified. The court held that the buyer could rely on material representations made by the seller and was not obligated to ascertain whether the representations were truthful. The court held that the trial court erred in finding that the buyers did not rely on the sellers' statement that there was gravel on the property. The court found that the statements regarding highway frontage and gravel content were material. The existence of gravel deposits was an important consideration by a reasonable person in developing a piece of property.

Click here to view the full text case and earn your Daily Research Points.