Legal Advice on Misrepresentation and Negligence Cases

This report evaluates two case studies based on the issues of misrepresentation and negligence and provides legal advice to each party. It discusses relevant laws and cases to provide advice. The report advises filing a suit for misrepresentation in the first case and a suit for negligence in the second case. The subject is Business Law, and no course code, course name, or college/university is mentioned.

Business Law Assignment

Executive Summary
In this report, two cases are evaluated in order to provide legal advice in each case. In order
to provide legal advice, relevant laws and cases are discussed in the report. In the first case,
the party is facing the issue whether a suit for misrepresentation can be filed. It is advised that
the party should file a suit of misrepresentation because Angela suffered loss due to the
wrong information which was given by Jessica while entering into the contract. In the second
case, the issue was related to the negligence of cola manufacturer. The Smith family suffered
substantial losses because of the negligence of Acme, and all the elements of negligence are
present in this case. It is advised that the Smith family should file a suit for negligence in
order to receive compensation for the losses suffered by them.

Table of Contents
Executive Summary...................................................................................................................1
1. Introduction.........................................................................................................................3
2. Answer 1.............................................................................................................................3
Issue of Misrepresentation.....................................................................................................3
Advice for Angela..................................................................................................................4
3. Answer 2.............................................................................................................................5
Issue of Negligence................................................................................................................5
Advice for the Smiths family.................................................................................................6
4. Conclusion..........................................................................................................................7
5. References...........................................................................................................................8

1. Introduction
This report will evaluate two case studies which are based on the issues of misrepresentation
and negligence. The aim of this report is to provide legal advice to each party in the case
study. In the first case, the issue of misrepresentation has raised which is referred to making a
false statement or untrue statement in order to create a contractual relationship between
parties. The false statement is made with an objective to attract another party into signing the
contract. If a contract is formed between the parties based on misrepresentation, then it is a
voidable contract. It means that the representee has the option to either validate the contract
or terminate the contractual relationship. In the second case, the issue of negligence has
raised between parties. It is referred to the failure to maintain a standard of care in order to
avoid harm to an individual (Stewart and Stuhmcke, 2009). In case such duty is not fulfilled
by a persona and duty to such failure another party suffered loss, then a suit for negligence
can be filed by the aggrieved party. This report will provide advice to the party of the case
studies based on these principles.
2. Answer 1
Issue of Misrepresentation
In the present case study, Angela is facing the issue whether a suit for misrepresentation can
be filed against Jessica given that she had made a false statement about the profit of this
business while entering into a contract with Angela. Before giving legal advice, it is
important to understand the elements of misrepresentation. In case of misrepresentation, there
are certain elements which are necessary to be present in order to ensure that the party is able
to file a suit for damages. The first element of misrepresentation is that the breaching party
must have made a false representation about a fact in order to attract another party to sign a
legal contract. The objective of the untrue statement must be to influence the decision of
another party and induce him in order to sign a legal contract (Derry v Peek [1889] 14 App
Cas 337, McConnel v Wright [1903] 1 Ch 546 and Nocton v Lord Ashburton [1914] AC 932)
(Watson, 2012). Every misleading statement made by a party is not considered as
misrepresentation, and the statement which is the mere opinion of a person or which is mere
puff is not considered as a false representation (Esso Petroleum v Mardon [1976] QB 801).
Any false statement which is made by a party regarding law is not considered as

