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Ruling: The Maggid Mishneh (Mechira 15:3) says that if a buyer could have checked and uncovered the blemish in the purchase item and did not do so, he no longer can nullify the sale because of it. Many agree and many disagree with this opinion (see S’ma 232:10; Shut Maharashdam 385). Also, some limit the Maggid Mishneh to cases where the check can be done easily and without charge. Others say that it does not apply when the seller explicitly assured the buyer that the flaw did not exist. Both of these limitations enable pl to claim an erroneous agreement.
On the other hand, the contract says that pl checked all of the pertinent information and found everything to their liking. Although pl claim that since they signed a standard agreement, dictated by def, they should not be bound by it. It is a complicated matter whether we could accept such a claim against what pl signed. But in this case, it is not necessary because the admission of checking everything is stated to apply to everything except what is found in the contract. Since def1’s ownership of the property is a provision of the contract, def1 indeed misled pl, and pl did not admit that they were aware.
In order for pl to collect from def2, owner of def1, there are two hurdles to overcome: 1. the idea that obligations of a corporate entity are paid only from the assets of the entity, not of its owners; 2. the fact that def2 did not agree to sign the arbitration agreement. Regarding #1, the halachic justification for the "corporate veil" is the agreement of the person doing business with it. However, here where the agreement was nullified based on fraud, the corporate veil should not apply. There are reasons according to Israeli law to lift the veil in this case (ed. note – beyond our scope).
Regarding #2, def2 can be obligated as well. Since he is the sole owner of def1 and he was interested in pursuing litigation in this beit din and took part in all of its proceedings, it is incorrect to say that he is not part bound by the litigation. Therefore, if def1 will not have the funds to pay pl, def2 will be liable to pay.
P'ninat Mishpat (827)
Beit Din Eretz Hemda - Gazit
835 - P'ninat Mishpat: A Seller with Questionable Rights to the Property – part I
836 - P'ninat Mishpat: A Seller with Questionable Rights to the Property – part II
837 - P'ninat Mishpat: Did Any Furniture Go to the Buyer? – part I
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Beit Din Eretz Hemda - Gazit
P'ninat Mishpat Payment for Not Clearing Warehouse On Time – part II
based on ruling 75076 of the Eretz Hemdah-Gazit Rabbinical Courts
Igrot Hare’aya Trying to Arrange Purchase of Land in Eretz Yisrael
#222 Date and Place: 2 Elul 5669 (1909), Rechovot
Igrot Hare’aya Connecting Disciplines in Torah Study
Igrot Hare’aya – Letters of Rav Kook 103 – part III
P'ninat Mishpat P'ninat Mishpat: Did Any Furniture Go to the Buyer? – part I
based on ruling 84093 of the Eretz Hemdah-Gazit Rabbinical Courts
P'ninat Mishpat P'ninat Mishpat: Return of Down Payment Due to War – part III
based on ruling 84044 of the Eretz Hemdah-Gazit Rabbinical Courts
P'ninat Mishpat P'ninat Mishpat: Undoing a Problematic Partnership – part III
based on ruling 84061 of the Eretz Hemdah-Gazit Rabbinical Courts
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