Brief Fact Summary. The Defendants, Mr. and Mrs. Gardner (Defendants), sold the Plaintiffs, Mr. and Mrs. Sorenson (Plaintiffs), a piece of property. The Plaintiffs sued the Defendants for deceit, alleging they misrepresented the value of the property.
Synopsis of Rule of Law. The tort of deceit is committed if one makes a representation of law that would lead a reasonable person to a set of factual assumptions that would lead to the legal conclusion.
Issue. Are the Defendant’s liable for the statements in question?
* Did the court err in instructing the jury how to award damages?
Held. Yes, on both counts.
* The rule is that misstatements of law do not make the speaker liable for the misrepresentation because people are presumed to know the law. This is not a defense to the Defendant’s statements about the construction of the house because they are not, so much, making a legal conclusion as making a statement that would lead a reasonable person to believe certain facts – that the house was constructed in a workmanlike manner. As for the statement about the well, there is no question, given that the Defendant’s gave an exact figure that was a statement of fact, not an opinion.
* The Court did not consider the question of the Defendants being third parties because their counsel did not raid this objection during trial.
* As for the instructions, the correct instructions were the difference between the fair market value of the property if it were as it was represented and the price paid. The jury did not get the information it needed to determine if the Plaintiffs had any losses at all, therefore, this case shall be reversed and remanded.
Discussion. The court ponders the problem of representations of fact and representations of law. They acknowledged the basic, though perhaps unreasonable, assumption, that all people are presumed to know the law and thus, there can be no action for misrepresentation of the law. Their reasoning allows for persons who were deceived by statements concerning the law to recover if those statements induced the persons to believe certain facts that were incorrect.