Case Digest on Laidlaw v. Organ

Caveat emptor is a Latin phrase that translates to "let the buyer beware."  

A party is not obligated to disclose all of the information within its possession with regard to a certain transaction when the other party asks a general question about the party's awareness of issues that might affect the transaction's value. But at the same time, each party must take care not to say anything tending to impose upon the other.

FACTS OF THE CASE:

The Plaintiff, vendee, Organ, and the Defendant, vendor, Laidlaw, entered into an agreement whereby Plaintiff would buy tobacco from Defendant at an agreed-upon price.

Before the completion of the sale, Organ learned the War of 1812 was ending and that the product's value would substantially increase. At the close of the sale, Laidlaw asked Organ if he knew of any information that would affect the product's value, and Organ answered in the negative. The price of tobacco rose 30 to 50 percent after the peace treaty was announced.

Laidlaw recovered the tobacco upon learning of the change in circumstances, and Plaintiff brought suit to enforce the contract.

Laidlaw brought a fraud claim against Organ, and the trial judge instructed the jury that Organ had a duty to disclose the information. The jury found that Organ was liable.

ISSUE OF THE CASE:

Whether the intelligence of extrinsic circumstances, which might influence the price of the commodity, and which was exclusively within the knowledge of the vendee, have been communicated by him to the vendor?

RULING OF THE CASE:

The Court, through Chief Justice Marshall, noted there may be an affirmative duty to disclose, but that it must be determined on a case-by-case basis, and the question of whether Plaintiff intentionally circumvented necessary information is one fact for a jury to decide upon.

In this case, since the Defendant directly asked Plaintiff whether it knew of any information that could affect the price of its product, the Court found Plaintiff may have been under a duty to disclose that information.

IMPACT TO THE LEGAL SYSTEM:

This case elucidates the principle that a seller does not have a duty to communicate information to buyer that the buyer might not know, as long as the information is equally available, and the seller does not engage in deliberate misrepresentations.