Vokes v. Arthur Murray, Inc.

Brief Fact Summary. The owner of Defendant’s franchise, J.P. Davenport, sold Plaintiff Audrey Vokes, dancing lessons for a total cash outlay of $31,090.45.

Synopsis of Rule of Law. While a misrepresentation is not generally actionable unless it is a misrepresentation of fact rather than opinion, where the party making the misrepresentation has superior knowledge, the misrepresentation may be regarded as a statement of fact even though it would be considered an opinion if the parties were dealing on equal terms.

Facts. Plaintiff attended a dance party at Davenport’s School of Dancing, a franchise of Defendant. During the evening she was the subject of much praise from Davenport regarding her bright future as a dancer. By the end of the night, Davenport had sold the plaintiff eight half-hour dance lessons for $14.50. Plaintiff thereafter expended a total of $31,090.45 in pursuit of her dream of being a dancer. All the while, Davenport and his associates heaped praise and flattery upon her inducing her to buy more lessons to become as great as she wished. Such praise and flattery went beyond mere sales puffery and into outright dishonesty and deception. In fact, Plaintiff did not develop her dancing ability, and Defendant, through its representatives, knew this to be true.

Issue. Can the contract for the dance lessons be rescinded as procured by fraud or misrepresentation?

Held. Yes. A contract can be rescinded where a party induces the contract by misrepresenting a material fact. A contract cannot be rescinded where the misrepresentation is one of opinion, prediction or expectation. However, where the parties do not stand on equal bargaining ground, an opinion may be regarded as a statement of fact. Here, the salespersons of Defendant knew Plaintiff to possess no dancing ability, yet she was told repeatedly that she was responding well to the training and improving even though she was not improving at all. Thus, the contract may be properly rescinded under these circumstances.

Discussion. “Sales puffery” is generally a permitted practice so long as the salesperson is expressing opinion, not fact. However, where the salesperson has “superior knowledge,” his opinion may properly be regarded as a statement of fact.