Halpert v. Rosenthal

Rosenthal (defendant) sought to buy a house from Halpert (plaintiff). Rosenthal inspected the property and specifically asked Halpert’s real estate agent if there was a problem with termites. The agent responded that there was not and that he had never experienced a termite problem in the part of town in which the house was located. At a later date, Rosenthal’s brother-in-law had asked Halpert about termites and she responded that there were no termites in the house. The parties agreed upon a price and Rosenthal provided a down payment. The balance was to be paid at the scheduled closing. Just before signing the agreement, which included a merger clause, Rosenthal asked the agent if he should have a termite inspection done. The agent responded that an inspection was unnecessary. Prior to closing, a termite infestation was discovered. Rosenthal informed Halpert that he would not purchase the house and he did not appear at the closing. Halpert brought suit for breach of contract, seeking specific performance or damages. Halpert argued that her misrepresentations were innocent. Rosenthal argued that Halpert and her agent had intentionally misrepresented that the house was free of termites. Rosenthal counterclaimed for the return of his deposit. Halpert argued that the merger clause precluded Rosenthal’s counterclaim. A jury found for Rosenthal. Halpert appealed to the Supreme Court of Rhode Island.