Also known as: fair market prices · fair market value
Written by attorneys — see sources below.
A price determined by the amount a willing buyer would pay a willing seller in an arm's-length transaction, neither being under compulsion to buy or sell.
Fernando Farrell held a lease on commercial space owned by Frostline Textiles. When the landlord breached a covenant, Fernando exercised his right to terminate. The court calculated damages using the fair market price of the lease on the termination date to measure Fernando's loss.
After Felicia Fuentes died, her personal representative prepared the required inventory within three months. The representative listed each asset with its fair market price as of the date of death and noted any encumbrances on the items.
Felicity French defaulted on a mortgage held by Fusion Power. After foreclosure sale, she requested a fair market price determination. The court found the property's fair market price exceeded the sale price and reduced the deficiency judgment accordingly.
Basic Incorporated was a publicly traded company primarily engaged in manufacturing chemical refractories for the steel industry. As early as 1965 or 1966 Combustion Engineering expressed interest in acquiring Basic but was deterred by antitrust concerns. In 1976 regulatory action removed the antitrust barrier and Combustion's strategic plan listed an objective to acquire Basic for thirty million dollars. Beginning in September 1976 Combustion representatives met and spoke by telephone with Basic officers and directors about a possible merger. During 1977 and 1978 Basic issued three public statements denying that merger negotiations were under way. On December 18 1978 Basic asked the New York Stock Exchange to suspend trading in its shares and announced it had been approached by another company concerning a merger. The next day Basic's board endorsed Combustion's offer of forty-six dollars per share. On December 20 1978 Basic publicly announced approval of Combustion's tender offer for all outstanding shares. Respondents are former Basic shareholders who sold their stock after Basic's October 21 1977 public statement and before the December 1978 trading suspension. Respondents brought a class action against Basic and its directors alleging that the three statements violated section 10(b) and Rule 10b-5 by misleading the market and causing sales at artificially depressed prices. The District Court certified the class under a presumption of reliance but granted summary judgment for the defendants on the ground that any misstatements were immaterial. The Court of Appeals for the Sixth Circuit affirmed class certification reversed the summary judgment and remanded the case. The Supreme Court granted certiorari.
View caseFelix Franco faced a deficiency action after his property sold at foreclosure for less than the debt. He proved the fair market price at sale exceeded the sale price, so the court applied an offset that eliminated the claimed deficiency.
Between June 3, 1999, and December 7, 2001, Halliburton Company and one of its executives made a series of public statements about the company's potential liability in asbestos litigation, its expected revenue from construction contracts, and the anticipated benefits of a merger with another company. Respondent Erica P. John Fund, Inc., serving as lead plaintiff, alleged that these statements were materially false and misleading and were made to inflate the price of Halliburton's common stock. Halliburton later issued corrective disclosures that EPJ Fund contends caused the stock price to drop and produced losses for investors who had purchased shares during the class period. EPJ Fund moved in the United States District Court for the Northern District of Texas to certify a class of all investors who purchased Halliburton common stock during the class period. The district court determined that the proposed class satisfied the four threshold requirements of Federal Rule of Civil Procedure 23(a). It nevertheless denied certification under Rule 23(b)(3) because Fifth Circuit precedent at the time required securities fraud plaintiffs to prove loss causation at the class certification stage to rely on the presumption from Basic Inc. v. Levinson. The Fifth Circuit affirmed the denial of class certification on the same ground. The Supreme Court granted certiorari, vacated the judgment of the Fifth Circuit in Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804 (2011), and remanded the case. On remand, Halliburton presented evidence that none of its alleged misrepresentations had actually affected the company's stock price and argued that this evidence rebutted the Basic presumption, so that individual issues of reliance would predominate. The district court declined to consider the price impact evidence at the certification stage and certified the class under Rule 23(b)(3). The Fifth Circuit affirmed the certification order. It acknowledged that Halliburton's price impact evidence could be used at trial on the merits but held that such evidence could not be considered at the class certification stage to rebut the presumption of reliance. The Supreme Court granted certiorari a second time to address whether Basic's presumption should be overruled or modified and whether defendants may present evidence of no price impact before class certification.
View caseFelipe Figueroa held a junior easement on land foreclosed by a senior mortgagee. After the sale produced a surplus, the court allocated funds first to junior liens and then paid Felipe the fair market price of the terminated easement before distributing any remainder.
The Hawaiian Islands were originally settled by Polynesian immigrants from the western Pacific. These settlers developed an economy around a feudal land tenure system in which one island high chief, the ali’i nui, controlled the land and assigned it for development to certain subchiefs. The subchiefs would then reassign the land to other lower ranking chiefs. All land was held at the will of the ali’i nui and eventually had to be returned to his trust. There was no private ownership of land. Beginning in the early 1800s, Hawaiian leaders and American settlers repeatedly attempted to divide the lands of the kingdom among the crown, the chiefs, and the common people. These efforts proved largely unsuccessful, however, and the land remained in the hands of a few. In the mid-1960s, after extensive hearings, the Hawaii Legislature discovered that the State and Federal Governments owned almost 49 percent of the State’s land while another 47 percent was in the hands of only 72 private landowners. The legislature further found that 18 landholders with tracts of 21,000 acres or more owned more than 40 percent of this land. The legislature concluded that concentrated land ownership was responsible for skewing the State’s residential fee simple market, inflating land prices, and injuring the public tranquility and welfare. To redress these problems, the legislature enacted the Land Reform Act of 1967. The Act created a mechanism for condemning residential tracts and transferring ownership of the condemned fees simple to existing lessees. In April 1977, the Hawaii Housing Authority held a public hearing concerning the proposed acquisition of some of appellees’ lands. It made the statutorily required finding that acquisition would effectuate the public purposes of the Act. In October 1978, it directed appellees to negotiate with lessees. When negotiations failed, the Authority ordered appellees to submit to compulsory arbitration. Rather than comply with the compulsory arbitration order, appellees filed suit in February 1979 in United States District Court. They asked that the Act be declared unconstitutional and that its enforcement be enjoined. The District Court temporarily restrained the State from proceeding against appellees’ estates. Three months later, while declaring the compulsory arbitration and compensation formulae provisions of the Act unconstitutional, the District Court refused preliminarily to enjoin appellants from conducting the statutory designation and condemnation proceedings. Finally, in December 1979, it granted partial summary judgment to appellants, holding the remaining portion of the Act constitutional under the Public Use Clause. The Court of Appeals for the Ninth Circuit reversed. On applications of HHA and private appellants, the Supreme Court noted probable jurisdiction.
View caseFrancisco Frost and his co-shareholder agreed to dissolve their inactive corporation. They transferred the sole asset at a price below its fair market price. The court held the transfer failed to satisfy the statutory requirement of distributing net assets to shareholders.
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View caseFair market price is determined by negotiation between willing parties without compulsion. Courts use it to offset deficiencies when the foreclosure sale price is lower, preventing unjust enrichment of the mortgagee.
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The representative must list each asset's fair market price as of the date of death in the inventory filed within three months of appointment. An appraiser may be hired if value is uncertain.
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A fixed-price right remains valid if the price was reasonable when created. Later market appreciation alone does not render the clause an unreasonable restraint on alienation.
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Recovery is limited to the difference between the price paid and the asset's actual fair market price at the time of purchase plus other reliance losses. Benefit-of-the-bargain damages are unavailable.
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