A seller knows that the basement of his home floods every spring, but when his buyer asks during negotiations he answers 'the basement has never had any water issues.' The buyer relies on that representation in deciding to close at full price. After the first spring rain following closing, the basement floods and causes $30,000 in damage. The buyer's lawsuit emphasizes that the seller knew the truth, deliberately misstated a material physical condition, intended to induce reliance, and that the buyer in fact relied to her detriment. Which legal theory most directly fits the seller's conduct?
Correct Answer
C) Fraud
The seller knew the truth, made a deliberate misstatement of a material physical condition, intended to induce reliance, and the buyer in fact relied to her detriment. A knowing, intentional misstatement of a material fact made to induce reliance is the legal theory of fraud.
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