Business Law Assignment - Misrepresentation and Negligence

Running head: BUSINESS LAW ASSIGNMENT
Business Law Assignment
Name of the Student
Name of the University
Author note

1BUSINESS LAW ASSIGNMENT
Answer 1:
Issue: The issue in the case of Jessica and Angela is where there was a misrepresentation of
facts by Jessica to Angela and whether Angela can sue Jessica for misrepresentation.
Rule: Misrepresentation of facts can be defined as a false or misleading statement given by
one party to the other to induce him to enter into a contract. Many common law countries
have adopted the concept of misrepresentation where the person who relies on the facts need
to enter into the contract by giving them untrue information. Under contract law
misrepresentation can be defined as a voidable contract where the party who has this means
to find out the truth can deem the contract voidable at his own instance. In the case of
Kalabakas v Chubb Insurance Company of Australia Ltd [2015] VSC 705 the courts
defined the meaning of a misleading statement to include that it can be defined as a false
statement to convince the other party to be bound by the terms of the contract.. Another
important fact to consider while concluding that there was misrepresentation it is important to
establish that the party gives out a strong statement of fact inducing the other one to believe
in the terms of the contract was held in Bisset v Wilkinson [1927] AC 17. In cases of
expression of opinions the other party cannot claim that there was misrepresentation because
it does not exist in cases of opinions. One more criteria to be fulfilled to make sure that there
is representation of facts is to prove that the statements made are completely false and they
were known to be untrue by the person presenting the facts. Horsfall v Thomas [1862] 1
H&C 90 held that the person making the statement has to have the power to induce other one
into entering into the contract. In cases when the other person had the means to find out about
the truth of the statement but did not do so it is difficult to establish that there was any
misrepresentation. In such cases it has to be shown that the person had enough opportunity
but he did not exercise his power to check the truthfulness of the facts presented to him.
Smith v Land & House Property Corp (1884) 28 Ch D 7dealt with a similar situation where

2BUSINESS LAW ASSIGNMENT
the person to whom the information was conveyed hand an opportunity to check the
truthfulness of the statement and the party did not do that. The court held that in this case
there was no expression of facts and only expression of opinions expressed by one party to
ensure the other party enters into the contract. The law governing misrepresentation in
Australia is called the Misrepresentation Act, 1972 which talked about the definition and
what constituted miss representation. The party to prove that he was misrepresented it is
important for them to prove that they have checked all the documents carefully and they
could not find out the truth and therefore the placed reliance on the person making the
statement of facts. The party has to prove the party had an intention to defraud and therefore
to further that goal they made statements knowing very well that they were not true.
Application: Jessica and. Angela entered into a contract to negotiate the deals of the
restaurant which Jessica was intending to buy from Angela. Angela made statements about
the profits her company makes before selling it to Angela. Jessica made false statements
about the profit the company incurs claiming that she earns a profit of $10,000 and had also
asked Angela to check the records for herself. Angeles check the record still 2007 she saw
that the company was making profits of $10,000 in 2007 and after that the company did not
make enough profits but only an amount of $2000 from 2008 onwards. Even though Angela
was given an opportunity to check the profits for herself she only checked for the year 2007
and when later it came to her knowledge that the company was not making enough profit she
realised that all the facts were not made known to her.
Therefore the other party can make a claim that all the documents where available with her
and she had the chance to check the facts of the case there shall be no case of
misrepresentation. The reliance test was held in this case where the court held those parties
have a reliance over the others and believing them they enter into a contract the wrong doing
party shall be held liable for misrepresentation. Therefore if the party places some reliance on