A seller and a buyer enter into a contract for the sale of a used car. The seller knows that the car’s transmission is failing, but chooses not to share this information with the buyer. The buyer does not ask any questions about the transmission and the seller does not make any statements about it. Can the buyer later claim fraud to rescind the contract based on the seller’s silence?
Yes, because the seller’s silence constituted a misrepresentation about the condition of the car.
No, because the buyer assumed the risk by not asking questions about the condition of the transmission.
No, because the seller had no duty to disclose the issue with the transmission to the buyer.
Yes, because the car’s transmission problem was a material fact that affected the value of the car.
Fraud requires either a false representation of a material fact with intent to deceive or, in some cases, failure to disclose a fact where there is a duty to disclose. In this scenario, the seller’s silence does not constitute fraud because, absent a direct question, most courts require a fiduciary or special relationship to impose a duty of disclosure. If the seller had actively concealed the defect or made false statements, the analysis would change. The other answers confuse situations involving false representation or active concealment, which are not applicable here.
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