Teuer Furniture A

MEMORANDUM

To: Senior Attorney
From: Junior Associate
Date: November 20, 2017
RE: Patel/Garcias

Question Presented

Can a contracted party be liable for fraud in relation to a construction project when: 1) the contracted party agrees with the move-in date proposed by the contractor; 2) the contracted party omit issues that might affect move-in date; 3) the contracted party intends to fulfill his obligations; and 4) the contractor: a) executed the agreement with the contracted party, and b) will need additional funds to complete their project.

Short Answer

1) Likely yes. The move-in date is something a normal person would attach importance when undertaking a construction project, therefore, can be a material fact. 2) Likely yes. Inaccurate representations of facts can be reckless misrepresentations. 3) Likely no. Intention to fulfill contractual obligations cannot support inducement to act based on misrepresentations. 4) Likely yes. a) Executing an agreement based on representations can support justifiable reliance and; b) additional funds to complete the construction can be damages suffered from misrepresentation.

Facts

The Garcias, a married couple, bought a property with a tear-down house on it. They wanted to take down the old house and build a new one in a year and a half, before her daughter Marie started school. The Garcias were looking for a contractor to take care of their project. Mrs. Garcia mother recommended them Mr. Prakash Patel, who had done wonderful job for her neighbors.

The Garcias got in touch with Mr. Patel, to verify if he would be interested in undertaking the Garcias project. They inquired Mr. Patel by email if it would be possible to move-in by September 1st, 2017. Mr. Patel replied that it would be no problem to move in on this date. Later, both parties discussed several other aspects of the project and executed an agreement for the project.

After the agreement was executed, the Garcias again asked Mr. Patel about the possibility to move to the new house by September 1st. Mr. Patel replied that it was impossible to guarantee, but he saw no reason at that moment for the project not to be finished in the date established.

After the old house was teared down, Mr. Patel informed the Garcias that the concrete for the new house would be poured by the end of September, 2016. On December 1st, 2016, the Garcias asked Mr. Patel why the concrete was yet not poured, and required him to confirm whether the September 1st, 2017, move in date was still applicable. Mr. Patel replied that the concrete for the new house was not poured because there was a shortage of the kind of concrete they needed; Mr. Patel assured the Garcias they were still on schedule and the concrete shortage would not affect the move-in date. The Garcias questioned if Mr. Patel was aware of the concrete shortage previously; Mr. Patel replied that he knew the company which provides that concrete was behind production for over a year, and that he thought the company would have it under control by that time.