Australian Commercial Law: Misrepresentation and Breach of Contract

This case study analyzes a commercial law scenario involving a contract dispute in Australia. The assignment examines issues of misrepresentation and breach of contract, specifically focusing on a situation where misleading information was provided in an advertisement. The analysis considers relevant legal principles, including the Consumer and Competition Act and case law such as Carlill v Carbolic Smoke Ball Co and Smith v Land and House Property Corp. The legal advisor provides advice on the remedies available, including claiming damages for misrepresentation and breach of contract. The case study highlights the importance of accurate information in contracts and the consequences of misleading statements, particularly regarding business expenses and undisclosed facts. The advice focuses on the legal responsibilities of the parties involved and the potential outcomes of a claim, including the challenges of claiming damages for issues not explicitly covered in the contract. The assignment concludes with a summary of the legal advice provided and the potential for legal action.

Australian
Commercial
Law
PART C

Issues
 While entering into a contract with Angelo, you
faced different issues, and as a legal advisor, I’ll
provide you information about issues, relevant
law and available remedies.
 The first issue is the validity of the contract
between you and Angelo given that he included
misleading information in the advertisement.
 The second issue is whether you can demand
damages from Angelo based on a breach of the
contract.

Relevant Law
(Misrepresentation)
• An offer bounds offeror into a legal relationship whereas an
invitation to treat did not create any legal relationship
between parties.
• Most advertisements are an invitation to treat however some
of them are unilateral offer which can be accepted by anyone
which resulted in establishment of a legal relationship (Carlill
v Carbolic Smoke Ball Co).
• As per Consumer and Competition Act, parties can be held
liable for providing false information in an advertisement.
• Misrepresentation is defined as false or misleading
information to create a legal relationship in which parties can
claim for damages (Suff, 2013).
• The party cannot avoid his liability of misrepresentation in
case he/she was in a position to know the fact (Smith v Land
and House Property Corp )

Advice
(Misrepresentation)
 The advertisement posted by Angelo was not a
unilateral offer because it cannot be accepted by
anyone, therefore, it was an invitation to treat, and
he cannot be held personally liable.
 However, as per Consumer and Competition Act,
you can file a claim against him for posting a
misleading advertisement.
 Angelo is liable for the misrepresentation made by
him regarding monthly expenses of the business
being $8000 because he is in the position to know
the truth.
 Therefore, you can claim for damages from him
based on misrepresentation.

Relevant Law (Breach of
Contract)
• Parties of a contract are bound by its terms and non
compliance with the terms of a contract resulted in
breach of such contract.
• The aggrieved parties can file for remedies in case of
a breach of a contract such as reputation, rescission,
damages, injunction or specific performance.
• The main purpose of damages is to put the aggrieved
party into a position as if the breach never occurred
(Carter, 2011).
• Parties can only claim for damages which occurred
due to breach of contract (Smith v Land and House
Property Corp)

Advice (Breach of
Contract)
 Angelo failed to tell you that the van is leased
which is constituted as a misrepresentation.
 Furthermore, your business expenses increased
because you had to pay the lease for the van.
 Therefore, you can claim for lump sum amount
of van and additional expenses from Angelo
based on breach of contract.
 However, the information about the working
condition of the loader was not provided in the
contract, therefore, you will face difficulties in
claim damages for the same.

Final Advice
 As a legal advisor, you should claim for damages from
Angelo as per Consumer and Competition Act because
he posted a misleading advertisement.
 You can claim that Angelo was in the position to know
the expenses of the business, therefore, he can be
held liable for misrepresentation.
 Angelo also failed to tell you that the van is leased and
it resulted in increasing your business expenses.
Therefore, you can hold him liable for breach of
contract and demand for damages.
 There was lack of information about the working
condition of the loader in the contract; therefore, you
will face difficulty in demanding damages for the
loader.

References
 Carlill v Carbolic Smoke Ball Co (1892) EWCA
Civ 1
 Pilkington v Wood (1953) Ch 770
 Smith v Land and House Property Corp (1884)
28 Ch D 7
 J. W Carter, Breach Of Contract (LexisNexis
Butterworths, 2011).
 Marnah Suff, Essential Contract Law (Routledge,
2013).