Laidlaw v. Organ
Encyclopedia
Laidlaw v. Organ, 15 U.S. 178
(1817), is a case decided by the United States Supreme Court
that established caveat emptor
in the U.S.
s of tobacco
(111,000 pounds) from Laidlaw & Co. on February 18, 1815. The purchase was made between 8 and 9am on the same day that news broke that a peace treaty
had been accepted between America and Britain, ending the War of 1812
and lifting a naval embargo that had drastically depressed the price of American tobacco by 30 to 50 percent. Organ was aware of the lifting of the embargo because his brother had informed him earlier that morning. Laidlaw was not aware of the news. During the discussion of the contract Organ was asked if he was aware of any reasons for the price to be higher; Organ stayed silent over the news of the embargo lifting. The subsequent rise in tobacco prices after the signing of the contract incurred a large relative loss on the sale, compared to the tobacco's next-day value. Two days later, on the 20th, Laidlaw & Co. repossessed the tobacco by force from Organ. Organ filed suit for breach of contract
to regain the tobacco or be awarded damages.
Marshall's opinion goes on to state that "[i]t would be difficult to circumscribe the contrary doctrine within proper limits, where the means of intelligence are equally accessible to both parties. But at the same time, each party must take care not to say or do any thing tending to impose upon the other."
The case was remanded to the District court of Louisiana, with directions to award a Venire facias de novo
. The court stated the question of equitable relief should have been submitted to a jury and that Laidlaw is entitled to a new trial. Chief Justice Marshall's opinion was brief, at approximately 120 words.
and "was one of the first cases to come before the [Supreme] Court involving a contract for future delivery of a commodity." This is also the first case that starts to articulate a doctrine of forbidding active concealment.
Laidlaw has been cited by over a hundred cases, and maintains great importance in U.S. legal scholarship and education (including law school Contracts courses).
Laidlaw has also faced criticism from an economic perspective on the idea that nondisclosure of information that will shortly become public does not encourage overall efficiency because it merely affects distribution. Earlier disclosure could have resulted in more efficient planting decisions by farmers, and nondisclosure only served to enrich Organ.
-Marshall
Case citation
Case citation is the system used in many countries to identify the decisions in past court cases, either in special series of books called reporters or law reports, or in a 'neutral' form which will identify a decision wherever it was reported...
(1817), is a case decided by the United States Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
that established caveat emptor
Caveat emptor
Caveat emptor is Latin for "Let the buyer beware". Generally, caveat emptor is the property law doctrine that controls the sale of real property after the date of closing.- Explanation :...
in the U.S.
Facts
Organ purchased 111 hogsheadHogshead
A hogshead is a large cask of liquid . More specifically, it refers to a specified volume, measured in either Imperial units or U.S. customary units, primarily applied to alcoholic beverages such as wine, ale, or cider....
s of tobacco
Tobacco
Tobacco is an agricultural product processed from the leaves of plants in the genus Nicotiana. It can be consumed, used as a pesticide and, in the form of nicotine tartrate, used in some medicines...
(111,000 pounds) from Laidlaw & Co. on February 18, 1815. The purchase was made between 8 and 9am on the same day that news broke that a peace treaty
Treaty of Ghent
The Treaty of Ghent , signed on 24 December 1814, in Ghent , was the peace treaty that ended the War of 1812 between the United States of America and the United Kingdom of Great Britain and Ireland...
had been accepted between America and Britain, ending the War of 1812
War of 1812
The War of 1812 was a military conflict fought between the forces of the United States of America and those of the British Empire. The Americans declared war in 1812 for several reasons, including trade restrictions because of Britain's ongoing war with France, impressment of American merchant...
and lifting a naval embargo that had drastically depressed the price of American tobacco by 30 to 50 percent. Organ was aware of the lifting of the embargo because his brother had informed him earlier that morning. Laidlaw was not aware of the news. During the discussion of the contract Organ was asked if he was aware of any reasons for the price to be higher; Organ stayed silent over the news of the embargo lifting. The subsequent rise in tobacco prices after the signing of the contract incurred a large relative loss on the sale, compared to the tobacco's next-day value. Two days later, on the 20th, Laidlaw & Co. repossessed the tobacco by force from Organ. Organ filed suit for breach of contract
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....
to regain the tobacco or be awarded damages.
Holding
Chief Justice Marshall's unanimous opinion can be interpreted to state that withholding information that is calculated to deceive the other party can cause a contract to be void on equitable grounds. However, on the question of whether Organ had an obligation to disclose the information he had obtained about the end of the war, the opinion declares that "[t]he court is of opinion that he was not bound to communicate it."Marshall's opinion goes on to state that "[i]t would be difficult to circumscribe the contrary doctrine within proper limits, where the means of intelligence are equally accessible to both parties. But at the same time, each party must take care not to say or do any thing tending to impose upon the other."
The case was remanded to the District court of Louisiana, with directions to award a Venire facias de novo
Venire facias de novo
In law, venire facias de novo , sometimes abbreviated to venire facias is a writ issued by an officer of the court summoning prospective jurors, which the court uses when there has been some impropriety or irregularity in the jury, or where the verdict is so imperfect or ambiguous that no judgment...
. The court stated the question of equitable relief should have been submitted to a jury and that Laidlaw is entitled to a new trial. Chief Justice Marshall's opinion was brief, at approximately 120 words.
Significance of the case
Laidlaw has been recognized by U.S. legal scholars as a central case in the history of U.S. contract law. It was the first case in which the Supreme Court adopted the rule of caveat emptorCaveat emptor
Caveat emptor is Latin for "Let the buyer beware". Generally, caveat emptor is the property law doctrine that controls the sale of real property after the date of closing.- Explanation :...
and "was one of the first cases to come before the [Supreme] Court involving a contract for future delivery of a commodity." This is also the first case that starts to articulate a doctrine of forbidding active concealment.
Laidlaw has been cited by over a hundred cases, and maintains great importance in U.S. legal scholarship and education (including law school Contracts courses).
Laidlaw has also faced criticism from an economic perspective on the idea that nondisclosure of information that will shortly become public does not encourage overall efficiency because it merely affects distribution. Earlier disclosure could have resulted in more efficient planting decisions by farmers, and nondisclosure only served to enrich Organ.
Quote
"[E]ach party must take care not to say or do anything tending to impose upon [i.e. take advantage of] the other"-Marshall
External links
- Full Text Opinion (on Justia)