Grano owns a forty-room motel on Highway 100. Tanner is interested in purchasing

Question

Grano owns a forty-room motel on Highway 100. Tanner is interested in purchasing the motel. During the course of negotiations, Grano tells Tanner that the motel netted $30,000 last year and that it will net at least $45,000 next year. The motel books, which Grano turns over to Tanner before the purchase, clearly show that Grano's motel netted only $15,000 last year. Also, Grano fails to tell Tanner that a bypass to Highway 100 is being planned that will redirect most traffic away from the front of the motel. Tanner purchases the motel. During the first year under Tanner's operation, the motel nets only $18,000. At this time, Tanner learns of the previous low profitability of the motel and the planned bypass. Tanner wants his money back from Grano.

Will Tanner be able to get his money back from Grano? Why or why not? As a part of your response, provide support based on contract law and ethics.

Explanation / Answer

There are four basic elements of proving fraud in a contract to make it voidable

1. The intent of deceit - Grano told Tanner that motel netted $30,000. This was to deceive Tanner and make him believe motel generates good revenue.

2. Misrepresentation of material facts - It is possible that Grano knew about the national highway was coming up and Grano never brought it up to Tanner and hid this material fact.

3. Reliance of suffering party on misrepresentation - Grano's statement about revenue of motel led Tanner to buy it.

4. Damage or injury caused by misrepresentation - The revenues were too low.

Now in the case, the court can go either way. Tanner may or may not get his money back from Grano. Reasons below:

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