Tom and Jerry created a joint venture to purchase an old house in Chicago, Illinois. They intended to renovate the home and flip it for a fast sale. Neither Tom nor Jerry had any background in home renovation, though they both thoughts of themselves as handy with tools. Tom and Jerry purchased the Chicago home on July 15 at a foreclosure auction.

Tom and Jerry began to renovate the home on July 22. During the process of renovation, Tom accidentally punctured two water pipes leading into the basement. Because of the punctures, water flooded the basement. Two days later, and after drying out the basement, Tom noticed several dark marks on the walls in the basement. Tom called Jerry to look at the stains. The stains were very dark and located directly behind the broken water pipes. They mistakenly believed that the marks were water stains caused by the broken water pipes. In reality, the marks were not caused by the broken pipes. Instead, they were a form of mold, easily recognizable to an experienced contractor, which required special treatment to eliminate. Thinking nothing of the stains, Tom and Jerry washed and disinfected the entire wall and then painted the entire basement a dark gray. The washing and painting succeeded in temporarily covering up and abating the molds growth.

Tom and Jerry finished renovating the home on August 25. After placing an advertisement to sell the home, they were contacted by Chris and Savanna. Chris and Savanna were partners in a large architect consulting firm in Evanston. They were tired of the "rat race" and wanted to simplify their lives. They had visited Chicago many times and thought the city was a perfect place to retire. Following a tour of the completely renovated property, Tom and Jerry presented Chris and Savanna with a proposed sales agreement offering to sell the home for $750,000. In response to Chriss question about any conditions on the property that would aggravate her chronic asthma, Tom agreed to include the following in the proposed agreement: There is no lead-based paint, asbestos, or mold/fungi contamination on property.

Based upon Toms representation about the absence of any harmful conditions on the property, Chris and Savanna decided to forego a professional inspection of the property and immediately signed the sales agreement. Using a form obtained from the Internet, Tom and Jerry later conveyed their home to Chris and Savanna for $750,000. Shortly after taking possession of the home, to Chris's allergies worsened. Chris grew increasingly ill. Concerned that Chris's health was connected to the home, Chris and Savanna hired a professional inspector. It was during this time that Chris and Savanna learned of the mold problems in and around the basement. Chris and Savanna decided to sue Tom and Jerry for rescission of the contract based on misrepresentation.

What is the likely result? What arguments will each party make.

For purposes of this paper, the rule of law is defined as follows:

The defendant made an untrue assertion of fact.

The fact asserted was material or fraudulent.

The plaintiff entered the contract because of reliance on the assertion.

The reliance was reasonable.

The plaintiff was harmed.