Contract Law Assignment: Barry's Legal Options Against Angelo

This assignment delves into a contract law scenario where Barry enters a contract with Angelo based on pre-contractual statements made by Angelo. The assignment explores whether these statements constitute actionable misrepresentation, focusing on materiality and reliance. It examines the remedies available to Barry, including the potential to make the contract voidable, cancel the contract (rescission), and claim damages or compensation. The analysis considers both statute law (e.g., the Competition and Consumer Act 2010) and common law principles, referencing relevant cases and legal concepts. The conclusion affirms Barry's potential to take action against Angelo for breach of contract, outlining the remedies of rescission and damages. The assignment also highlights exceptions where the misrepresentor might not be liable for damages, such as when they believed the statement to be true or when the statement was made on their behalf by someone who believed it to be true.

CONTRACT LAW
PART B

Whether Barry has any right to take action against the
contract’s validity in lieu of pre-contractual statements
made by Angelo for inducing to Barry to enter into the
contract?
QUESTION 2

Terms of the contract are the most important part of the
contract law and this is the area which actually classified
the rights and duties of the parties related to the contract.
Both pre-contractual statements of the parties and post
contractual conduct while considering their rights and
obligations under the contract, and breach of any of these
terms lead to non-contractual rights and obligations.
DETAILS

In case parties made any statements which are false in nature to
the other party before entering in the contract and that other party
rely on these statements for entering in the agreement then party
who made false statements breach section 18 under Competition
and consumer Act 2010. As stated by Section 18 of the ACL if any
person while dealing in trade or commerce must not enter into any
such conducts which results in misleading or deceptive conduct.
Common law also stated that any false representation made by
person before the contract is considered as misrepresentation. A
misrepresentation is defined as wrong statements in context of fact
made by one party to the contract to the another party for
inducing that party to sign the contract, then such representation
is considered as term of the contract and bind both the parties.
APPLICABLE LAW

Actionable Misrepresentation is considered as providing
wrong information of the fact by the one party to another
party before the contract was made for inducing another
party to enter into contract, and another party sign the
contract by believing that wrong information. In context of
misrepresentation two factors must be satisfied that are:
Materiality- misrepresentation must be material, which
means it can induced the another person to enter into
contract.
Reliance- as per this rule, another party to whom false
statements are made must depend on those statements to
sign the contract.
CONTINUED…..

It must be noted that actionable misrepresentation provides
various remedies to the innocent party, and these remedies
are stated below:
Parties can make the contract voidable.
Parties can cancel the contract.
Parties can file claim for damages and compensation
REMEDY

In this case, Barry contacts the Angelo after seeing the
advertisement made by Angelo in which he made different
claims related to the business. While talking to the Barry,
Angelo made some further statements related to the
business such as about the profitability, crown, expenses,
etc. However, on the basis of these statements, Barry sign
the contract but after signing the contract Barry founds
that statement made by Angelo were false in nature. In this
all the provisions of actionable misrepresentation are
applied because if wrong information of the fact is provided
by the one party to another party before the contract was
made for inducing another party to enter into contract, and
another party sign the contract by believing that wrong
information then it is considered as actionable
misrepresentation.
CASE FACTS

Materiality- misrepresentation must be material, which
means it can induced the another person to enter into
contract. This factor is satisfied in the present case because
Barry purchased the business from Angelo on the basis of
statements made by Angelo. Therefore, statements made by
Angelo are material in nature.
Reliance- as per this rule, another party to whom false
statements are made must depend on those statements to
sign the contract. In this case Barry signs the contract by
relying on the false information provided by Angelo.
CONTINUED….

It must be noted that actionable misrepresentation provides
various remedies to the innocent party, and as per these
remedies parties can make the contract voidable because
such contract is not enforceable in nature. Therefore, it is
possible for Barry to challenge the contract’s validity on the
basis of actionable misrepresentation.
CONCLUSION

whether it is possible for Barry to take any action against
the Angelo under the breach of contract?
QUESTION 3

in case person depends on the actionable misrepresentation
while entering into the contract with the another party then
such person has right to take action under breach of
contract, and both statute law and common law provides
different remedies to innocent person for breach of
contract such as rescind the contract and file claim for
damages and compensation.
DETAILS

First remedy provides the power to the innocent party to
set aside the contract, and this power can be used by the
party in all the situations of misrepresentation. The main
purpose of this remedy is to put back the parties to the
contract in their original position, and this means that
parties to the contract are put back in the similar situation
when contract is not enforced between them. Innocent
party has right to cancel the agreement between them and
send notification of the same to the representator. It must
be noted that innocent party cannot use this remedy in case
of repudiation.
FIRST REMEDY

Another party cannot put back in the original position, if
party to the contract rescinds the contract by providing
information of the same to the former party and returning
the goods in question in acceptable condition. In case,
parties to the contract rescind the contract under
Misrepresentation Act 1972, then also Court possess power
to validate the contract.
CONTINUED…

Second remedy which can be accessed by the innocent
party under breach of contract is claim for damages or
compensation. In this claim for damages and compensation
are considered as the alternative remedy to the
cancellation of contract, and in this innocent party possess
the power to file suit for damages against the party who is
involved in actionable misrepresentation. Parties also
possess their right under tort of deceit, because this act
provides remedy in context of actionable misrepresentation.
In case Byrne v Heller, Court recognizes this remedy for the
fraudulent misrepresentation. Court further stated that
main purpose of this remedy is to put back the person in
original position.
SECOND REMEDY

Various components are determined by the Court for
deciding the question of actionable misrepresentation and
reliance of the innocent party on that misrepresentation.
However, some exceptions are also there under which
person who made false representation is not liable to pay
any damages, and these exceptions are stated below:
Necessary evidences are present which proves that seller
believes the statement to be true.
Another person made statement on seller’s behalf and such
person also believes that statements are true
CONTINUED…

in the present case, Angelo indulged in actionable misrepresentation and this
is already proved in above question, and actionable misrepresentation is
considered as the breach of contract. As stated above in case person depends
on the actionable misrepresentation while entering into the contract with the
another party then such person has right to take action under breach of
contract, and both statute law and common law provides different remedies to
innocent person for breach of contract such as rescind the contract and file
claim for damages and compensation. In the present case, Barry can claim for
these remedies, and explanation regarding both the remedies is stated below:
Rescission- under this Barry has power to cancel the contract because Angelo
make false statements to the Barry and on the basis of these statements Barry
sign the contract.
Damages/compensation. In this claim damages and compensation are
considered as the alternative remedy to the cancellation of contract, and in
this innocent party possess the power to file suit for damages against the party
who is involved in actionable misrepresentation.
CASE FACTS

Barry can opt for rescission and claim for damages.
CONCLUSION

ACL, Terms, <
https://www.australiancontractlaw.com/law/scope-terms.html >,
accessed on 2nd May 2018.
Lexis-Nexis, Actionable misrepresentation and negligent
misstatement—overview, <
https://www.lexisnexis.com/uk/lexispsl/disputeresolution/document/3
93747/567M-26H1-F18B-71BK-00000-00/Actionable-misrepresentati
on%E2%80%94overview
>, Accessed on 2nd may 2018.
C Turner, MISREPRESENTATION, AGENCY, AND CONTRACTS FOR
THE SALE OF GOODS IN SOUTH AUSTR,ALIA-MORE EFFECTIVE
REMEDIES OR INCREASING CONFUSION?, <
http://classic.austlii.edu.au/au/journals/AdelLawRw/1975/8.pdf >,
accessed on 2nd may 2018.
REFERENCES