Legal Analysis of Misrepresentation and Negligence in Contract Law

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Contents
Solution 1.........................................................................................................................................2
Issue.............................................................................................................................................2
Law...............................................................................................................................................2
Application of law........................................................................................................................3
Conclusion...................................................................................................................................3
Solution 2.........................................................................................................................................3
Issue.............................................................................................................................................3
Law...............................................................................................................................................3
Application of law........................................................................................................................5
Conclusion...................................................................................................................................6
Reference List..................................................................................................................................7

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Solution 1
Issue
Whether the contract amid Jessica and Angela is based on misrepresentation and thus Angela can
terminate the contract?
Law
In every contract it is very necessary that all contract elements must be present, that is, offer,
acceptance, legal intention, consideration and capacity. It is also necessary that the basis of the
contract is not any kind of deception amid the parties. One of the elements which if present
renders the contract ineffective is misrepresentation. (Latimer 2011)
Misrepresentation is an act on the part of any of the party to the contract, under which one party
to the contract makes some declaration which are not true and which the basis are of contract
formation. in such situation, the aggrieved party can annul the contract and seek damages. So, to
prove misrepresentation, the main elements include: (Barker et al, 2015)
i. Statement of fact – It is very necessary that the wrongdoer must have made a
statement or declaration to the aggrieved party and the same must be of some fact
which is related to the statement and is held in Esso Petroleum v Mardon [1976]. Any
lawful statement, opinions, expressions, past information has no relevance. It is
necessary that a statement of fact must be made by wrongdoer and is held in Smith v
Hughes (1871).
ii. The statement is false – That the statement of fact that is made by the wrongdoer to
the aggrieved party should not be true; rather, a false statement is made by the
wrongdoer and is held in Edgington v Fitzmaurice (1885).

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iii. That the false statement that is made by the wrongdoer must be made by him with full
intention so that the aggrieved party gets influenced from the same and gets ready to
make a contract with the wrongdoer and is held in Nottingham Brick & Tile Co v
Butler (1889).
iv. Aggrieved party is not aware of the truth of the statement - It is very necessary that
the aggrieved party should not be aware of the truth of the statement. If the aggrieved
has knowledge that the wrongdoer is making a false statement, then, there is no
applicability of misrepresentation.
v. Aggrieved party relying on the statement – To make the contract based on
misrepresentation it is necessary that the aggrieved party after listening to the false
statement must rely on the same and must base his decision of making the contract
upon such false statement and is held in Horsfall v Thomas [1862].
When all the elements are fulfilled then the contract is based on misrepresentation and the
aggrieved party can cancel the contract and ask for damages from the wrongdoer.
Application of law
The law is now applied.
It is found that the contract that is made amid Jessica and Angela is based on misrepresentation
mainly because:
i. There were negotiations that are taken amid Jessica and Angela. Jessica wants to sell
her restaurant to Angela. Jessica submitted that the annual profit is $10,000. So, this
is a factual declaration that is made by Jessica and thus the first requirement of
proving misrepresentation is comply with;