Under certain circumstances, even as between a seller and buyer dealing at arm's length, the seller may have a duty to disclose a material fact likely to affect a prospective buyer's judgment as to whether the buyer should purchase the property. Goldfarb v. Dietz, 8 Wn. App. 464, 469, 506 P.2d 1322 (1973) (citing Obde v. Schlemeyer, 56 Wn.2d 449, 353 P.2d 672 (1960)). ¶17
However, in Chemical Bank v. WPPSS, 102 Wn.2d 874, 899, 691 P.2d 524, cert. denied, 471 U.S. 1065 (1984), our Supreme Court permitted rescission of a contract on the basis of a mutual mistake of law where at the time the contract was entered into, it was assumed that municipalities and PUD's had statutory authority to enter into the agreements involved. Holding to the contrary is Goldfarb v. Dietz, 8 Wn. App. 464, 469, 506 P.2d 1322 (1973).
The same test has since been applied to other types of latent defects. See Mitchell v. Straith, 40 Wn. App. 405, 409-13, 698 P.2d 609 (1985) (water pipes); Gunnar v. Brice, 17 Wn. App. 819, 822-23, 565 P.2d 1212 (1977) (construction defects); see also Obde v. Schlemeyer, 56 Wn.2d 449, 452-53, 353 P.2d 672 (1960) (termite infestation); Luxon v. Caviezel, 42 Wn. App. 261, 264-65, 710 P.2d 809 (1985) (septic system); Goldfarb v. Dietz, 8 Wn. App. 464, 470-71, 506 P.2d 1322 (1973) (zoning requirements). (1) a vendor, knowing that the land has been filled, fails to disclose that fact to a purchaser of the property, and (2) the purchaser is unaware of the existence of the fill because either he has had no opportunity to inspect the property, or the existence of the fill was not apparent or readily ascertainable, and (3) the value of the property is materially affected by the existence of the fill. . ..
Sorrell v. Young, supra at 225-26. Accord, Goldfarb v. Dietz, 8 Wn. App. 464, 470, 506 P.2d 1322 (1973); Kaas v. Privette, 12 Wn. App. 142, 149, 529 P.2d 23 (1974). See also Obde v. Schlemeyer, 56 Wn.2d 449, 353 P.2d 672 (1960); Ikeda v. Curtis, 43 Wn.2d 449, 261 P.2d 684 (1953); Perkins v. Marsh, 179 Wn. 362, 37 P.2d 689 (1934).
Failure to reveal a fact which the seller is in good faith bound to disclose may generally be classified as an unfair or deceptive act due to its inherent capacity to deceive and, in some cases, will even rise to the level of fraud. See Ikeda v. Curtis, 43 Wn.2d 449, 261 P.2d 684 (1953); Goldfarb v. Dietz, 8 Wn. App. 464, 506 P.2d 1322 (1973). The declared purpose of the Consumer Protection Act is to compliment the federal trade laws in order to protect the public and foster fair and honest competition, and to that end the act must be liberally construed.
In addition, if circumstances exist where the vendor is particularly aware of an infirmity in the subject matter and the vendee is not, the duty arises in the vendor to disclose the material facts likely to affect the judgment of the vendee in his decision on whether or not to complete the sale. Goldfarb v. Dietz, 8 Wn. App. 464, 506 P.2d 1322 (1973). Rescission of the sale is warranted, and the vendee is entitled to be made whole by being placed in the financial condition in which he would have been had he not entered into the transaction.