LAW81210: Business of Law Case Study 2022

LAW81210
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LAW81210 1
Contents
Question 1........................................................................................................................................2
Issue 2
Rules 2
Application 3
Conclusion 4
Question 2........................................................................................................................................5
Issue 5
Rules 5
Application 7
Conclusion 8
Bibliography....................................................................................................................................9
Case laws 9
Books/Journals 9
Other Resources 9

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Question 1
Issue
The issue of the case is to discover and discuss the contractual rights of Belinda.
Rules
Common-Law of contract identifies a certain basic element that needs to exist in each contract.
Without these elements, a valid contract cannot be formed. These include offer and consent to
the same, consideration, and intention of all the parties to enter into legal relationship with each
other. As soon as all these factors come together, a valid contract is formed. Nevertheless only
the presence of these elements is not enough but the same must be valid also. Rules associated to
the validity of consideration and consent are discussed further. Firstly, to discuss rules related to
the validity of consideration this is to state that the same must not be illegal or invalid. It can be
anything and need not present in monetary form. Further, a consideration must be sufficient, no
matter whether the same is adequate or not as given in the case of Chappell v Nestle1 . It means
the amount of consideration cannot be judge based on the value of an article2.
Further to discuss the validity of consent this is to state that valid consent is the one that is free
from mistakes, fraud, and misrepresentation and so on. These factors affect the validity of a
contract, for instance, misrepresentation can held the contract voidable. Misrepresentation refers
to the wrong representation. It is a situation where a party makes a false representation of fact or
law to another person. It generally consists of a statement where a party mention something
about fact or law to another party which is not true and the first party does so to seek the consent
of others. Here it is clear that a confirmed statement must be there and only a statement of
1 Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1
2 Mindy Chen-Wishart, Contract Law (Oxford University Press, 2018) 120.

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opinion or idea cannot be considered as misrepresentation as decided in the case of Bisset v
Wilkinson3 . Further, in the case of “Smith v Hughes”4 , it was decided that silence cannot be
considered as misrepresentation5. It means if a person does not say anything about a fact even
knowing the truth then it does not treat as he did misrepresentation. Different types of
misrepresentation need to be discussed as different remedies are available for them. Mainly three
types of misrepresentation are there such as “fraudulent”, “negligent,” and “innocent
misrepresentation.” For instance, if the misrepresentation is the fraudulent one then the claimant
may set aside the contract and can also demand damages6. As decided in the case of Derry v
Peek7, “fraudulent misrepresentation” is the one where knows that the particular statement is not
false or belief that the same is not true. In the case of innocent misrepresentation, a claimant may
only ask for damages and has no right to cancel the contract.
Application
If to discuss facts of the case, Belinda visited several car dealers and lastly decided to buy a 1998
Ford Mustang. The purchased this car from “American Car Sales” where the sales executive
Jaxson confirmed her that the car she wanted to buy has only completed 54000 km and also has
been manufactured in 1998. Relying on these facts, Belinda purchased the subjective car. The
problem initiated where this car demanded service after 3 months and Belinda took the same to
the local mechanic. This mechanic revealed some additional facts about this car. He classified it
as a 1994 model rather than 1998, which Belinda used to believe by this point of time. He further
stated that the car might have complete nearly 100000 km. This was a case of misrepresentation
as the facts related to the manufacturing year as well as completed km shared by American Car
3 Bisset v Wilkinson [1927] AC 177 Privy Council
4 Smith v Hughes (1871) LR 6 QB 597
5 Veronica E. Bailey, Cape Law: Text and Cases: Contract Law, Tort Law and Real Property (AuthorHouse, 2016)
6 lawhandbook.sa.gov.au, Misrepresentation (lawhandbook) <https://lawhandbook.sa.gov.au/ch10s02s06.php>.
7 Derry v Peek (1889) 5 T.L.R. 625