Misrepresentation 3

1. Misrepresentation #3 Reliance, Plaintiff Fault, and Proximate Cause misrep3misrep3

2. Reliance 1. P must actually have relied on the misrepresentation. ex: Violin expert at flea market purchase is told �it plays with better harmonics than a Stradivarius�. Ex: Seller says the gold necklace is 24� long, but Buyer compared it to her own 24� necklace and saw that it was shorter. Ex: Seller says the antique Chinese figure was made in 1657. Actually, 1653. Was the year material? Note: overlap with materiality rqmt. will have a hard time convincing the fact-finder that she actually relied on the statement, no recovery if P (1) did not believe D; (2) never learned of the misrep. (unless fraud on the market)will have a hard time convincing the fact-finder that she actually relied on the statement, no recovery if P (1) did not believe D; (2) never learned of the misrep. (unless fraud on the market)

3. Reliance - 2 2. P�s reliance must be justified very narrow meaning most courts do NOT insist that the reliance be reasonable Instead, largely redundant of other elements Misrep must be material not mere puffing or opinion used when court doubts actual reliance Obvious to P? (948) Cigarettes (despite efforts of companies to mislead)Obvious to P? (948) Cigarettes (despite efforts of companies to mislead)

4. Reliance - 3 Like the appendix, a vestigial organ? Maybe not entirely leaves some room for cases where P already had sufficient information to ascertain falsity did own inspection rep was patently false sometimes just doubting actual reliance sometimes c-fault is sneaking in where P was on notice of falsity.

5. Plaintiff�s Fault Pelkey v. Norton (Me. 1953) 944 Customer told auto dealer that his trade-in was a 1949 model. Really 1947. D�s theory? P failed to use reasonable care to discover the falsity. Thus, reliance was not reasonable. Held? P�s negligence ? bar to intentional tort. HOW RECONCILE PELKEY WITH J. RELIANCE? (no duty to inspect) but cannot recover if (1) immaterial or (2) falsity is obvious toP.HOW RECONCILE PELKEY WITH J. RELIANCE? (no duty to inspect) but cannot recover if (1) immaterial or (2) falsity is obvious toP.

6. Return to J-Reliance Ex: wino selling �Picasso� C-fault not available as a defense Justified reliance? Obviously false??? (Should have been???) Courts often give cases like this to jury; especially in sale between merchants with opportunity to inspect. Small version of c-f sneaks back in. NOTE: also can overlap �fact� v �opinion� q. (like commercial parties in Vulcan)

7. P�s Fault - 2 Negligent misrepresentation is subject to comparative fault defense. Example: Modified International Products. Assume that P got a bill of lading that had both Dock D & F on it. Too lazy to dig it out of the file, P called D�s office and was told only Dock F by employee who said he did not have records in front of him. Jury could bar (or reduce recovery by) P for P�s own fault. Interestingly, c-neg is not a defense to INNOCENT misrep (strict liability) bc not about fault, but about allocation of risk (ala w.c.). But P must still prove justifiable reliance. Dobbs suggests some move to use c -f for innocent too now.Interestingly, c-neg is not a defense to INNOCENT misrep (strict liability) bc not about fault, but about allocation of risk (ala w.c.). But P must still prove justifiable reliance. Dobbs suggests some move to use c -f for innocent too now.

8. Liability to Third Parties(Proximate Cause) Fraud=liability to foreseeable victims. Accountant A is in collusion with Shifty to cook the books of Shifty�s company and sell it. A does an audit report that he knows S will use when selling the property. Can Buyer sue A? Yes, because this use of the report was foreseeable and actually intended. Foreseeability=RS 533 (slightly more cautious: intends or has rasona to expect)Foreseeability=RS 533 (slightly more cautious: intends or has rasona to expect)

9. Liability to Third Parties - 2 Negligent misrepresentation assume the Accountant was merely negligent in doing the audit of Shifty�s company. Courts are in disarray on test. Some authority for F test; most=more narrow;resemble pF test

10. Third Parties - 3 RS � 552=limited group for whose benefit he intends to supply the info or knows his customer intends to supply it. Not Buyer, above, unless A knows of impending sale? Ultramares (950)=more narrow privity or near privity (aware of P�s tranxn).