Duty to Disclose + Merger

Question 1

Common Law

Answer 1

i. Caveat Emptor: seller has no duty to disclose, UNLESS
1. there is a confidential or fiduciary relationship between the parties or
2. Cannot lie or misrepresent
3. Silence is not misrepresentation

Question 2

Modern Law

Answer 2

i. In General –
1. Objective test of whether reasonable person would attach importance to fact
2. Subjective of whether the defect affects value or desireability
ii. 2 Approaches:
1. Majority (Johnson): Seller has a duty to disclose if they know, but they do not have to go looking for these things.
a. Buyer cannot have actual or constructive notice to enforce this rule though
2. Minority (Stambovsky):
a. Duty to disclose exists only if:
i. Problem/condition created by the seller, and
ii. That materially impairs the value of the contract
iii. Within knowledge of the seller or unlikely to be discovered

Question 3

Examples of Defects:

Answer 3

1. Megan’s law and sex offenders (duty to disclose no duty to find out)
2. Stigma Statutes (should disclose murders and stuff)
3. Disclosure of Hazardous Waste Disposal (liable for correction even if they didn’t create)

Question 4

As Is Clauses

Answer 4

generally enforceable if defects are reasonably discoverable and there is no fraud.

Question 5

Merger

Answer 5

ON CLOSING, only terms of deed survive, warranties in K are void. Only remedy is that which is in the deed.
i. Exception:
1. Fraud
2. Contractual promises deemed collateral to the deed