Question

1. Lester purchased a used automobile from MacKintosh Motors. He asked the seller if the car had ever been in a wreck. The MacKintosh salesperson had never seen the car before that morning and knew nothing of its history but quickly answered Lester’s question by stating: “No. It has never been in a wreck.” In fact, the auto had been seriously damaged in a wreck and, although repaired, was worth much less than the value it would have had if there had been no wreck. When Lester learned the truth, he sued MacKintosh Motors and the salesperson for damages for fraud. They raised the defense that the salesperson did not know the statement was false and had not intended to deceive Lester. Did the conduct of the salesperson constitute fraud?

1. Sarah’s house caught on fire. Through the prompt assistance of her neighbor Odessa, the fire was quickly extinguished. In gratitude, Sarah promised to pay Odessa $1,000. Can Odessa enforce this promise?
2. William E. Story agreed to pay his nephew, William E. Story II, a large sum of money (roughly equivalent to $50,000 in 2007 dollars) “if he would refrain from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he should come to be 21 years of age.” William II had been using tobacco and occasionally drank liquor but refrained from using these stimulants over several years until he was 21 and also lived up to the other requirements of his uncle’s offer. Just after William II’s 21st birthday, Story acknowledged that William II had fulfilled his part of the bargain and advised that the money would be invested for him with interest. Story died, and his executor, Sidway, refused to pay William II because he believed the contract between Story and William II was without consideration. Sidway asserted that Story received no benefit from William II’s performance and William II suffered no detriment (in fact, by his refraining from the use of liquor and tobacco, William II was not harmed but benefited, Sidway asserted). Is there any theory of consideration that William II can rely on? How would you decide this case? [Hamer v. Sidway, 124 N.Y.

Answer 1

Yes. The salesperson making the statement did not know whether the car had been in a wreck or not. Nevertheless, the salesperson made the statement as though it were true and as though he knew that the statement were true. This constituted reckless indifference as to whether or not the statement was true. The reckless indifference as to the truth of a statement satisfies the mental state element of fraud. The salesperson was therefore guilty of fraud.

To enforce this promise we need to analyse whether there has been any agreement or contract betwen Sarah and Odessa and whether the same can be enforced. For a valid contract or agreement the basic need is that there must be a communication (oral communication is sufficient), there must be some consideration involved (monetary or otherwise), the parties intention must be there to perform their part of contract, parties must be competant to contract.

If we see the current case on above parameters we find that all the conditions are fulfilled, in such a case what really needs to be checked or proved is that whether Sarah promised to actually create a legal obligation to pay or it was just a casual statement out of gratitude and whether Odessa assissted Sarah for want of anything in exchange from Sarah. Generally under such circumstances the decision depends on the perspective of the judge and the detailed study of the facts.

However, as per my perspective; since it is not general that we help our neighbours in their need for want of any monetary consideration but it is just love and affection. Therefore, the action of Odessa was not on the basis of establishing any contractual relationship with Sarah and Sarah has also promised out of gratitude. Hence, there is no enforceable contract or promised established between the two. Odessa cannot enforce this promise.