Contracts I, Pages 477–483

Kannavos v. Annino

Supreme Judicial Court of Massachusetts, 1969

Facts:

Plaintiff and his wife bought two real properties from defendants. The properties had single-family homes on them when defendant purchased them, but defendant converted each into a multi-family apartment building despite the zoning prohibiting such a use. They did this knowingly and without a building permit. The advertisements selling the houses advertised them as being used for income as multi-family apartments, which is why plaintiff bought them. No statements were made by defendant with respect to the zoning, although they said nothing false.

Procedural History:

The master concluded that the vendors represented that the buildings were being used a multi-family dwellings and that plaintiff could continue so to operate them. He also concluded that plaintiff relied upon the representations of the defendants and that he would not have bought the real estate otherwise.

Issue:

Did defendants' withholdings about the properties entitle plaintiff to rescind the sales?

Rule:

While there is "no duty to speak for the information of the other, . . . if he does speak, . . . he is bound to speak honestly and to divulge all the material facts bearing upon the point that lie within his knowledge."

Reasoning:

Defendants represented the property as being suitable for multi-family use. If they communicated that much, they were bound to fully disclose the issue. Failing to do so, they were responsible for misrepresentation.

Holding:

Yes, defendants' withholdings entitled plaintiff to rescind. Remanded.

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