Business Law: Misrepresentation and Negligence

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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BUSINESS LAW
Answer 1
Issue:
The issue in the present case is whether there was a misrepresentation of facts by Jessica about
the profits amount in her account. The issue to be considered in the factual scenario is whether
there was misrepresentation of facts by Jessica to Angela.
Rule
Misrepresentation can be defined as a false or misleading statement about any fact which induces
the other party to enter into a contract. Misrepresentation has been adopted by many common
alw countries where the representee is forced to enter into a contract by making them believe in
the veracity of the untrue statements. Misrepresentation is a contract vitiating factor and it is
treated as a voidable contract whereby the representee can set aside the terms of the contract. the
definition of misrepresentation was found in the case of Kalabakas v Chubb Insurance
Company of Australia Ltd [2015] VSC 705 where the court held that it is a false statement given
by one party to another and inducing them to enter into the contract. The judge in the ober dicta
held that misrepresentation can be done by one party to another party or to his agent. Bisset v
Wilkinson [1927] AC 177 laid down three tests that can constitute misrepresentation within the
definition of a contract. The three tests can be defined as follows:
1. The misrepresentation has to be of facts and they do not extend to opinions of
expressions. If a party makes an opinion, it will not be considered as misrepresentation of
facts under the definition of Contract. Esso Petroleum v Mardon [1976] QB 801 held
that misrepresentation has to be of facts and not of opinions.

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BUSINESS LAW
2. The facts stated by one party to the other need to be factually incorrect and there can be
no truth in the statements that the party makes to induce the other one to enter into the
contract.
3. The facts presented by the party to the other shall be done with the person of persuading
the other to make the contract and the party will be made to believe in the misleading
statements.
An exception to the principle of misrepresentation is that if the party to whom the facts
are conveyed have means to find out about the veracity of the statement, it shall not
account to misrepresentation. A case dealing with a situation when the representee could
find out the truth by checking himself, shall not be held to be misrepresentation. Smith v
Land & House Property Corp (1884) 28 Ch D 7 in this case, the seller expressed an
opinion about a tenant calling him the “most desirable” but it was merely an opinion and
not a fact. Coming to a party making false statements and thereby inducing the other one
into entering into a contract was held in the case of Edgington v Fitzmaurice (1885) 29
Ch D 459, where the company made a false statement about using shares for raising
money in the prospectus, where in reality, the purpose for the shares was to get rid of the
debts. In Australia, the governing law for misrepresentation is the Misrepresentation Act,
1972 which states that in cases when the party had ample chances to check the truth in
the statements and he still did not, there can be no charges of misrepresentation against
the person who made the claims. For misrepresentation to subsist, the element of
intention is very important.