Fraud and Benefit of the Bargain

In Schnellmann v. Roettger, the Supreme Court held that the Court of Appeals erred by applying an incorrect method of calculating damages in a fraud case. The buyers of a home claimed damages for fraud because the actual square footage of the home was much less than the home had been listed for. The Court of Appeals held that damages were the difference between the contract price and the reasonable market value of the property. The Supreme Court reversed, holding that damages for fraud are determined pursuant to the “benefit of the bargain” rule, or the difference between the value the plaintiff would have received if the facts had been as represented and the value he actually received, plus any consequential losses proximately resulting from the fraud.