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Innocent Misrepresentation Case Study

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Case 13.5: Innocent Misrepresentation This is a case of fraudulent misrepresentation. W.F. Yost, was the owner of an establishment called Red Barn Barbecue Restaurant who listed it for sale. Richard Ramano, his wife and his brother-in-law of Rieve Enterprises, became interested in purchasing the property. They conducted a visual inspection of the premises and began entering into a contractual agreement of purchase based on the statement "Seller warrants that at the time physical possession is delivered to buyer, all equipment will be in working order and that the premises will pass all inspections necessary to conduct such business." (Leagal.com, 2015) After a routine health inspection uncovered 52 cited health code violations, just two weeks after the Ramano’s purchased the business, the Heath Department shut down the business. The Ramano’s file a case of fraud against Yost for knowingly misrepresenting the material damages of the equipment and building. (Cheeseman , 2013) The question befalls, should the …show more content…

The basis for this is due to the statue that states that regardless if the misrepresentation is made innocently or knowingly, misrepresentation of a material fact acted on by the other party to his detriment is a ground for rescission of a contract. (Leagal.com, 2015) Meaning that due to the wording in the contract that the facility and equipment purchased would pass all health inspections; Yost, while claiming innocent misrepresentation entered into a fraudulent contract. As a side note, Yost’s credibility comes into question due to the amount of citations that were recorded in a two week time frame, from sanitation, structural integrity, plumbing, to the stove being condemned. These are not citations that are made lightly by the Health Department furthering the Ramao’s claim of

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