misrepresentation because it is considered that the information about the law is common and
people know about such information (Pankhania v LB Hackney [2002] EWHC 2441) (Loi,
2012). It is also necessary to ensure that the person who is making the untrue statement is in
the position in which he/she is expected to know about such facts (Smith v Land & House
Property Corp [1884] 28 Ch D 7).
Furthermore, while entering into a contract, it is the duty of a person to disclose all the
material facts especially when a party is in the position to know the truth. It is necessary that
a contracting party must disclose information about all the material facts which any
reasonable person would in such situation; failure of disclosure of material facts can be
considered as misrepresentation (Lambert v Co-operative Insurance Society [1975] 2 Lloyd’s
Rep 485) (Tarr, 2013). While determining a suit for misrepresentation, it is necessary that the
representee must have relied on the false statement made by another party and based on such
untrue statement he/she must have entered into a contract (Horsfall v Thomas [1862] 1 H&C
90). However, if the party of the contract check the validity of the statement or enter into the
contract without relying on such statement than a suit for misrepresentation cannot be filed by
the party (Attwood v Small [1838] UKHL J60). If an opportunity to check whether the
statement is true or false is given to the representee, however, it was rejected by the
representee than it is considered that the party had a reliance on the false statement (Redgrave
v Hurd [1881] 20 Ch D 1) (Halladay, 2010). In case of misrepresentation, the contract
becomes voidable, and the representee had the option to end the contract and claimed
damages or continue with the contractual obligation.
Advice for Angela
As an owner of the business, Jessica was in a position to know about the annual profits of the
business (Smith v Land & House Property Corp). The information was a material fact in the
contract as well because based on the false statement Angela formed a contract with Jessica
(Lambert v Co-operative Insurance Society). The untrue statement made by Jessica is
considered as a misrepresentation. Jessica can argue in the court that Angela had checked the
accounts, so she did not rely on her statement (Attwood v Small). But, Angela only checks the
accounts of 2007, and she did not check the rest because she had a reliance on the statement
of Jessica (Redgrave v Hurd). Therefore, a suit for misrepresentation can be filed because the
contract is voidable and Angela can end the contractual obligation and claim for damages.

3. Answer 2
Issue of Negligence
In the present case study, the Smiths family needs advice whether they can file a suit for
negligence against Acme and claim damages. Before given the advice, it is necessary to
understand each element of negligence without which the parties can not file a suit for
negligence. While performing certain duties, a person has to ensure that he/she maintain a
level of care in order to avoid injury to another party. Such care is required to be maintained
by the party to avoid injury to others. In case such case is not taken, or the party breaches the
standard of care, and it caused injury to an innocent party, then a suit for negligence can be
filed (Stewart and Stuhmcke, 2009). There are a number of elements which are necessary to
be fulfilled in order to claim compensation for the negligence of another party. The claimant
is required to prove that the defendant had a duty to maintain a certain level of the case and
such duty was breached by him that caused injury to the claimant. The court uses ‘neighbour
test’ in order to ascertain whether the defendant owes a duty of care or not. This test was
given by the court in Donoghue v Stevenson [1932] AC 562. There are two key elements
which are necessary to be fulfilled by the parties in order to determine whether a duty of care
is owed by the party (Bennett, 2011).
Firstly, there must be a closeness or proximity in the relationship of the parties (Anns v
Merton London Borough Council [1978] AC 728). The second factor is foreseeability or
predictableness of the harm (Home Office v Dorset Yacht Co Ltd [1970] AC 1004 and Topp v
London Country Bus [1993] 1 WLR 976) (Stephenson, 2012). In case both of these elements
are present, then a person owes a duty to care which is required to be fulfilled by him.
Another key factor is that the party must breach the duty due to failure to maintain a standard
of care which any reasonable person would have in the particular situation (Wilsher v Essex
[1988] 1 AC 1074). It is also necessary that a party suffers an injury in order to claim for
negligence because if no harm has occurred than a claim for negligence cannot be instituted
by a party. Other than these elements, it is necessary that the action of the defendant must
cause the damages which are suffered by the party. The causation of the damages is a key
element in the case of negligence. The court uses ‘but for’ test in order to determine whether
the actions of the defendant caused the injury to the claimant (Jobling v Associated Dairies
[1982] AC 794) (Burin, 2014). The test evaluates the situation by analysing that whether the
injury of the claimant is caused due to the actions of the defendant.

