LaFazia v. Howe

575 A.2d 182 (R.I. 1990)

 

RULE:

Deceit is a tort action, and it requires some degree of culpability on the misrepresenter's part. It is fundamental to actions predicated on the theory of deceit that the party claiming deceit present evidence that shows that he or she was induced to act because of his or her reliance upon the alleged false representations.

FACTS:

The buyers had purchased a delicatessen from the sellers. Business was not as the buyers had anticipated and the business lost money. As a result, the buyers were unable to make their payments on the promissory note and sellers sued for breach. The buyers claimed that the sellers made specific misrepresentations that induced them to enter into the contract, particularly on the profitability of the business since they had no experience running it. The sellers moved for summary judgment, which the trial court granted. On appeal, the buyers argued that summary judgment was inappropriate because the sellers' misrepresentations raised an issue of material fact concerning whether the misrepresentations were intended to induce the buyers to purchase a failing business and argued that the misrepresentations were a basis for rescinding the contract. The sellers pointed to merger and disclaimer clauses in the contract and claimed that they obviated the buyers' claim of misrepresentation.

ISSUE:

Did the merger and disclaimer clauses preclude the buyers from asserting that they were induced to enter into the contract because of sellers’ misrepresentation?

ANSWER:

Yes.

CONCLUSION:

The court agreed with the sellers that the clauses precluded the buyers from asserting that the sellers made material misrepresentations regarding the profitability of the business. The court reasoned that the evidence showed that the buyers did not attempt to rescind the contract but instead affirmed the contract and that the merger and disclaimer clauses prevented the buyers from successfully claiming reliance on prior representations.

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