Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 2

The Blixseths entered into a purchase agreement with American Capital Corporation (ACC) for three parcels of real estate in Newport, Rhode Island. One was vacant, the second parcel had a mansion on it, and the third had a carriage house. Although ACC knew that all three parcels were located within the Newport Historic District and subject to the rules and regulations of the Newport Historic District Commission, it did not disclose that fact to the Blixseths. A Rhode Island statute provides that a buyer may terminate a sale if an undisclosed condition is a "materially deficient condition." Will the Blixseths be able to void the purchase and sale agreement? [American Capital Corp. v. Blixseth, 563 F. Supp. 2d 316 (D.R.I. 2008).]