Law Commons^™

Contracts - Fraud - Implied Representation Of Solvency

Michigan Law Review

Defendant, a wholesale grocer, had been losing steadily for months by selling below cost, and had assets of $83,000 against liabilities of $140,000 on Nov. 21, 1929. On that date he accepted a 90-day trade acceptance drawn by claimant for cases of tomato paste which he had ordered, and which claimant now seeks to reclaim on the ground of fraud. On December 3 defendant obtained the goods, and the next day went into involuntary bankruptcy. Held, that the buyer's promise to pay implies belief in reasonable ability to pay, and that concealment of belief to the contrary is fraud …