Remedies for material misrepresentation or fraud include all remedies available under this article for nonfraudulent breach. Neither rescission or a claim for rescission of the contract for sale nor rejection or return of the goods shall bar or be deemed inconsistent with a claim for damages or other remedy.
(Code 1933, § 109A-2 - 721, enacted by Ga. L. 1962, p. 156, § 1.)
Cross references.- Rescission of contracts generally, § 13-4-60 et seq.
Law reviews.- For article discussing ex parte rescission of sales contract for fraud and suit for fraud and deceit, in light of City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974), see 11 Ga. St. B.J. 172 (1975). For article, "Buyer's Right of Rejection: A Quarter Century Under the Uniform Commercial Code, and Recent International Developments," see 13 Ga. L. Rev. 805 (1979). For article discussing the applicability of warranty provisions under the Uniform Commercial Code to domestic solar energy devices, see 30 Mercer L. Rev. 547 (1979).
JUDICIAL DECISIONSANALYSIS
General Consideration
Uniform Commercial Code not intended to erase tort remedy for fraud.
- Neither draftsmen nor legislature intended to erase tort remedy for fraud and deceit with adoption of Uniform Commercial Code in Georgia. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974).
Fraud in procurement justifies rescission at option of injured party.- If charge of fraud in procurement of contract is substantiated, the written contract itself is voidable and subject to rescission at election of injured party. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).
Failure to perform coupled with present intention not to perform is fraud.- When failure to perform promised act is coupled with present intention not to perform, inceptive fraud is present and is sufficient to support action for cancellation of written instrument. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).
Actual fraud cannot arise from mere promissory statements about future acts or events.- Actual fraud can arise only when representations made relate to then existing or past facts, and cannot be predicated upon statements which are merely promissory in nature, referring to future acts or events. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).
Where both parties expect buyer to live up to promise, there is no fraudulent inducement.- Where parties to contract fully contemplated and expected that buyer would live up to a promise, whether or not it was ever reduced to writing, a charge of fraudulent inducement is not supported by evidence. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).
Tort action not controlled by terms of contract.
- Uniform Commercial Code does not preclude action in tort based upon fraudulent misrepresentation inducing the sale where plaintiff proves by preponderance of evidence the elements of fraud and deceit recognized under Georgia law, and such a tort action cannot be controlled by terms of contract itself. City Dodge, Inc. v. Gardner, 232 Ga. 766, 208 S.E.2d 794 (1974); Massey v. Stembridge, 177 Ga. App. 791, 341 S.E.2d 247 (1986).
Cited in F.N. Roberts Pest Control Co. v. McDonald, 132 Ga. App. 257, 208 S.E.2d 13 (1974); Waller v. Scheer, 175 Ga. App. 1, 332 S.E.2d 293 (1985).
Actions
Elements of claim for fraud and deceit.
- Defendant seeking damages or rescission by way of counterclaim in nature of a tort claim for fraud and deceit must show that plaintiff (or someone acting for plaintiff) made representations, which at time made were known to be false, or what the law regards as equivalent of knowledge, that representations were for purpose of deceiving defendant, that defendant relied on the representations, and that defendant sustained loss or damage as proximate result of the representations. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).
Precise allegations and proof required.- Georgia courts require precise allegations and particular proof of all necessary elements of fraud. Cone Mills Corp. v. A.G. Estes, Inc., 399 F. Supp. 938 (N.D. Ga. 1975).
RESEARCH REFERENCES
Am. Jur. 2d.
- 67A Am. Jur. 2d, Sales, §§ 858, 859, 1161, 1216-1225, 1278, 1279.
C.J.S.- 77A C.J.S., § 50 et seq.
U.L.A.- Uniform Commercial Code (U.L.A.) § 2-721.
ALR.
- Remedy of contractor, who has partially performed before discovering fraud, as to character or amount of work, 2 A.L.R. 1396.
Validity and effect of stipulation to the effect that vendee or purchaser does not rely upon representations of vendor or seller, or the latter's agent, 10 A.L.R. 1472.
Election of remedies: inconsistency of action for damages for fraud and suit to establish constructive trust based on same transaction, 35 A.L.R. 1175; 43 A.L.R. 177.
Fraud of vendee or buyer inducing vendor or seller to accept less favorable terms as sustaining an action in tort, 52 A.L.R. 1153.
Dealings between seller and buyer after latter's knowledge of former's fraud as waiver of claim for damages on account of fraud, 106 A.L.R. 172.
Seller's liability for fraud in connection with contract for the sale of long-term dancing lessons, 28 A.L.R.3d 1412.
Validity of express statutory grant of power to state to seek, or to court to grant, restitution of fruits of consumer fraud, 59 A.L.R.3d 1222.
Fraud actions: right to recover for mental or emotional distress, 11 A.L.R.5th 88.