Norton v. Poplos
- D was the owner of a lot subject to M-1 zoning. D wished to sell the land, so he hired a real estate broker to help.
- In all signs on the property and all advertisements, the property was represented as being zoned M-1.
- P was looking for an M-1 lot for his business. He heard about the land and contacted the D's agent.
- There were restrictions on the usage of the lot, and some uses of the land had to be approved by an industrial park building committee. Neither D nor his agent ever told P about these restrictions.
- After the purchase contract was signed, P learned about the restrictions and that the land was unsuitable for his purposes.
- P sued D to rescind the contract.
- Lower court found for D.
- DE Supreme Court reversed, found for P, contract rescinded.
- If one party makes assertions that are true on the surface but are actually innocent misrepresentations, can the other party who relied on these assertions seek relief from the contract?
- A party who relies on assertions from another party that appear to be true on the surface but are actually innocent misrepresentations may seek relief from the contract.
- From the Second Restatement §164, "If a party's manifestation of assent is induced by either a fraudulent or material misrepresentations by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient."
- It would be unjust and inequitable to permit a person who has made false representations, even innocently, to retain the fruits of a bargain induced by such representations.
- Although a statement may be facially true, it may constitute an actionable misrepresentation if it causes a false impression as to the true state of affairs, and the actor fails to provide qualifying information to cure the mistaken belief. (Restatement 159)
- The agent is not liable since it is the vendor's duty to see that its salesmen have the pertinent information.
- The merger clause in the contract does not preclude the buyer from rescinding a contract if there is an innocent but material misrepresentation.
- An agent operates on the behalf of the seller, so it is the same as if the seller did it.