Law of Commerce: Breach of Verbal Representation and Misrepresentation

LAW OF COMMERCE

Table of Contents
Issues..........................................................................................................................................3
Source of law..............................................................................................................................3
Justification of law.....................................................................................................................4
Application of law......................................................................................................................4
Conclusion..................................................................................................................................5
Reference list..............................................................................................................................6
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Issues
In the provided case scenario, it is mentioned that Bob was going to start a new business and
he has taken lease of an office in Melbourne. Prior to the contract of lease, he has asked Ken,
the owner of office, not to allow other similar business to take lease within same premises. At
that time, Ken has agreed with this term verbally and both entered into the contract of lease.
However, he has included a clause to the contract that states that no verbal representations
will be considered as legal. Bob did not read the agreement paper and signed it. After six
months, Ken allows another similar business to take lease within the same premises. Breach
of verbal representation has taken place and it can be considered as the major issue in
this case. This action has been taken by Ken to improve his financial condition. However,
business of Bob has been suffered from financial loss due to sudden arrival of competitor.
Ken has not informed Bob about the clause about the verbal agreement for ensuring
Bob’s entry into the contract. This aspect can be considered as a minor issue of this case.
Bob needs to proceed legally against Ken for getting justice.
Source of law
Australian government has created legal system to support consumers from fraudulent
activities. In Australia, there are two main sources of law. Case laws are made based on
decision of judgment of the Supreme Court. On another hand, parliaments made laws, which
are called legislation. Major issue, in this case, is the breach of promise by Ken and Bob can
proceed legally against Ken to get justice. Promissory estoppel is helpful in this kind of
cases. In Australia, the promissory estoppel is case law and it has been included within
Australian legal system in the case of Legion v Hateley [1983]. As mentioned by Bant and
Paterson (2017), this act helps to get damage if one of the parties breaches verbal promise in
Australia. It will help Bob to get compensation for breach of promise by Ken.
The minor issue is including clause without taking consent from opposite party. The
Australian ConsumerLaw (ACL) can be considered as helpful in this case. According to
this law, verbal representations are acceptable as legal if it is made prior to the contract. It can
be assumed that verbal representations are made to influence another party to enter into the
contract. In this case, extra clause has been added to make verbal representation illegal. The
Australian Consumer law is legislation that has been drawn on the conclusion of review of
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