13.5 Innocent Misrepresentation W. F. Yost, who owned the Red Barn Barbecue Restaurant (Red Barn), listed it

13.5 Innocent Misrepresentation W. F. Yost, who owned the Red Barn Barbecue Restaurant (Red Barn), listed it for sale. Richard and Evelyn Ramano of Rieve Enterprises, Inc. (Rieve), were interested in buying the restaurant. After visiting and conducting a visual inspection of the premises, Rieve entered into a contract to purchase the assets and equipment of Red Barn, as well as the five-year lease of, and option to buy, the land and the building. Prior to the sale, the restaurant had been cited for certain health violations that Yost had corrected. In the contract of sale, Yost warranted that “the premises will pass all inspections” to conduct the business.

Rieve took possession immediately after the sale and operated the restaurant. After two weeks, when the Board of Health conducted a routine inspection, it cited 52 health code violations and thereupon closed the restaurant. Rieve sued to rescind the purchase agreement. Evidence established that Yost’s misrepresentations were innocently made. Can Rieve rescind the contract? Yost v. Rieve Enterprises, Inc., 461 So.2d 178, Web 1984 Fla. App. Lexis 16490 (Court of Appeals of Florida)

(Cheeseman 230)

Cheeseman, Henry R. Business Law, VitalSource for DeVry University, 8th Edition. Pearson Learning Solutions, 02/2013. VitalBook file.

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