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Business Law Ch11-15

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Business Law Ch11-15
Stephanie Van Horn

Case 11-4
Dorris Reed, the plaintiff, purchased a home from Robert King. Robert King and his real estate agent did not tell Dorris Reed that a woman and her four children were murdered 10 years ago, because the murder would affect the value of the home. Dorris Reed, however, did find out about the murder from a neighbor and sued Robert King and his real estate agent for rescission and damages. Dorris Reed paid $76,000 for the home but the value of the house, once the murder was taken into consideration, was only worth $65,000. Due to Dorris Reed failing to state a cause of action, the trial court sided with Robert King and his real estate agent. Dorris Reed appealed. Fraud is being looked at in the case of Reed vs. King. There are five elements to proving fraud, 1) material misrepresentation, 2) facts/knowledge, 3) intent, 4) reliance, and 5) damage (quoted from text book). Robert King and his real estate agent hid the first and second element of fraud. They knew about the murders and did not present Dorris Reed with this information, which would have affected Dorris Reed decision to buy the house. However, when dealing with the selling of real property, the question of materially is the main issue. Materiality is based on three conditions, 1) the gravity of the harm inflicted by nondisclosure, 2) the fairness of imposing a duty of discovery on the buyer as an alternative to compelling disclosure, and 3) the impact on the stability of contracts if rescission is permitted (citation from text book). Even though murder is horrible and it would affect a person’s judgment on buying that particulate house, there is no evidence to support Dorris Reed claim that the murder would in fact affect the market value of the house. The judgment was later reversed because Dorris Reed was able to present enough evidence to show that history can affect the value of property.

Case 12-1
Friends for over 25 years, Harold Pearsall and Joe Alexander, bought

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