Corporations and Business Law: Contract Law and Corporations Law Questions

CORPORATIONS AND BUSINESS LAW
Corporations and Business Law
Name of the Student
Name of the University
Author Note

1CORPORATIONS AND BUSINESS LAW
PART A: CONTRACT LAW QUESTIONS
Issue
Whether Jane has rights under common law and under statute law.
Rule
A valid contract needs to possess the following elements, namely,
• Existence of an offer, which has been followed by an acceptance.
• The parties entering into the contract must be competent to contract.
• There must be a consideration for both the parties of the contract.
• There must be an intention to create legal relations
• The consent of the parties must be obtained without the deceptive and misleading
representation about the terms of the contract.
However, the person who after reading the terms of the contract agrees to it, cannot
repudiate it because of the terms being unfair. This is because he has already agreed to the
same.
Under common law, misrepresentation implies a statement made during the formation of a
contract, which is misleading and false, made in order made to obtain the consent of one of
the party to the contract. Misrepresentation generally relates to a statement of facts, which is
material to the contract. The party to the contract, whose consent was obtained by such
misrepresentation, has the option of either repudiating the contract or claim damages.
However, to prove the commission of misrepresentation, the aggrieved party has the onus to
establish the following elements:

2CORPORATIONS AND BUSINESS LAW
 Misrepresentation must have been committed relating to a fact, which is material
to the contract. Misstatement of a fact, which is not material to the contract does
not amount to misrepresentation.
 The person whose consent was thus obtained by the misrepresentation must prove
that his consent to the contract was a result of the misrepresentation.
 A misrepresentation must be express, mere silence does not amount to
misrepresentation.
The person aggrieved of misrepresentation has the option of either repudiating the contract
or claim damages. The options that an aggrieved party will avail will depend on the
circumstances of the case. In case of the claim for damages, the quantum of damages will be
decided considering the loss caused by such misrepresentation.
Misrepresentation may be of three types, namely fraudulent, innocent or negligent. In the
case of innocent misrepresentation, a contract cannot be rescinded by the aggrieved party.
The same can be illustrated with the case of Seddon v. North Eastern Salt Co Ltd [1905] 1 Ch
326. The same was also followed in the case of Svanosio v. McNamara [1956] HCA 55.
A contract obtained by misrepresentation is voidable at the option of the aggrieved party.
A contract obtained on the basis of misrepresentation may confer upon the aggrieved party a
right to avail contractual remedy. The remedy can be availed either under common law or
under the Competition and Consumer Act 2010.
In the case of Shaddock & Associates Pty Ltd and Another v Parramatta City
Council (No 1) (1981) 36 ALR 385; (1981) 150 CLR 225, it was held that liability for
misrepresentation will arise, if a person has made the misstatement, being aware of the fact
that the other person will base his decision to enter into the contract on that statement.