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LaFazia v. Howe

Supreme Court of Rhode Island
575 A.2d 182 (1990)


The Howes (defendants) were conducting negotiations with Arthur LaFazia and Dennis Gasrow (LaFazia) (plaintiffs) for the sale of LaFazia’s deli. The Howes questioned whether the business was profitable, especially after seeing LaFazia’s tax returns, but LaFazia convinced them that it was a good business. The Howes signed a contract and bought the deli. A clause in the contract stated that the Howes were relying “on their own judgment as to the past, present or prospective volume of business or profits of the business of the Seller” and that they were not relying “on any representations of the Seller with respect to the same.” The purchase price was $90,000 and the Howes paid $60,000 and signed a promissory note for the other $30,000. The Howes were able to eventually pay $20,000 off the promissory note, but lost money on the deli because business was bad and never paid the remaining $10,000. LaFazia brought suit for breach of the promissory note and the Howes counterclaimed for fraud in the inducement of a contract. The trial court granted summary judgment for LaFazia. The Howes appealed.

Rule of Law


Holding and Reasoning (Fay, C.J.)

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