chapter 12, case 3

CHAPTER 12 The Extent of Contractual Rights 223 CASE 3 Sly operated a used-car business. He sold Fox an automobile that he indicated was in good condition and Finance Company for $10,000. Fox was duly notified in suitable for use by Fox as a taxi. In the course of this writing of the assignment. discussion, Sly stated that, in his opinion, the vehicle A week later, the automobile broke down. When was "hardly broken in," as the odometer registered only the vehicle was examined by a mechanic, Fox was 26,000 kilometres. informed that most of the running gear and the engine Sly suggested that Fox test drive the car to satisfy were virtually worn out. Unknown to both Sly and Fox, the previous owner had driven the automobile 226,000 himself as to its condition. Fox did so and, on his return kilometres and the odometer, which registered only six from a short drive, agreed to purchase the automobile digits (including tenths of kilometres), was now count- for $12,000. Fox signed a purchase agreement whereby ing the third time over. he would pay for the car by monthly installments over a When Fox discovered the condition of the auto- three-year period. mobile, he refused to make payments to the finance On the completion of the transaction, Sly immedia company. ately sold the purchase agreement to the Neighbourhood Discuss the rights of the parties in this transaction