Problem:
Ann buys land for $ 125,000 and shortly thereafter sells it to a total stranger, Sean, for $200,000. Ann makes no misrepresentations. Sean does not ask what Ann paid for the property, or when she bought it and Ann does not say. Thus, there is no basis for a common-law action for fraud or deceit. There is no fiduciary obligation of Ann to Sean and no duty to disclose the purchase price. Ann is entitled to keep her $75,000 profit. Of course, if Ann lies to Sean, she may be liable to him for damages. What if he asks her what she paid for the land? If she is reluctant to reveal her purchase price but wants to avoid liability, how might she respond? Suppose Sean says, I heard that you bought the land for $125,000 only a month ago. Is that true? Assuming that Ann in fact bought the land two months ago, for $125,000, how might she respond?