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19. If the buyer sues the dealer to rescind the transaction, is the buyer likely to succeed?
During negotiations to purchase a used car, a buyer asked a dealer whether the car had ever been in an accident. The dealer replied: «It is a fine car and has been thoroughly inspected and comes with a certificate of assured quality. Feel free to have the car inspected by your own mechanic.» In actuality, the car had been in a major accident, and the dealer had repaired and repainted the car, successfully concealing evidence of the accident. The buyer declined to have the car inspected by his own mechanic, explaining that he would rely on the dealer's certificate of assured quality. At no time did the dealer disclose that the car had previously been in an accident. The parties then signed a contract of sale. After the car was delivered and paid for, the buyer learned that the car had been in a major accident.
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A is incorrect. When a seller induces a buyer into consenting to a contract by means of a material misrepresentation, the resulting contract is voidable at the election of the buyer. Although there might be some instances in which a failure to independently inspect property might constitute a defense to a claim of misrepresentation, the facts of this case don't justify such a conclusion. The buyer is entitled to rely on the truth of material representations made by the seller, and need not conduct independent tests to see whether the seller is lying, even if such an independent test would reveal the lie. In this case, the seller actively concealed the damage, and would not escape responsibility for misleading the buyer merely because the seller did not answer the question more directly—by saying, for example, «No, the car has never been in an accident.»
B is incorrect. When a seller induces a buyer into consenting to a contract by means of a material misrepresentation, the resulting contract is voidable at the election of the buyer. In this case, the buyer asked a direct question about whether the car had ever been in an accident, and the seller gave an answer that a reasonable buyer would take as an assurance that the seller at least had no knowledge of the car's involvement in an accident. The seller's statement, taken in context, and in light of the seller's active steps to conceal evidence of the damage and repair, would be the legal equivalent of a statement that the car had not been in an accident. The seller actively concealed the damage and would not be permitted to escape being held responsible for misleading the buyer merely because the seller did not answer the question more directly—by saying, for example, «No, the car has never been in an accident.»
C is incorrect. This answer correctly concludes that the buyer may rescind the contract, but it misstates the reason why this is so. When a seller induces a buyer into consenting to a contract by means of a material misrepresentation, the resulting contract is voidable at the election of the buyer. Unconscionability arises when there are unfair terms, coupled with an unfair bargaining process. In some cases, unconscionability may be found where a seller has made misrepresentations, or concealed material facts, but not every case of misrepresentation presents a case of unconscionability. In this case, apart from the fact that the seller concealed the damage to the car, and gave a misleading answer to the buyer's question, there is insufficient evidence that the contract was unconscionable.