Case Law Summaries

Crown Pacific New Jersey Corporation v. The Morris Companies

• Opinion Date: October 30, 2001
• Real Property Law
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CONTRACTS; REPRESENTATIONS; AS-IS—An AS-IS, WHERE-IS contract provision places the burden of investigation on a buyer and the buyer may then not reasonably rely on all of a seller’s representations.

After closing of title, a buyer of commercial property sued its seller for, among other things, fraudulent misrepresentation concerning the status of governmental approvals for the project; and the physical condition of the property. The lower court dismissed the complaint, and the Appellate Division agreed. The contract of sale provided that the buyer would accept the property at closing in an “as-is, where is” condition based solely on the buyer’s own inspections and judgment and not on any representations from the seller. The contract also provided the buyer with a “feasibility period,” during which the buyer had the right to conduct environmental and topographical studies. The buyer retained an environmental consultant who inspected the site and raised concerns, including that the property contained wetlands and was adjacent to a Superfund site. The buyer and seller met to discuss the matter, and the buyer claimed that certain representations were made at the meeting inducing it to continue with the transaction. After closing, the buyer claimed that its seller misrepresented the condition of the property. In order to succeed in an action based on fraud, one must prove that the other party materially misrepresented a presently existing or past fact with knowledge or belief that it was false and with an intention that the other person rely on that misrepresentation. There must also be reasonable reliance by the other party on that misrepresentation. The Appellate Division noted that the buyer and seller were sophisticated parties and each was represented by counsel. The contract provided the buyer with ample opportunity to investigate and the duty to exercise due diligence. Further, the Court found that the seller’s statements at the meetings in question were too vague to be deemed representations. It also noted that even if there were misrepresentations by the seller, the buyer could not reasonably rely on them. The contract provided that the property was being sold “as is, where is,” so the burden was on the buyer to investigate and evaluate the condition of the property, and it could not rely on any statements by the seller.

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