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14. Is the buyer likely to prevail?
The construction of the golf course will probably increase the market value of the buyer's property, and the water from the city reservoir exceeds all established standards for drinking water.
A developer contracted in writing to sell to a buyer a house on a one-acre lot for $100,000. The developer told the buyer that the lot abutted a national park and that the water for the house came from a natural artesian spring. The developer knew that both of these representations were important to the buyer and that both were false. The buyer moved into the house and eight months later learned that a private golf course was being constructed on the adjacent land and that the water for his house was piped in from the city reservoir. The buyer immediately sued the developer to avoid the contract.
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A is incorrect. The developer's fraud actively concealed the true nature of the property the buyer had purchased. The buyer only just discovered the misrepresentations and then immediately sued the developer. The time period where the misrepresentations were hidden from the buyer will not be held against him by the court.
B is incorrect. A party may avoid a contract to which the party's assent was induced by fraud even if the resulting transaction is fair on its terms. Because the buyer immediately sought to avoid the contract after learning of the misrepresentation, he will likely prevail.
C is incorrect. Void ab initio means void from the outset. An agreement to which assent is induced by a misrepresentation is not void. Rather, it is voidable, which permits the party whose assent was induced by the misrepresentation to avoid the agreement.