Legal Action for Recovery of Money Paid for Discs and Liability for Debts

Running head: ASSIGNMENT S1 2018 1
Assignment S1 2018
Student’s Name
Institutional Affiliation

ASSIGNMENT S1 2018 2
Assignment S1 2018
Question 1
Discuss any grounds on which Annie could take legal action to recover the money she has
paid for the discs.
Issues
1. Under the Contract Act and common law, which requires the parties to agree on the
contractual subject matter, can Annie take legal action to recover the money she has paid
for discs she bought from a shop under terms that are different from what was displayed
in the advertisement on the shop’s window when the shop carried an advertisement
“Today’s special offer: Beyonce songs and albums. These normally sell for $12.99 each,
now $2.99 or five for $12.99.”?
2. Under Australian law and common law governing contracts and sale of goods, what
defences can the Desert Island Discs have in case of a legal action?
Rule
1. According to Redgrave v Hurd (1881), fraudulent misrepresentation is a basis for
rescinding a contract.
2. The Competition and Consumer Act 2010 (Cth) section 18(1) provides that “A person
must not, in trade or commerce, engage in conduct that is misleading or deceptive or is
likely to mislead or deceive.”
Application
One of the cases that considered the effect of conditions going to the root of a contract
was Associated Newspapers Ltd v Bancks [1951] HCA 24. In this case, the Court was called to
determine whether a change in terms that had induced a party to enter into a contract was a basis

ASSIGNMENT S1 2018 3
for rescinding a contract. In its reasoning, the court considered the materiality of a term in
inducing a contract. According to the Associated Newspapers Ltd court, “The test of essentiality
is whether it appears from the general nature of the contract considered as a whole, or from some
particular term or terms, that the promise is of such importance to the promisee that he would not
have entered into the contract unless he had been assured of a strict or a substantial performance
of the promise, as the case may be, and that this ought to have been apparent to the promisor”
(1951). Therefore, the terms of the offer were material in inducing the Annie’s purchase.
Upon proving misrepresentation, Annie may recover the money she used to pay for the
discs. There will be misrepresentation if “a defendant makes a false representation, knowing it to
be untrue, or being reckless as to whether it is true, and intends that the claimant should act in
reliance on it, then in so far as the latter does so and suffers” (Clerk & Lindsell, pp 23. para 18-
01). Liability grounded on misrepresentation requires adducing of evidence to the effect that a
party abdicated its duty of care by making a fraudulent or negligent misrepresentation which a
counterparty relied on to its detriment. Under common law, there is a presumption of reliance on
fraudulent misrepresentation. This was established in Dadourian Group International v Simms
[2006] EWHC 2973 (Ch). Therefore, liability will be construed upon satisfaction of the elements
of materiality of misrepresentation, reliance, and prejudice upon that reliance.
The remedies of misrepresentation are damages and rescission. Equitable principles
require restitution to the original place. Misrepresentation of stock valuation may necessitate
rescission of contract at the option of the buyer. Under equitable principles, the Court may grant
damages based on reliance of the seller’s offer to induce a sale. In the Carlill v Carbolic Smoke
Ball Company case, the court directed that a sales offer was an invitation to treat whose intent