Misrepresentation And Contracts Made Prior To Registration

This presentation discusses the issue of misrepresentation and contracts made prior to registration in the context of Australian misrepresentation cases. It also analyzes the assumptions that Carvers Pty Ltd is entitled to make and who needs to be held liable for the payment to Linen Ltd. for the supply of tablecloths under Corporations Act. The presentation concludes that Jane has no rights under common law or under statute law as the representation made by Allan was true and does not amount to misrepresentation. The company needs to be held liable for the payment to Linen Ltd. for the supply of tablecloths.

CORPORATION AND
CONTRACT LAW
Misrepresentation And Contracts Made Prior To Registration

CONTRACT LAW ISSUE
 Whether Jane has rights under common law and under statute law.
 This can be analysed in the light of the common law and statute law
relating to misrepresentation.
 The present issue will be discussed in the context of Australian
misrepresentation cases.

CONTRACT 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.

RULE CONTINUED
 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 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.

RULE CONTINUED
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rescinded by the aggrieved party.

RULE CONTINUED
 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.

RULE CONTINUED
 The Competition and Consumer Act 2010, also contains provisions
relating to misrepresentation. The Australian Consumer Law
recognises misrepresentation as an offence. Under this Act,
misrepresentation may incur a penalty for the person making the
misrepresentation. The penalty incurred may extend to a maximum
fine of $1,100,000 for a body corporate and $220,000 for individuals.

APPLICATION
 the consent of Jane was also influenced by the belief on her capability to
perform better.
 The contract for sale contained no mention of the turnover of the
company.
 The statement, which obtained the consent of the aggrieved party to the
contract, was not false or misleading.
 the dependence of the consent to the contract on the statement is not
relevant.
 The statement made in the present situation was based on evidence and
cannot be regarded as misrepresentation.
 the present situation does not comes under the purview of
misrepresentation owing to the fact that statement made was true

CONTRACT LAW CONCLUSION
 Jane has no rights under common law or under statute law
 as in the present situation the representation made by Allan was true
and
 does not amount to misrepresentation.

CORPORATION LAW ISSUE
 Assumptions that Carvers Pty Ltd is entitled to make.
 Who needs to be held liable for the payment to Linen Ltd. for the
supply of tablecloths.
 These issues needs to be analysed with respect to Corporations Act.

CORPORATION LAW RULE
 Section 131 of the Corporations Act
 Section 127 of the Corporations Act
 Section 128 of the Corporations Act
 Section 129 of the Corporations Act
 Doctrine of indoor management

CORPORATIONS LAW APPLICATION
 In this case, the company failed to ratify the contract within
reasonable time.
 This makes the contract automatically ratified by the company owing
to the elapsing of reasonable time within which it needed to be
rescinded or ratified.
 The company has two option in this regard. It can either perform the
contract or pay damages to the other party.
 The company liable to pay for the tablecloth.

APPLICATION CONTINUED
 The company affixed its seal in the contract and signed the same.
 The Carvers Pty Ltd is entitled to make certain assumption regarding
the company.
 The Carvers Pty Ltd is conferred with the right to assume that the
company has complied with all the requirements that has been
provided under the doctrine of indoor management.

CONCLUSION
 Carvers Pty Ltd is entitled to make relating to the indoor
management of the company.
 The company needs to be held liable for the payment to Linen Ltd. for
the supply of tablecloths.