Case Study: Contract Law - Nick, Frank, and Hugh's Legal Obligations

This case study delves into contract law, presenting two distinct scenarios. The first examines whether a binding contract existed between Nick and Frank, considering elements like intention and consideration, drawing parallels with the case of Jones v Padavatton. The analysis explores the formation of a contract and the impact of a written agreement. The second scenario assesses issues of misrepresentation involving Hugh and Donald, evaluating whether Hugh made fraudulent or negligent misrepresentations regarding a diamond. The analysis covers different types of misrepresentation (innocent, negligent, and fraudulent), their legal implications, and potential remedies, referencing cases like Derry v Peek and Howard Marine v Ogden. The study concludes with an assessment of Hugh's liability for his actions.

Question 1
Issue
In this case the basic issue was that whether Nick had a binding contract with Frank?
Rule
A contract is a legally binding document where each competent party makes a promise
to each other to do or sell or exchange something with each other (Carter, 2011).
Whereas the legally binding agreements are the ones which are framed between at
least two parties either in oral or in written form. One party promises to do something in
exchange for a certain kind of benefit (Cartwright, 2012). A contract becomes legally
binding when both the parties to contract obeys its terms and performs all the outlined
duties with due care. The basic elements of a contract are to make an offer, provision of
the express acceptance, due consideration, capacity, clarity and intention towards the
contract (Clarke, 2010-13).
Intention is a very essential aspect of every binding contract formed in the course of
agreements framed in the social and the domestic relationships. The intention may be
express as well as implied. It was held up very clearly in case of
Jones v Padavatton [1969] 1 WLR 328 by the Appealing Court that one mom had
promised to provide $ 200 monthly to her daughter if she gets ready to leave her job
and get continued with her studies for the bar. Firstly the girl denied as she had a very
well paid job. Later she had accepted to do so but in the middle of completing her study
she got married and left her studies. (Clarke & Clarke, 2016) The raised question in this
case was that whether there was a legally binding agreement between mom and
daughter or was merely an agreement which cannot be considered as binding. And it

was held that there was a pure existence of domestic agreement which was based on a
presumption which had no evidence to be rebutted.
The presumption can become reattributed if related evidences can be pulled out and the
best way is formation of written contract. In the leading case of Errington v Errington
Woods [1952] 1 KB 290 in the Court it was held that due formation of the written family
agreement which cannot be revoked without the express agreement of both the parties
the mother in law was unable to throw her daughter in law out of the house (Fehlberg &
Smyth, 2017).
Application
All the facts mentioned in the case study are very much alike the case of Jones v
Padavatton. In this case also Frank was concerned about the health of his favorite
nephew Nick and had offered him $1000 to abstain him from drinking alcohol and join
Alcoholic Anonymous (AA) for getting rid of his drinking habit. It was also a domestic
case. But the presumptions were based on the evidences o the written document
signed by both of them which was very similar in the case of Errington v Errington
Woods. Intention was absolutely based upon the presumption of the evidences of the
written documents.
Conclusion
It is very clear from the above that, Nick had entered a binding contract with Frank
Question 2
A
Issue

The key issue in this case is whether there existed misrepresentation on part of Hugh?
Rule
Misrepresentation means the representing a fact or law in a false way which
encourages the party to enter into an agreement. Misrepresentation can be of three
types i.e. innocent misrepresentation, negligent misrepresentation and fraudulent
misrepresentation. Misrepresentation makes a contract voidable and the remedy is
made available on the basis of type of misrepresentations (Giancaspro, 2107).
In accordance to sec. 2(!) of Misrepresentation Act 1967, a misrepresentation is said to
be fully innocent if it exist in the place where there are appropriate reasonable grounds
for relying on the fact to be accurate. Whereas under sec. 2(2), it is determined that
misrepresentation are rescission or compensations in its lieu and the claims cannot be
made against it. Measuring of damages are done on the normal basis of the contractual
principles (Harris & Croese, 2017).
Application
In this case also it was seen that both Hugh and Donald did not have any idea about the
reality of the diamond that it can also be a topaz one. They had believed it to be rough
diamond which Donald actually wanted.
Conclusion
Thus from the above statement it is clear that no remedy can be imposed against Hugh
in relation to misrepresentation of the fact that diamond was topaz not rough.
B
Issue

