Business Law

This article discusses the legal implications of fraud, misrepresentation and insanity in contracts. It explains the UAE laws and relevant statutes, and provides answers to common legal questions.

Running head: BUSINESS LAW 1
Business Law
Name
Institution

BUSINESS LAW 2
Question 1
i) John, a lawyer in a trial, accused Paul (a witness in that trial) of being a thief
while Paul was on the witness stand. Can Paul sue John? Explain using legal terminology
During trial, a lawyer is permitted by the court to ask unlimited questions especially
during cross-examination in order to establish the credibility of a witness. Whenever the trial
lawyer finds something that can make the credibility of a witness questionable, then they
bring the issue to the attention of the court. Therefore, Paul cannot sue John who actually is
performing his duties to the court, by accusing Paul to be a thief; the trial lawyer is only
trying to establish the credibility of the witness.
ii) Later that day John repeated the same statement about Paul outside of the
courtroom. Can Paul sue John? For what specifically? Explain.
Yes. Paul can sue John in this case; the moment John repeated the same statement outside
court then he is liable for slander. The statement is considered slanderous since it injures the
reputation of Paul especially when nothing about the same has been proved. Therefore, Paul
has every right to sue John for slander before a legal court of law (Baker, 2011).
iii) What if John actually has evidence that Paul was convicted of theft? Explain the
legal implications for situation "ii”
In the event that John has evidence about what he is claiming then this statement would
not be considered slanderous since it will be the truth about Paul. In that case, Paul cannot
sue John for slander if John has evidence that supports his claims before a court of law.

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Question 2
Sam a salesman said to Joe, "This washing machine is as good as other well-known
brands." Joe bought the washing machine (for use at home) but is not satisfied with it
and wished to sue Sam for fraud.
- Explain the legal implications of fraud and misrepresentation in the UAE (including
the relevant statute number and year)
Misrepresentation in the UAE is administrated by Federal Law No. 5 of 1985 in respect of
the Civil Transactions Law (Civil Code).
According to UEA as expressed in article 185 Misrepresentation is defined as situation
where one of the contracting parties uses fraudulent means to deceive the other party into
consenting to something they would have not consented to under normal circumstances
(Wadlow, 2011).
Article 187 of the civil code under UEA laws highlights the legal consequences of
misrepresentation;
The party mislead in a contract has a right to cancel the contract. The civil code under the
UEA laws views misrepresentation as a defect to consent of contracting parties hence the
aggrieved party can cancel the contract (Macdonald, Atkins, & Krebs, 2018).
Misrepresentation under the UAE laws serves as ground for termination. However,
misrepresentation as per the UAE laws on its own is not ground for compensation for the
aggrieved party as it is not considered as breach of contract.

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- And explain whether Sam is guilty of fraud and/or misrepresentation?
Sam could be guilty of either fraud or misrepresentation depending on what is proven
before a court of law. If Sam intentionally made misleading information or there was non-
disclosure of an important fact he ought to have made hence influencing the other party to
purchase the product then it would be considered fraud. If Sam made misleading information
or failed to disclose an important fact about the product unintentionally, then it will be
considered as misrepresentation.
Question 3
i) Peter is declared insane by the courts. However, he signed a contract to buy a
grand piano while he was on a lucid (sane) interval.
- What is the effect of the agreement (valid, void or voidable)? Explain.
For a contract to be considered valid, all parties involved must be competent. All the
parties must have attained the majority age and also must have normal mental legal capacity.
Consequently, a party must have capacity so as to be in the position to understand the
contents of a contract. Generally mentally incompetent persons cannot make an agreement to
protect their own interest.
In this case, Peter signed the agreement when he was on a lucid interval hence making the
agreement void; a contract which has been made by a person declared by the court as insane

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is considered void irrespective of whether it was made when he was on lucid intervals. The
legal guardian appointed by the court should handle matters on behalf of the insane person.
ii) What would be the legal implications of the signed contract if Peter was not declared
insane by the courts? Explain.
In the event that peter was not declared insane by the court, then the agreement would
remain valid given that he made the contract when he was on lucid intervals and there was no
authority declaring him insane.

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References
Baker, R. (2011). Defamation Law and Social Attitudes: Ordinary Unreasonable People.
Gloucestershire, England: Edward Elgar Publishing.
Macdonald, P., Atkins, R., & Krebs, J. (2018). 13. Misrepresentation. Law Trove.
doi:10.1093/he/9780198752844.003.0013
Wadlow, C. (2011). The Law of Passing-off: Unfair Competition by Misrepresentation.
Sweet & Maxwell.