In Rhode Island, a party who has been induced by fraud to enter into a contract may pursue either one of two remedies. He may elect to rescind the contract to recover what he has paid under it, or he may affirm the contract and sue for damages in an action for deceit.
During the parties' negotiations for the sale and purchase of the plaintiff vendor's home, the vendor and his agent affirmatively represented, upon the defendant vendee's specific inquiry, that the home was termite-free. After the parties executed the contract for the sale, an inspection revealed that the home was infested with termites. The vendee notified the vendor that he did not intend to buy the home. The vendor later sued the vendee to recover the difference between the contract price and price he later obtained from a different buyer; the vendee counterclaimed for the return of the deposit he paid to the vendor under the contract. A jury rendered a verdict for the vendee and the trial court denied the vendor's motion for a directed verdict on the counterclaim. On appeal, the court remanded the case for the trial court to enter judgment for the vendee, and denied the vendor's motion for reargument.
Can defendant vendee recover damages for the misrepresentation of the plaintiff vendor?
The court ruled that, regardless of whether the vendor's misrepresentation was innocent or fraudulent, because the vendee relied upon the misrepresentation as to a material fact and was thereby induced to enter into the contract, the vendee was entitled to rescind the contract even though he offered no proof that the vendor intended to deceive him. That the vendee's allegata and proof differed was immaterial, the court ruled.