Halpert v. Rosenthal

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Halpert v. Rosenthal
Court Supreme Court of Rhode Island
Citation 107 R.I. 406, 267 A.2d 730 (1970)
Date decided 1970

Facts

The defendant wanted to purchase from the plaintiff a house, and they agreed. He put a $2,000 deposit on the house, but soon found that there were termites. The plaintiff had assured him that there were no termites, but made an innocent misrepresentation of the facts. The plaintiff later sold the house for much less than the original agreement, and sued for the difference. The defendant sought back his $2,000 deposit.


Procedural History

The plaintiff made a motion for a directed verdict on the issue of the alleged fraudulent misrepresentations. The trial justice reserved decision on the motion and submitted the case to the jury. After the jury’s verdict, he denied the motion. The jury found for the defendant.


Issues

  1. Whether an innocent misrepresentation of a material fact warrants the granting of a claim for rescission.
  2. Whether a merger clause means that proof of a fraudulent misrepresentation must be shown.


Holding/Decision

Affirmation of the denial of the motion for a directed verdict. Defendant was amply justified in believing that the home he was purchasing was free of termites.


Rules

  1. It is not necessary, in order for a contract to be rescinded for fraud or misrepresentation, that the party making the misrepresentation should have known that it was false.
  2. There is no valid reason to say that a merger clause will prevent a rescission of an agreement which is the result of a false though innocent misrepresentation where both innocent and fraudulent misrepresentations render a contract voidable.

In determining whether relief is appropriate, courts must look to the effect of the untrue statement upon the person to whom it is made, rather than the motivation of the one making the representation.