In February, Gardner, a schoolteacher with no experience in running a tavern, entered into a contract to purchase for $40,000 the Punjab Tavern from Meiling
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In February, Gardner, a schoolteacher with no experience in running a tavern, entered into a contract to purchase for $40,000 the Punjab Tavern from Meiling. The contract was contingent upon Gardner’s obtaining a five-year lease for the tavern’s premises and a liquor license from the State. Prior to the formation of the contract, Meiling had made no representations to Gardner concerning the gross income of the tavern. Approximately three months after the contract was signed, Gardner and Meiling met with an inspector from the Oregon Liquor Control Commission (OLCC) to discuss transfer of the liquor license. Meiling reported to the agent, in Gardner’s presence, that the tavern’s gross income figures for February, March, and April were $5,710, $4,918, and $5,009, respectively. The OLCC granted the required license, the transaction was closed, and Gardner took possession on June 10. After discovering that the tavern’s income was very low and that the tavern had very few female patrons, Gardner contacted Meiling’s bookkeeping service and learned that the actual gross income for those three months had been approximately $1,400 to $2,000. Will a court grant Gardner rescission of the contract? Explain. |
Explanation
Individual M and the gardener already havea contract for buying the tavern for $40,000 and the income quoted by Individual M, at the time of the first contract, was not wrong. So, there is no case of fraud and misrepresentation.
Beside that, before signing in tothe second contract, the gardener has thechance to check the authenticity of the statement made by Individual M.
Verified Answer
The gardener's contention is not right because Individual M has not made any misrepresentation. at the time of thefirst contract, about the income of the tavern and gardener has theoption not to rely on the representation made by Individual M before entering into the second contract.
