Case Citation
Legal Case Name

LaFazia v. Howe Case Brief

Supreme Court of Rhode Island1990Docket #60442771
575 A.2d 182 1990 R.I. LEXIS 112 1990 WL 71380 Contracts Torts

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Case Brief Summary & Legal Analysis

General Brief
3 min read

tl;dr: Buyers alleged sellers fraudulently misrepresented a business’s profits. The court enforced a specific disclaimer clause in the sales contract, finding it negated the buyers’ ability to prove they justifiably relied on the sellers’ prior oral statements, thus barring their fraud claim.

Legal Significance: A specific, non-general disclaimer clause in a contract, which disclaims reliance on representations about the very subject of the alleged fraud, can defeat a subsequent claim of fraudulent inducement by negating the essential element of justifiable reliance.

LaFazia v. Howe Law School Study Guide

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Case Facts & Court Holding

Key Facts & Case Background

Defendants (the Howes) contracted to purchase a delicatessen from Plaintiffs (LaFazia and Gasrow). Plaintiffs orally represented that the business was highly profitable, earning $450,000 to $500,000 annually, despite tax returns showing much lower figures. Plaintiffs explained the discrepancy by claiming they operated on a cash basis and pointed to their lavish lifestyles as proof of profitability. The Howes, represented by their attorney son, proceeded with the purchase. The final Memorandum of Sale included a specific disclaimer clause stating, “The Buyers rely on their own judgment as to the past, present or prospective volume of business or profits… and does not rely on any representations of the Seller with respect to the same.” The contract also contained a general merger clause and an “as is” provision. After discovering the business was unprofitable, the Howes made two partial payments on a promissory note before defaulting on the final payment. Plaintiffs sued for the balance, and the Howes counterclaimed for fraudulent misrepresentation.

Court Holding & Legal Precedent

Issue: Does a specific contractual disclaimer, in which a buyer expressly states they are not relying on the seller’s representations regarding business profitability, preclude the buyer from later claiming fraudulent inducement based on those same representations?

Yes. The specific disclaimer clause regarding business profitability prevents the buyers from Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliq

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IRAC Legal Analysis

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Legal Issue

Does a specific contractual disclaimer, in which a buyer expressly states they are not relying on the seller’s representations regarding business profitability, preclude the buyer from later claiming fraudulent inducement based on those same representations?

Conclusion

This case demonstrates that a specific, targeted disclaimer clause, as opposed to Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nost

Legal Rule

While a general, boilerplate merger clause does not bar a claim for Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute ir

Legal Analysis

The court first noted that the defendants had affirmed the contract by Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad m

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Flash Summary

  • A specific disclaimer clause in a contract can defeat a claim
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa

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