LAWS1100 : Business Law : Negligent Misrepresentation Fails

Application. apply everything you have just said in the law section to the case study (the main problem scenario).
apply to case analysis and case application.
The application section must be around the same length as the law section. IT IS CRUCIAL THAT ALL INFORMATION YOU USE must be from the powerpoint and not from anywhere else.

Conclusion. short 1 sentence answer e.g. tim has breached his contract. If there are multiple outcomes say which one is better.

Answer: 

Issue:

“Is Dale liable to compensate for damagessuffered by Bob and Marcy”

Law:

Misrepresentation

• Misrepresentation can be understood as the false statement made by one party to another. In such case, if the other party has entered into the contract on the grounds of misrepresentation then, such contract is considered as voidable.
• A contract is considered as voidable when the transaction is capable of being set aside at the option of one of the party, usually the innocent party. Until this happens,the contract is said to be legally binding on both the parties.
• The law of vitiating factors govern the setting aside of the contract for the innocent party. These vitiating factors affect only those contracts that are genuine in nature. Depending upon the type of misrepresentation, the party can claim for damages or the contract may be set aside.
• Misrepresentations are of three types fraudulent, innocent and negligent
• Fraudulent misrepresentation takes place when the representor knows that the statement being made by him is false and still, he is presenting it as true in order to make the other party enter in to the contract. Because of this false statement,the other party suffers damages. In such case,the other party that is the representee can claim for damages from the represent.
• Innocent misrepresentation is undertaken when the representor does not intend to tell lie to the representee or to deceive them. In the case of innocent misrepresentation, the misrepresentation is made unintentionally. In case of innocent misrepresentation, the parties affected cannot claim for damages, they can only rescind the contract.
• Negligent misrepresentation takes place when the representor makes an honest but false statement either negligently or carelessly. In this case of misrepresentation,the representee can claim for damages.
• The remedies available for misrepresentation includerescission or compensation for damages. Rescission is provided in the case of innocent misrepresentation, whereas, compensation for damages are made in the case of fraudulent or negligent misrepresentation.
• In this case, the innocent misrepresentation is valid as Dale has claimed that he had no previous information related to the boat.
• Oscar Chess v Williams (1957) case can be referred for the judgement regarding such case. In this case, the court ruled that the statements claimed by the representor in his own knowledge can only be inferred to the contract (Law Teacher, 2013).

Application

In the case Dale had claimed earlier that he knows the full history of boat and claimed that it is in good condition and is a recent model whose valuation will increase in the coming year. Whereas, this was not the case when Bob and Marcy purchased the boat and started to use it. The boat breaks down within two months of purchase. From further investigation, it was found that the information provided to Bob and Marcy was incomplete and the boat was used for many years and was not in a proper condition to work further and add future valuation to the boat. Also, the log books of the boat were falsely documented. But, after knowing this it was claimed by Dale that he had no idea about who used the boat earlier and that the log books were falsely documented. Also, he claimed that he honestly believed that the value of the boat will increase in future.

On the basis of the case, it can be said that this is a case of misrepresentation in which false information is given to one party before entering into a contract in order to make them enter the contract. The false statement can be related to factual details related to the products, or a fake promise, or a statement of opinion. Dale in his defence can argue that he was innocent, as he himself did not knew about the right condition of the boat and he forwarded that information only to Bob and Marcy which he believed was true. Therefore, in this case it can be stated that this is the case of innocent misrepresentation as the representor did not intended to deceive Bob and Marcy by making false claims. Innocent misrepresentation is governed by the statutory norms mentioned under the Misrepresentation Act 1967. In order to save this case from falling under negligent misrepresentation Dale can argue that, in negligent misrepresentation, the representor knows the truth but negligently does not mention that to the representor. As in this case Dale was unaware of the fact that this boat has been used for many years and the log books were falsely documented and, therefore, it cannot be said that this is a case of negligence. Hence, it can be said that when the negligent misrepresentation fails innocent misrepresentation intervenes(Law Teacher, 2018).

The remedy available in front of Dale is that he can go for rescission. Rescission in simple terms can be understood as the cancellation of the contract (Free Advice, 2018). As the loss suffered by Bob and Marcy was not because of negligence on the part of Dale, Dale can go ahead and say that he is not liable for any damages caused to the boat. Hence, he may not need to pay money back to Bob and Marcy (Austlii, 2018). However, Bob and Marcy can argue this as a case of fraudulent misrepresentation. This is because they have many evidences that can prove that Dale deliberately provided wrong information. For instance, Dale had fixed boat several times at his boat yard, so he was aware that boat was in poor condition and not well maintained as claimed by him. Dale at time of selling the boat said that boat was utilized recreationally, but in actuality it was used for racing and water stunt by owner before selling to Martin. Having repaired boat many times, he must have been aware of this fact, but he purposefully did not reveal this information to Bob and Marcy. Thus, Dale to avoid paying money should prove that statements being made by him were true to his sense and he believed them on reasonable grounds that these statements or facts were true (Legal service Commission , 2018).

Conclusion:

On the balance of probabilities, a court would most likely find Dale guilty and he will have to pay the compensation to Bob and Marcy. This is because evidences suggest that Dale was aware of condition and full history of the boat, but he only told partial truth to Bob and Marcy. 

References:

Austlii. (2018). Sydney Law Review . Retrieved from Austlii.edu.au: https://www.austlii.edu.au/au/journals/SydLawRw/1959/20.pdf

Free Advice. (2018). What is rescission? Retrieved from Law.freeadvice.com: https://law.freeadvice.com/litigation/legal_remedies/what-is-rescission.htm

Law Teacher. (2013). Oscar Chess v Williams [1957] 1 WLR 370. Retrieved from Lawteacher.net: https://www.lawteacher.net/cases/oscar-chess-v-williams.php

Law Teacher. (2018). 5.1.2 Misrepresentation Lecture. Retrieved from Lawteacher.net: https://www.lawteacher.net/modules/contract-law/vitiating-factors/misrepresentation/lecture.php

Legal service Commission . (2018). Misrepresentation. Retrieved from Lawhandbook.sa.gov.au: https://www.lawhandbook.sa.gov.au/ch10s02s10.php