Anyone familiar with this? Wasn't sure of a few things. Intro Level

1) Seller has a house that has a crack in the foundation, which means it can collapse at any minute. An engineer informed him that it'll become hidden a few years later. A few years later, he intends to sell this to Buyer. The Buyer asks him if there is any problem. The Buyer doesn't disclose the existence of the crack, but only says, "Decide for yourself." So the Buyer hires an engineer to inspect the house but doesn't discover it. A few months later, the house collapses after the contract had been signed. What can the Buyer recover from Seller?

I understand that the crack is a latent defect, and should still be considered so even though Buyer hired an engineer to inspect the house. Does the phrase "Decide for yourself" have any effect? Or does the fact that Buyer did not disclose a latent defect mean he will always be liable if the house collapses?

2) Adam borrows $20,000 from John in 2014. He agrees to pay back John in 2017 after landing his first job for a total of $25,000. However, he is not able to pay this much and asks for an extension. Although John agrees, he sues Adam the next day for $25,000. Can he recover?

I'm a little confused by the phrasing and whether or not the Statute of Frauds applies to debts. I believe John cannot recover from Adam because the contract is orally agreed to (it only says agreed, no indication of a written contract), and the contract itself lasts for more than a year, so the SoF would make this unenforceable.

Any help is appreciated, thanks.

I know wiki is the devil but this wiki on latent defect gave some good info. (https://en.wikipedia.org/wiki/Latent_defect) it states "As such, the seller is required to show that he or she could not possibly have known of the defect, rather than the buyer having to show that the seller did know about the defect" ... What this means to me is that since the seller DID know about the defect he would have hard time demonstrating that he did not have this prior knowledge and would likely be found liable. However, I'm not seeing any actual "laws" regarding this specifically.

Regarding the second, the lawsuit would likely not go thru because the three parts of a contract were established, an offer (extending the loan repayment term), an acceptance of offer (John agreeing to the new repayment schedule) and a consideration of something of value that the parties will exchange (loan repayment).

Not a lawyer, just someone with time and google so take it with a grain of salt.

I can't remember terminology, and my answers won't be bang on, but I can help point you in the right direction. I did 2nd year business law in 2011, so it has been a while.

Big thing: There's lots to say about each of these scenarios... courses like these often want concise terms and phrases, based on notes/lecture points. You could go on and on about stuff that is correct, but the teacher might not give you marks for that. These courses aren't about real-world solutions... they just want you to show you know the terms/concepts covered. So anything I say or anyone else says might not be helpful for the course.

#1: "As-is" sale clauses only take you so far. There are specific term(s) you are looking for. I don't know if that term is "negligence", or something similar, on the part of the seller. There may be failure to disclose. There may also be an assumption in the contract that the land, though sold as-is, is safe.

"Decide for yourself" suggests to me that the land is being sold "as-is". It also indicates that the seller chose to withhold vital information that legally must be disclosed. If you took this further (depending on your course), this is reckless endangerment of anyone who enters the building. Criminal charges may be laid.

I would look through your notes to see what your teacher wants. He could be getting at "the core of the contract", which is to say: The core of the contract is that a building+land is being exchanged for a consideration (I assume cash). The contract was not fulfilled, as the building component of the contract was violated (there was reasonable assumption that the land was safe).

Because the sale was land + a building (I assume land + a building?), a number of things could be gone after: Fraud, civil suit for a number of damages as a result, loss of income if the building is being used for business, cost of repair/etc. The sale of land + a building tends to be a combined contract, so I'm not sure how much of the land's value could factor into recovered costs. I don't know if the buyer could seek a reversal of the contract.

The buyer did what he could to mitigate damages (I don't know if that's the correct terminology, as I only remember covering mitigation of damage as after-the-fact actions). The buyer hired an engineer, and did his due diligence to ensure all was well.

Anyways... there's more to cover, but to get the right answer that your prof may want... you might want to look at your notes.

#2: I'm not sure either, but I believe fraud involves intentional deception. I (think) Adam would have had to intend not to pay back John, or perhaps failed to notify John ahead of time when he knew it was unlikely he would be able to pay. Other factors that may matter might include what expenses Adam chose to prioritize.

Oral agreement is still a contract. It's just as enforceable as written if everyone is honest & accurate... but proof (someone could lie), accuracy (someone could recall the wrong words or selective parts of what was said), and interpretation (intonation and what is remembered), may differ... making oral contracts difficult. As far as this contract extension goes, it depends: What are the revised terms? All I see is he agreed to be paid later. The agreement could've been "sure, not a problem, pay me in a month? good?". The agreement could've been "well if you don't have the money now, pay me as soon as you get it." The former would sound more like a go-ahead for an extension (foregoing accrual of interest or damages), while the latter sounds more like a temporary solution (a temporary agreement that doesn't exempt or modify previous terms that have been violated).

This post was edited by Canadian_Man on Apr 20 2017 08:15pm

Thanks for the opinions

Unfortunately the questions were as short as I wrote them in, so other details are omitted, and we're told not to assume any extra details.
The questions themselves focus on Defenses to Contract Enforceability so I focused on fraud + Statute of Frauds as a defense.

This post was edited by Sefira on Apr 21 2017 09:04am

1) I dont know US law but in Canada we have disclosure letters which means the seller HAS to disclose any defects that are KNOWN, so if the buyer could prove an engineer told the seller about the foundation, seller is fuuuuucked here :). The condition though is that the defect was known.