The proper measure of damages in fraud and deceit cases is determined by the so-called "flexibility theory," which employs the following factors in its application: if the defrauded party is content with the recovery of only the amount that he actually lost, his damages will be measured under that rule; if the fraudulent representation also amounted to a warranty, recovery may be had for loss of the bargain because a fraud accompanied by a broken promise should cost the wrongdoer as much as the latter alone; where the circumstances disclosed by the proof are so vague as to cast virtually no light upon the value of the property had it conformed to the representations, the court will award damages equal only to the loss sustained; and where the damages under the benefit-of-the-bargain rule are proved with sufficient certainty, that rule will be employed.
Appellant purchased an automobile from the appellee and later filed suit, alleging appellee had fraudulently represented that car was new when, in fact, it had over 2,000 miles on the speedometer and had been involved in an accident. The trial court granted appellee's motion for a directed verdict in appellant's fraud and deceit action. At issue was the proper measure of damages in fraud and deceit cases. Appellant sought review of the directed verdict entered in appellee's favor by the Circuit Court for Montgomery County (Maryland).
Did the trial court err in directing the verdict against plaintiff for failure to produce evidence upon which damages could be awarded?
The court reversed, remanded for a new trial, and, in the process, reaffirmed that the proper measure of damages in fraud and deceit cases was determined by the so-called "flexibility theory," which considers several factors in determining what the actual measure of damages should be in a given case.