Question

Kahn of Portland Oregon sent a letter to Lischner of Los Angeles inquiring whether Kushner’s property in Humboldt County was for sale. Lischner replied that he was interested in selling and asked Kahn about the fair market value. Kahn wrote that it was difficult to make an offer without a legal description of the property and asked for it and the annual taxes. These were provided by Lischner. Subsequently, Kahn wrote, "I hesitate to place a value on someone else’s property, but I can tell you that I have been offered a similar track of property for $2,000. Since your property is closer to mine, I would prefer to buy yours, and offer a four-year term contract at a total price of $2,500." The two parties ultimately agreed on a cash price of $2,500. Shortly after contracting with Kahn, Lischner went to Humboldt county and readily learned, upon the most superficial inquiry that the property was worth more than $2,500. He sold the property to Pacoima Lumber Sales, Inc. for $7,500. Thereupon, Kahn sued Lischner for $5,000. Lischner responded that he had been induced to contract by a fraudulent misrepresentation as to the value of the property by Kahn and therefore could rescind their contract of sale.What are the elements that must be present for fraudulent misrepresentation? Did Kahn commit fraud? Why, or why not.

Answer 1

Answer:

Misrepresentation & Fraud:

a) Elements for Fraudulent Misrepresentation:

1) A representation was in fact made:  This means that it was not just a mere opinion expressed by the party misrepresenting.

2) That particular representation was false: The statement made was untrue.

3) The defendant had knowledge that the representation was false:  The misrepresentation was intentional on the party of the defendant.

4) The statement was made with the intention that the other party rely on it and enter into a contract or agreement:  The defendant was out to induce the other party to enter the contract.

b) Kahn committed a fraud since he intentionally induced Lischner to contract on the basis of fraudulent misrepresentation.  The remedy available for Lischner is to rescind the contract.

Explanation:

a) Fraudulent misrepresentation is the presentation of false facts by someone who attempts to persuade another into action with the intent to deceive.  The remedy available to the deceived party is to rescind the contract or to plea for damages.

b) According to the  britannica.com, "Fraud, in law, is the deliberate misrepresentation of fact for the purpose of depriving someone of a valuable possession."