The court asks in the test that the harm which is suffered by the claimant would not have
happened but for the failure of maintaining a standard of care by the defendant such injury
occurred (Barker v Saint Gobain Pipelines [2004] EWCA Civ 545) (Hedley, 2011). Based on
this test, the element of causation is established by the court. Another key element of
negligence is remoteness of injury or damages. The harm which is suffered by a person which
is caused due to failure of maintaining a standard of care by a party must not be too remote
unless the person cannot claim for damages (Re Polemis & Furness Withy & Company Ltd
[1921] 3 KB 560 and Jolley v Sutton [2000] 1 WLR 1082). A party can not file a claim for
negligence for the injury which is suffered by a party that is not caused due to the action of
the defendant. It is an additional mechanism which is used by the court for controlling
tortious liability of a party (Doughty v Turner Manufacturing Company [1964] 1 QB 518)
(Martin, 2014). After proving all these elements of negligence, the claimant can demand
damages from the party who failed to maintain a standard of the case due to which the
defendant suffers injury.
Advice for the Smiths family
There are a number of elements which are necessary to be proved by the Smiths family in
order to claim for compensation. Firstly, the court evaluated whether the party owed a duty of
care. Based on the neighbour test, the drink which was manufactured by Acme Cola
Company Limited is consumed by Andy, and it is a general fact that contaminated drinks can
cause harm to the person (Donoghue v Stevenson). Therefore, a proximity relation exists
between the party and the foreseeability of harm was present as well. Furthermore, the drink
was sold by Acme even when it has remains of a cockroach based on which the cola
manufacturer breaches the duty. After close examination it was found that the illness of Andy
is caused due to drinking remains of a cockroach, therefore, the injury suffered by Andy are
caused due to the direct actions of Acme (Barker v Saint Gobain Pipelines). Furthermore, the
damages were not too remote which they were foreseeable kind, and Acme could have taken
appropriate care to avoid such damages (Re Polemis & Furness Withy & Company Ltd).
Therefore, a suit for negligence can be filed by the Smiths family, and they can claim the
compensation for the financial crises faced by them due to a breach of the duty of Acme.

4. Conclusion
It can be seen from the above observations that legal advice is given after evaluation of the
relevant laws and cases. In this report, two cases are discussed, and each case deals with a
separate issue. In the first case, Angela was facing an issue whether she can claim
compensation for misrepresentation. It is advised to Angela that she can claim compensation
for the losses suffered by her which are a result of misrepresentation of Jessica. She can
demand damages in order to compensate the loss suffered by her due to the untrue statement
of Jessica. In the second case, the Smiths family suffered financial crisis due to paying the
medical bill for Andy who suffered illness due to drinking remains of cockroach from the
cola bottle. The party suffered the injury because of the negligence of the manufacturer.
Hence, it is advised to the Smiths family that they should file a suit of negligence against the
manufacturer. The injury resulted in the breach of the duty of the manufacturer. Therefore, a
suit of negligence is valid in this case based on which the Smiths family can claim for
compensation for the losses suffered by them.

5. References
Anns v Merton London Borough Council [1978] AC 728
Attwood v Small [1838] UKHL J60
Barker v Saint Gobain Pipelines [2004] EWCA Civ 545
Bennett, L. (2011) Judges, child trespassers and occupiers' liability. International Journal of
law in the Built Environment, 3(2), pp.126-145.
Burin, A.K. (2014) What does it mean to suffer loss? Haxton v Philips Electronics. The
Modern Law Review, 77(6), pp.994-1008.
Derry v Peek [1889] 14 App Cas 337
Donoghue v Stevenson [1932] AC 562
Doughty v Turner Manufacturing Company [1964] 1 QB 518
Esso Petroleum v Mardon [1976] QB 801
Halladay, J. (2010) Surviving a Fall into the Deep End. Denning LJ, 22, p.189.
Hedley, S. (2011) Tort. England: Oxford University Press.
Home Office v Dorset Yacht Co Ltd [1970] AC 1004
Horsfall v Thomas [1862] 1 H&C 90
Jobling v Associated Dairies [1982] AC 794
Jolley v Sutton [2000] 1 WLR 1082
Lambert v Co-operative Insurance Society [1975] 2 Lloyd’s Rep 485
Loi, K.C. (2012) Banks, agency and misrepresentation. Sing. J. Legal Stud., p.441.
Martin, J. (2014) Key Cases: The English Legal System. Abingdon: Routledge.
McConnel v Wright [1903] 1 Ch 546
Nocton v Lord Ashburton [1914] AC 932

Pankhania v LB Hackney [2002] EWHC 2441
Re Polemis & Furness Withy & Company Ltd [1921] 3 KB 560
Redgrave v Hurd [1881] 20 Ch D 1
Smith v Land & House Property Corp [1884] 28 Ch D 7
Stephenson, G. (2012) Sourcebook on Tort Law 2/e. Abingdon: Routledge-Cavendish.
Stewart, P.E. and Stuhmcke, A.G. (2009) Australian principles of tort law. Annandale: The
Federation Press.
Tarr, J.A. (2013) Disclosure and concealment in consumer insurance contracts. Abingdon:
Routledge-Cavendish.
Topp v London Country Bus [1993] 1 WLR 976
Watson, S. (2012) The tension in corporate governance: Keeping tabs on company
health. University of Auckland Business Review, 15(1), p.38.
Wilsher v Essex [1988] 1 AC 1074