A seller cannot purposefully lie to or mislead a buyer. However, sellers do not have to disclose every known fact. On the other hand, if asked directly about some aspect of the sale, the seller must reply truthfully with any relevant information. 

A seller usually does not commit fraud by remaining silent on aspects of a sale. Most courts hold that silence is not fraud, especially where the defect could have been readily discovered by the buyer through a routine inspection.

However, failure to disclose information may be fraud where:

  • The seller agreed in the purchase agreement to disclose all relevant facts
  • The seller and buyer have a confidential or fiduciary relationship
  • The seller knows the buyer is mistaken as to certain facts
  • The seller knows the buyer is purchasing the product for a particular purpose, but the product cannot meet that purpose
  • The buyer asks a seller a question, but the seller knowingly does NOT give a correct response

"As Is" Statements

Sellers can limit themselves to a certain extent by using "as is" statements in the purchase agreement. This means the buyer takes the product as it is, without warranties.

Merger Clause

A seller can also protect himself by including a merger clause into the purchase agreement. A merger clause is a provision which states that everything agreed upon is in the written agreement.

Should I Contact a Lawyer?

If you have a dispute arising from a contract for the sale of goods, a business lawyer can help you formulate defenses or pursue restitution. An experienced attorney will be familiar with the terms and warranties included in most contracts, and he or she can ensure that your rights are protected.