By: Jordan Roberts
Eblen Freed PC
Dealers’ speak. Trade talk. Sellers’ statements. Puffing. It goes by many names but the boundaries can be hard to define.
Most often, consumer attorneys will come up against the concept of puffing in the context of a fraud or warranty claim. Did the seller make a warranty about the condition of the product? Did the seller make a misrepresentation about the condition of a product? Did the purchaser have a right to rely on the seller’s misrepresentations? These are the questions that often must be answered.
“General words of commendation such as ‘good’, ‘high-class’, and ‘okeh’ are regarded, without more appearing, as mere seller’s talk and expressions of personal judgment. Stovall v. Newell, 158 Or 206, 208-209 (1938). “As to such matters the plaintiff could observe and judge as well as the defendant.” Id. at 208.
“A purchaser must use reasonable care for his own protection and cannot rely blindly upon the seller’s statements but must make use of his means of knowledge and failing to do so, cannot claim that he was misled.” Miller v. Protrka, 193 Or 585, 598 (1952).
“The rule is well settled that mere general commendations of property which are the subjects of sale, sometimes called ‘trade talk,’ ‘dealers’ talk,’ ‘sellers’ statements’ or ‘puffing,’ do not attain the status of fraudulent representations where the parties deal at arm’s length.” Id. at 597.
The rule established in Miller was later clarified to mean that “a knowledgeable buyer was not entitled to treat mere ‘puffing’ or ‘dealers talk’ as a representation of fact.” Bodenhamer v. Patterson, 278 Or 367, 374 (1977).
As such, when we deal with true “puffing,” we do not get into questions of whether the purchaser had a right to rely on the misrepresentation because, by definition, puffing is not a misrepresentation of fact. But when does puffing cross over from being opinion to being a representation of fact?
Generally, an action in deceit will lie only for false representations of matters of past or existing fact, and hence statements of opinion, as for example, expressions by a vendor commendatory of the thing which he is trying to sell are not actionable even though false. Holland v. Lentz 239 Or 332, 344 (1964).
““This rule is based on the universal practice of the seller to recommend the article or thing offered for sale and to employ more or less extravagant language in connection therewith. The law does not hold him to a strict accountability for those vague commendation of his ware which manifestly are open to difference of opinion, and which do not imply untrue assertions concerning matters of direct observation; nor has the buyer any right to rely on such statements.”” Id. quoting 12 RCL 250-251, Fraud and Deceit §18.
““The reason of the rule lies, we think, in this: There are some kinds of talk which no sensible man takes seriously, and if he does he suffers from his credulity. If we were all scrupulously honest, it would not be so; but, as it is, neither party usually believes what the seller says about his own opinions, and each knows it.”” Id. at 344-345 quoting Vulcan Metals Co., v. Simmons Mfg. Co. 248 F 853, 856 (2d Cir 1918).
“It is recognized, however, that statements of opinion regarding quality, value, or the like, may be considered as misrepresentations of that, that is, of the speaker’s state of mind, if a fiduciary relation exists between the parties as, for example, representations of value made by a real estate prober to his principal, or where the parties are not on an equal footing and do not have equal knowledge or means of knowledge.” Id. at 345.
“The rule is well settled that mere general commendations of property which are the subjects of sale sometimes called ‘trade talk,’ ‘dealer’s talk,’ ‘seller’s statements’ or ‘puffing,’ do not attain the status of fraudulent representations where the parties deal at arm’s length, as here***such statements usually are regarded as mere expressions of opinion upon which a purchaser cannot safely rely***This is especially true when the prospective buyers have or can obtain equal means of information and are equally qualified to judge certain factors claimed to contribute to the value of the property offered for sale. To such statements the maxim of caveat emptor applies.” Coy v. Starling, 53 Or App 76, 81 (1981) (internal quotations omitted).
These cases illustrate a general guiding principal of “buyer beware” whenever the parties are on relatively equal footing and have equal access to information and there is no fiduciary duty on the part of the seller. However, in many consumer transactions the “equal footing” doesn’t actually exist. In those cases, a court may be more likely to find a statement to be a statement of “fact” rather than an “opinion.”
See, for example, Taylor v. Nielsen, 31 Or App 663 (1977), where the defendant sold a used motorcycle to a consumer. The seller made the representations that the motorcycle engine was “in fine running condition” and that “the cylinders on it were bored .030 over standard size.” The Court of Appeals upheld a verdict for plaintiff on his fraud claim saying that the statements “were found to not be mere ‘sellers’ puffing’ since the evidence showed defendant had assembled the engine and appeared to have the expertise to know that the engine was not ‘in fine running condition.’” Id. at 667.
“Thus, notwithstanding some ostensible tensions, Oregon case law adheres to a consistent principle: reliance in fact must be reasonable, but such reasonableness is measured in the totality of the parties’ circumstances and conduct. For example, if there is a naive and unsophisticated plaintiff on one side of the equation and an unscrupulous defendant who made active misrepresentations of fact on the other, a court might well conclude that, although a more sophisticated party would not have taken at face value the false representations of the defendant, that particular plaintiff was justified in doing so. In contrast, if a party is a large and sophisticated organization that has at its disposal a small army of attorneys, accountants, and hired experts to evaluate a business deal, that party, like the plaintiff in Coy, probably “ha[s] or can obtain equal means of information and [is] equally qualified to judge” the merits of a business proposition, thus making reliance on misstatements by another party unjustified.” OPERB v. Simat, 191 Or App 408 (2004) citing Coy, supra.
Ultimately, whether or not a representation will be deemed an “opinion” or a “statement of fact” that could give rise to liability is an intensely fact-based question that will vary case-by-case and will depend on a number of factors including the sophistication of the parties and whether a misrepresentation was made knowingly or negligently. Understanding this can help an attorney navigate a potential fraud case starting with the very first client intake meeting.