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Suppose Alice buys a car from Bob. In the case the car was stated in the advert as the top of the range model but was in actuality the model below badged as the top one Alice would have some protections. In the UK the statutory right of being 'as described' applies in the civil system. If Bob had after the sale talked on social media about how he knew it was mislabelled and sold it anyway, and how Alice was stupid for not just looking up on the number plate on the DVLA or the many other sites that repackage this information there may be questions of criminal charges, potentially fraud.

What would be the situation if it was the other way around? The car was advertised as the model below, but was in actuality the top model badged as the lower one. Alice purchased the car and later talks online about how she had prior to the deal looked up online and found the true model, but not informed the seller. Would the seller have any comeback on the deal through the civil system? Could Alice be potentially charged with a crime?

As far as jurisdiction is concerned, I care a bit more about the UK but answers for any would be interesting.

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    Hi. I'm afraid this would very strongly depend on the details and specifics of the situation. If the car's usual price is 9000£, and because of a mistake it was for sale at 6000£, and Alice had looked the usual price online and knew that it was usually 9000£, it's not going to be fraud just because she gloats about having bought it at a lower price. But if it can be argued that she deceived the seller into thinking that they were selling a different car, then it could be fraud. So, there are arguments for both sides, and it would strongly depend on the details.
    – Stef
    Commented Jan 13 at 18:29

2 Answers 2

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Anything you say must be accurate, but you don’t have to say anything

I’m assuming that Bob and Alice are private individuals not in the business of buying/selling cars so we can ignore statutory consumer protection law which imposes additional obligations on businesses.

The common law of misrepresentation is symmetrical- it applies equally to sellers and buyers.

Naturally, misrepresentations by sellers are more common than by buyers, simply because the seller is typically disclosing more facts than the buyer. But, say Alice falsely stated that she represented an antique automobile museum and Bob’s car would be a prominent exhibit, that would be misrepresentation by Alice.

As stated in the headline, any facts disclosed must be correct, but there is no general obligation to disclose any. Silence, in the absence of a legal obligation to disclose (for example, Health and Safety law may require the disclosure of non-operable safety equipment), is not generally a misrepresentation unless it distorts a representation already made: “it was only driven by my granny [in illegal street races 3 times a week].”

So, as stated in the question, if Bob has made a misrepresentation to Alice, then she has a cause of action. If Alice has not made any representations, Bob has no cause of action. However, if Alice made the check discovering that the car was better than Bob said and then told him it was worse (a misrepresentation), and that induced Bob to enter the contract at a lower price, Bob would have a cause of action.

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The Seller's main remedy would be to sue the people who sold the mislabelled goods to it.

Under Article 2 of the Uniform Commercial Code, adopted in every U.S. jurisdiction, every seller of goods, even a wholesale seller of goods, makes certain express and implied warranties including a warranty that the goods are what they are represented to be by the seller. See U.C.C. § 2-313, which says:

Express Warranties by Affirmation, Promise, Description, Sample.

(1) Express warranties by the seller are created as follows:

(a) Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.

(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

(2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goodsor a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

If a retail seller of goods buys goods that the wholesaler who sold them to it misrepresented (even if the wholesaler was itself deceived or ignorant of the facts), then the retailer can sue the wholesale who sold the good to the retailer for any damages (within the boundaries set forth in the U.C.C.) that the retailer suffers as a result of the mislabeling. Damages for breach of warranty are governed by U.C.C. § 2-714 which states:

Buyer's Damages for Breach in Regard to Accepted Goods.

(1) Where the buyer has accepted goods and given notification (subsection (3) of Section 2-607) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller'sbreach as determined in any manner which is reasonable.

(2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.

(3)In a proper case any incidental and consequential damages under the next section may also be recovered.

In theory, the chain of breach of warranty liability can have many iterations up the chain of distribution until you reach the firm that screwed things up in the first place.

Breach of warranty liability under the Uniform Commercial Code is much easier to prove than common law fraud and involves far fewer material facts, so it is far less expensive to litigate and far more likely to be resolved by settlement or by a pretrial dispositive motion prior to trial. Common law fraud claims also can't be brought against innocent intermediary parties in the supply chain and don't extent to inadvertent mislabeling mistakes.

Court documents asserting a UCC breach of warranty claim also don't have to be as specific. See e.g., Federal Rule of Civil Procedure 9(b) (in federal court). Often the statute of limitations for a UCC breach of warranty claim is also longer than the statute of limitations for a common law fraud claim.

But prevailing on a claim under the Uniform Commercial Code does not allow a prevailing party to recover punitive damages, and the damages award for a U.C.C. breach of warranty claim can be discharged in bankruptcy, while a common law fraud claim usually cannot be discharged in bankruptcy.

Would the seller have any comeback on the deal through the civil system?

Not under the U.C.C.

It would also be very difficult to establish that Alice engaged in common law fraud or fraudulent concealment in this situation.

Even if Alice knew that the product was mislabelled and intended to take advantage of that fact, it would be very hard to establish, as the seller would have to for a common law fraudulent concealment claim, that the seller reasonably relied upon Alice's silence to determine that the product was properly labeled and couldn't have correctly determined the facts itself.

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