Principles of Business Governance

Principles of Business Governance
Firstname Lastname
Semester 1, 2019 Assignment
Date

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Case Scenario of Camita, the Car dealer, and Mathew
Issues
The issue, in this case, is a matter of representation. In particular, it is a question as to
whether the statements were terms or representations, and if terms, whether there was a
misrepresentation.
Rule of Law
English law defines a representation as a statement which is not a term in the contract. On
the other hand, a term is an essential statement in a contract that if the statement was left out, the
parties would not have entered into the contract. A simple way to differentiate the two is to adopt
the explanation given in (Taylor and Taylor 2015, 96) that a term is an essential part of the
contract while a representation hangs at the outside edges of the contract. making of the contract
would not have been possible.
In differentiating a term from a representation, the statement must be fundamental to the
formation of the contract to become a term (Bannerman v. White 1861). A statement is also a
term if there was the contract was formed shortly after when the defendant gave the statement
(Routledge v. McKay 1954). Also, an oral statement becomes a term when it is included in the
written agreement. Lastly, a statement becomes a term if it was made out of the skills and
expertise of the defendant (Dick Bentley Productions Ltd v. Harold Smith (Motors) Ltd 1965).
Once the statement ruled as a term turns out to be untrue, the court regards that as a
misrepresentation. A misrepresented term must exist either orally, written or in conduct (Spice
Girls Ltd v. Aprilia World Service BV 2002). The statement must be false (With v O’Flanagan
1936). Also, the false statement must have been given in fact but not as an opinion (Bisset v
Wilkinson 1927). In addition, there must be claimant’s reliance on the statement (Horsfall v.

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Thomas 1862). Once misrepresentation has been identified, the court may allow rescission where
monetary damages would not be adequate (McKendrick 2015, 236). Where money can serve as
adequate compensation, the court would allow the innocent party to claim for damages.
Application
On application, the court needs to differentiate between terms and representation in the
agreements between Camita and the initial dealer, and in the agreement between Matthew and
Camita. While considering Camita’s contract with the car dealer, the court must also consider
Camita’s affirmation of misrepresentation when he discovered the breach from the mechanic. A
situation like this one was dealt with in (Long v Lloyd 1958). In the case, the court could not
award a rescission because the continued use of the lorry by the claimant having identified the
misrepresentation was a complete affirmation of that misrepresentation. An elaboration of this
rule was provided by Jordan C.J that an innocent party entitled to rescind a contract must do so
upon the discovery of the breach, but not after continuing with the performance. Therefore, even
without looking at other facts, Camita has no right to rescind the contract with the original dealer
since she continued to use the car even after realized the misrepresentation.
The case between Camita and Matthew would require the court to consider different
principles. Firstly, from the facts, we are told that Mathew was interested in the mileage and
accident collision, and he repeatedly asked Camita about this the two considerations. Given these
facts, the court would need to decide whether mileage and accident were terms or representation.
In (Bannerman v. White 1861), the court found that the importance of the statement that the hops
were not treated with sulfur made that statement a term. The importance of the statement was
found on the fact that the claimant enquired. Similarly, Mathew enquired about the accident and
mileage making it a term. Also, even considering the knowledge of the parties as in the case of