What liabilities ABC has under common law with respect to misrepresentation made by the same?

Business Law Assignment
5/23/2019
Student’s Name

MA506 1
Contents
Question 2.................................................................................................................. 2
Issue 1..................................................................................................................... 2
Rules 1.................................................................................................................... 2
Application 1........................................................................................................... 2
Conclusion 1............................................................................................................ 3
Issue 2..................................................................................................................... 3
Rules 2.................................................................................................................... 3
Application 2........................................................................................................... 3
Conclusion 2............................................................................................................ 4
Question 3.................................................................................................................. 4
References................................................................................................................. 6

MA506 2
Question 2
Issue 1
What liabilities ABC has under common law with respect to a
misrepresentation made by the same.
Rules 1
Misrepresentation is one of the important aspects provided by common law
that is necessary to study here. It is a situation where one of the parties makes a
false representation about a fact or law and representee enters into a contract
believing on such a false statement. To prove misrepresentation under a
transaction, some factors are required to be there. Firstly, a false statement must
be there as decided in the case of
Bisset v Wilkinson [1927] AC 177. Secondly, it
was given in the case of
Horsfall v Thomas [1862] 1 H&C 90, that only existence of
false statement is not enough but the same must induce an innocent party to enter
into a contract. At last, representee must suffer from a loss out of the subjective
contract. Misrepresentation can be of various types such as fraudulent
misrepresentation, negligent misrepresentation, and innocent misrepresentation.
Negligent misrepresentation is the one that a representor makes without having
sufficient and reasonable grounds to believe in its truth. In was decided in case ofRoyscott Trust v Rogerson [1991] 2 QB 297 that in case of negligent
misrepresentation, the innocent party can rescind the contract and can also ask for
the damages under Tort Law.
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964]
AC 465 is an important case to discuss here. In this case, it was held that where
skills of a person are used for the use of another person then a duty of care arises
on the part of the person who performs such skills.
Application 1
Here applying the provisions of
Hedley Byrne & Co Ltd v Heller & Partners
Ltd, ABC had a duty of care to all the users of financial statements of Geartrain Pty
Ltd as this firm was acting in the capacity of accountants. ABC made a
misstatement as it wrongly calculated expenses and trading stock of the company.