Citation. Laidlaw v. Organ, 15 U.S. 178, 4 L. Ed. 214, 2 Wheat. 178 (U.S. Mar. 15, 1817)
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Brief Fact Summary.
Plaintiff purchased tobacco from Defendant. Plaintiff knew the price of tobacco was going to rise once news of peace became public. Defendant asked Plaintiff if he knew of anything that was going to effect the price of tobacco.
Synopsis of Rule of Law.
It is not fraud in a business transaction not to inform a party of all the information that you have obtained when that party asks a blanket question regarding your knowledge of factors that affect the value of that transaction.
Before it was made public, Organ (Plaintiff) learned from a friend that the War of 1812 was over. Plaintiff contracted to buy tobacco from Laidlaw (Defendant). Before the sale was complete, Defendant asked Plaintiff whether Plaintiff knew of any information that would affect the price of tobacco. It is unclear if or how Plaintiff responded. After peace was made public, the price of tobacco rose between 30 and 50 percent. Defendant reposed the tobacco he sold to Plaintiff by force. Plaintiff sued for the loss of tobacco.
Is it fraud in a business transaction not to inform a party of all the information that you have obtained when that party asks a blanket question regarding your knowledge of factors that affect the value of that transaction?
No. Judgment for Plaintiff. Reversed and remanded.
* However, the court thinks that the absolute instruction of the trial judge was erroneous and the question whether any imposition was practiced by the vendee upon the vendor ought to have been submitted to the jury. It was for the trier of fact to decide whether or not there was fraud.
A buyer is not bound to communicate information that would affect the price of an item for sale. A buyer cannot lie to a seller. In this case, saying no to the blanket statement, “Do you know anything I don’t?” does not consist fraud. The court remanded the case to the trial court to allow the jury to decide if Plaintiff committed an act of fraud.