How much may Sally recover in damages from Linda?
Linda induced Sally to enter into a purchase of a home theater receiver by intentionally misrepresenting the power output to be seventy-five watts when in fact the unit delivered only forty watts. Sally paid $450 for the receiver. Receivers producing forty watts generally sell for $200, whereas receivers producing seventy-five watts generally sell for $550. Sally decides to keep the receiver and sue for damages. How much may Sally recover in damages from Linda?
The following two rules can be applied in the situation:
The wrong representation of facts by Individual L is going to entitle Individual S to withdraw the contract of sale and claim the damages of $350. Damage is calculated by subtracting the 40 watts receiver value of $200 from the value of 75 watts receiver value. The privilege is especially given to the injured party under the out-of-pocket rule.
The damages of $250 are going to be paid by Individual L to the defaulted party under the bargain rule. The damage is calculated after subtracting the 40 watts receiver value, $200, from the actual cost paid by Individual S, $450.
The two rules that can be applied are as follows:
Individual S can sue Individual L for the damages of $250 as per the out-of-pocket rule for fraudulent misrepresentation of watts. The out-of-pocket rule provides the right to the fraud victim to recover the damages.
Individual L is going to be liable to pay the damages of $350 to Individual S as per the benefit of the bargaining rule because this rule provides rights to the victim to recover the value from the other party, which is the difference of the actual value and the promised value.