A seller in Needham, Massachusetts accepts a buyer's written offer for $1,100,000 and both parties sign the Purchase and Sale Agreement. The P&S does not contain a home inspection contingency. After signing, the buyer hires an inspector who discovers severe structural damage that the seller knew about but did not disclose. The buyer demands to rescind the contract. The seller argues that Massachusetts follows caveat emptor (buyer beware) and the contract has no inspection contingency, so the buyer must proceed. Under Massachusetts law, which statement most accurately describes the outcome?
Correct Answer
D) The buyer may rescind the contract and seek damages under MGL Chapter 93A because the seller's knowing concealment of a material defect constitutes a deceptive act, overriding caveat emptor
This question tests the critical intersection of Massachusetts caveat emptor and MGL Chapter 93A. While Massachusetts does generally follow a caveat emptor (buyer beware) approach and does not have a mandatory statutory seller disclosure form, caveat emptor has important limits. A seller's knowing concealment of a material defect — as opposed to mere failure to volunteer information — constitutes an affirmative deceptive act under MGL Chapter 93A (the Consumer Protection Act). Massachusetts courts have consistently held that Chapter 93A overrides caveat emptor when there is active concealment or intentional misrepresentation of known material defects. The buyer may rescind the contract and seek double or treble damages plus attorney's fees under Chapter 93A.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
Offer and acceptance is the process by which one party proposes specific terms for a contract and the other party agrees to those exact terms, creating mutual assent. This mutual agreement, also called a meeting of the minds, is an essential element of every valid contract.
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