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Semenov v. Hill: Purchaser’s Lack of English-Language Proficiency May Void Purchase Agreement

The Supreme Court of Utah recently considered whether the failure to understand a contract written in English is an appropriate basis for voiding a real estate sales contract.

Georgiy Semenov (“Purchaser”) emigrated to the United States in 1991 from Russia. In 1994, he entered into an agreement to purchase an “Eat-A-Burger” restaurant from Hill Daw, Inc. (“Seller”). At the closing, the Seller presented to the Purchaser, for the first time, a twenty-page purchase agreement written in English. The Purchaser signed the agreement. Subsequent to his signing of the agreement, the Purchaser learned that the agreement contained information that the restaurant was losing money, which he alleged was different than what the Seller orally had represented to him.

The Purchaser filed a lawsuit seeking to “rescind,” or void, the purchase contract. He first claimed that the Seller owed him a heightened duty of care because he had relied upon and trusted the Seller during the closing. Alternatively, the Purchaser claimed that the Seller fraudulently deceived him. He claimed the Seller knew that he could not read the purchase agreement written in English, and so the Seller had orally misrepresented the financial condition of the restaurant to him. The Seller argued that the Purchaser’s alleged English-language deficiency was not a legal basis for rescinding the purchase agreement.

The trial court ruled for the Seller. It found that the transcript of the Purchaser’s deposition demonstrated that the Purchaser had adequate English-language skills to understand the purchase agreement. The Purchaser appealed.

The Supreme Court of Utah reversed the trial court and sent the case back to the trial court for further proceedings. The court first addressed the allegations that the Seller owed a heightened, or “fiduciary,” duty to the Buyer. The court stated that merely relying upon another cannot create a fiduciary duty. Further, the court stated that parties to a contract are entitled to act in their own interest during the execution of a contract. Therefore, the Seller did not owe a fiduciary duty to the Buyer.

The court next turned to the Purchaser’s fraud allegations. Fraud is a basis for a party to seek rescission of a contract. To plead fraud, a party must show that another intentionally made a misrepresentation of a material fact upon which it knew the other party would rely, and that the other party then justifiably relied upon this misrepresentation to their detriment. The court ruled that the question of the Purchaser’s English-language proficiency at the time of closing was a question that the trial court needed to resolve in order to evaluate the Purchaser’s fraud allegations. Thus, the court sent the case back to the trial court for further proceedings on this question.

Semenov v. Hill, 982 P.2d 578 (Utah 1999).