Whether there was a valid ground of fraudulent by Hugh’s side?
Rule
The false statement of law or fact is what defined as misrepresentation and fraudulent is
one of its main type. Fraudulent is very well defined in the instance of Derry v
Peek (1889) 5 T.L.R. 625 by Lord Herschell. He very well-defined a statement as
misrepresented if it is made even after having the knowledge about its untruthfulness, or
lacking belief that it could be the truth or being careless about the factor whether it can
be true or not. Further remedies for the fraudulent misrepresentation of fact very well
defined under the case of Doyle v Olby [1969] 2 QB 158. In this case it was held that
representation is not a term of contract so contractual damages cannot be made
applicable for misrepresentation. But in case of fraudulent misrepresentation damages
could be claimed under tort (Makela, 2010-18).
Application
In the given case it was very clearly visible that Hugh was totally aware of the fact that
the diamond was a topaz one but still had not discussed this fact with Donald these are
clear symptoms of misrepresentation seen in the case of Derry v Peek and this meets
up all the elements of fraudulent misrepresentation defined in the case of Doyle v Olby.
Hugh is bound to bare all the remedies which could be imposed upon him by tort.
Conclusion
Hence to conclude the above statement, Hugh could be determined to misrepresent the
facts fraudulently so is liable for paying off remedies.

C
Issue
Whether an effective entitlement of misrepresentation can be transported against Hugh
for not disclosing the actual fact of the case?
Rule
False representation made in regard of a fact is considered as the key requirement for
upholding the claim of misrepresentation. Predictions done on the basis of future or
opinions can be misrepresented. In the case of Bisset v Wilkinson [1927] AC 177, the
complainant purchased a farm and at the same time, he consumed the seller for
regarding the number of sheep could be held on the land. Who replied just on the basis
of presumptions? Relying on his words the plaintiff assimilated the land and later he
realized that the presumption of the seller was absolutely wrong. The claim was thus
declined when it was brought before the Privy Council on the basis that the provided
statement was just an opinion and not a fact (Radan & Gooley, 2010).
Application
In the case given also Hugh though knew that Donald had a misconception of the fact
regarding the diamond but had not cleared it in the very same way as had happened in
the case of Bisset v Wilkinson. So remedies will be imposed on him.
Conclusion
The claim of misrepresentation can thus be brought against Hugh, which is very definite
from the above statements.

D
Issue
The key issue in the case is that, can Hugh be claimed back for remedies for
misrepresenting the things or for breaking the bling belief of Donald?
Rule
Misrepresentation can be of many different types and the remedy is available on the
basis of one of its type. The different kinds of misrepresentation are fraudulent
misrepresentation, negligent misrepresentation and wholly innocent misrepresentation.
In case of negligent misrepresentation which is present under sec 2(!) of the
Misrepresentation Act 1967. A negligent misrepresentation is that declaration that is
conveyed irrespective of having a sensible pulverized to be have faith in it as reality. It
was very well determined in the case of Howard Marine v Ogden [1978] QB 574 that the
burden of proving was not discharged by the defendant i.e. they had reasonable
believing grounds for demonstrating it to be the truth. This was because a registered
document was there with him which was capable enough to prove down the facts from
the side of the defendant (Vickovich, et al., 2013).
In the case of Royscott Trust v Rogerson [1991] 2 QB 297 the Court of Appeal has very
clearly determined the remedies which can be made available for the damages caused
under sec. 2(1) of the misrepresentation act 1967 can be measured on the foundation
of tort of deceit and on basic of the principles of contract. It can only be applied in case
where the fraud is basically not present (thelawdictionary, 2018).

Application
In the given case study it was seen that Donald had assumed the things represented by
Hugh i.e. without checking anything in relation to the diamond which was offered by
Hugh the club expert of diamonds. It was his negligence that he had not checked the
item before paying a very big amount for purchasing it. As seen in the case of Howard
Marine v Ogden the facts were negligently misrepresented and the remedies will be
made available to him on the basis of the injuries produced as mentioned very clearly in
the case of Royscott Trust v Rogerson.
Conclusion
Hence it can be concluded that Hugh cannot be claimed back for the negligence on the
part of Donald.

Bibliography
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Vickovich, l., Radan, P. & Gooley, J. V., 2013. Principles of Australian Contract Law. 3rd ed.
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