Business Laws

Running head: BUSINESS LAWS
Business Laws
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BUSINESS LAWS
ANSWER 1
IDENTIFIED ISSUE
Is there any contractual claim which can be made by Angela from Jessica as when she sold her
business she suggested that the profits were $10000 but they actually turned out to be only
$2000.
RELEVANT LAW
There are several correspondences which take place between the parties before a contract
between them is formed. In such correspondences many statements are discussed which can be
distinguished as terms or the contract and a representation. When contract terms are breached the
parties are provided the right to claim damages or rescind the contract according to the rules of
Bettini v Gye 1876 QBD 183. On the other hand when a false representation has been made a
party can claim misrepresentation which makes the contract voidable at the option of the
innocent party according to the rules of Bisset v Wilkinson [1927] AC 177. According to Oscar
Chess v Williams [1957] 1 WLR 370 a representation is a statement which has been discussed by
the party before the contract is formed and is not a term of the contract.
In Esso Petroleum v Mardon [1976] QB 801 the judges held that when a representation which
has been made by the party is false relating to a fact but not an existing law or a mere opinion the
first element of establishes misrepresentation will be satisfied.
In Horsfall v Thomas [1862] 1 H&C 90 the judges stated that when a representation which has
been made by the party is false relating to a fact but not an existing law or a mere opinion and it

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BUSINESS LAWS
has been used by the party to form a contractual relationship the second element of
misrepresentation will also be satisfied.
Misrepresentation of are three kinds, innocent, negligent and fraudulent. When the
misrepresentation is innocent the parties are discharged from their contractual liability, when the
misrepresentation is negligent or fraudulent the injure person can claim compensation and also
claim recession in form of a remedy. A person would be deemed to have fraudulently
misrepresented a statement of fact when they ought to know the truth behind the statement as
found by the judges in the landmark case of Derry v Peek [1889] UKHL 1.
The question that a statement represented is a mere opinion or an actual fact relies on specific
legal provisions of common law. Generally when a party claims that they had only made an
opinion and not a statement of fact but they are in a position to know the truth behind such
opinion they are regarded to have made a statement of fact by the court of law as it was done in
the case of Smith v Land & House Property Corp (1884) 28 Ch D 7
The question whether a statement represented has induced or made a person to get into a contract
is also addressed by special provisions of common law. Generally when a person has been given
an opportunity to check the validity of a statement and has verified information which had been
provided by the representor than they have no right to claim inducement or reliance in relation to
the statement. However where such information is not verified reasonably than it would give a
right to the person to claim reliance or inducement with respect to the statement as done in
Redgrave v Hurd (1881) 20 Ch D 1.
APPLICATION OF LAW