Introduction to Business Law - Essay Writing Assessment Answers

Essay

Whenever two parties wish to indulge into any contractual relationship, then, prior establishment of such contract, there is various negotiation that is entered amid them which form basis of the contracts. The statement which is made by one party are factual but false and is made so as to induce the other party to enter into the contract with him, then, such kind of representations is called misrepresentation in common law. Once misrepresentation are proved then the aggrieved party have a actionable claim and can render the contract voidable and claim damages.

The present essay aim at understating the law of misrepresentations, especially when the same are made fraudulently. The arguments and evaluation of the cases laws have help in understating the exact position of Bob in common laws. Several evidences is laid down which establishes that there are a fiduciary relationship amid Bob and Mr Spoke, that Mr Spoke have misrepresented Bob and have Bob has suffered damages because of the same. The essay also establishes the remedies that Bob can avail from Mr Spoke against the misrepresentation.

It is analyzed that Bob have been in love with pushbikes. He was so pro in biking that at the age of 17 he even participated at the World Cup. He is now willing to work for himself and see an ad wherein Mr Spoke, the owner of a bicycle store want to sell his store. Bob find it as a perfect opportunity and have made various enquiries with Mr Spoke regarding the sale. Considerations is made to various case laws prior reaching the nature of contract that are made amid the two.

In Edgington v Fitzmaurice (1885) & Esso Petroleum v Mardon [1976] the law are settled that only those statements is considered to be under the law of misrepresentations which are factual in nature and not futuristic. Judges in Bisset v Wilkinson [1927] further clarified that an opinion by the contractual parties is not misrepresented statements even if the same are false. But the opinion can be converted into a fact when represent or are aware of the factual situation. The court in Smith v Land & HouseProperty Corp. (1884) has made a valid point on the same and illustrates that in such situations the person giving opinion can be held liable under the law of misrepresentation. But, mere puffs is not misrepresentation unless the statements is supported by proof.

The facts reveal that when Bob intended to purchase the store of Mr Spoke he have made various inquiries from Mr Spoke. Mr Spoke have made representations regarding the past/future profitability of store. Historical figures was presented by him in the form of historical accounts which was not accurate representation, but were inflated by 55%. Mr Spoke have laid down historical figures in the form of accounts which depict past situation of the business. Thus, the representations which was made were regarding the past accounts and can be considered as misrepresented statement. But the representation of future made by him have no relevance in common law.

Contracts Uberrimae Fidei is another legal concept which have its own relevance in misrepresentations. Contracts Uberrimae Fidei are the contracts which is made upon utmost good faith and trust. This doctrine opines that there are a duty of disclosure which are laid upon the party who are at the strong position to disclose all the necessary/ material facts to the weaker party and let him aware the truth of the situations. In Lambert v Co-Operative Insurance Society [1975], the judges defined material fact which are so important that it can influence the decision of a normal prudent man and there is an obligation on the strong party to reveal such material fact otherwise the contract can be rescinded by weaker party. Where there is fiduciary relationship there is an obligation of disclosure.

Evaluation of the facts reveal that Mr Spoky were at a strong position as he is fully aware regarding ups and down of the business. However, he exploited his position and misrepresented Bob. The trust created by Bob was fully exploited by Mr Spoky resulted in the breach of Contracts Uberrimae Fidei element.

In St Marylebone Property v Payne (1994) the courts have further extended the law on misrepresentation and held that exaggeration of facts also falls in the category of misrepresentation and contracts should be avoided on such ground. In St Marylebone case, photographs was taken in such a context that it indicated the extent of the boundaries and were considered as a kind of factual.

Considering a similar situation with Bob and Spoky, Mr Spoky have inflated the figures by 55% and thus exaggerated the true position of his business. He does all acts so that Bob could be misrepresented.

Once it was well settled that factual statement are made by the defaulting party, then, it are very important to satisfy that the statement so made were intended to induce the relying party. In Museprime Properties v Adhill Properties [1990], the judges submitted that a misrepresentation are only material when it have the capacity to induce a normal prudent person. Thus, a clearly held in Horsfall v Thomas [1862], that if the relying party are already aware of the misrepresentation then no good could be achieved from the same.

Considering the factual situation Bob has no knowledge regarding the business nor he could read the accounts and relied on the judgment of Mr Spoky. Mr Spoky have inflated the figures to induces Bob. Bob actually relied upon the statements made by Mr Spoky prior making the final decision. The statement were material and was relied upon by Bob.

Further it is clearly laid down in Derry v Peek (1889) that when the false statement are made knowingly and with utmost carelessness and recklessness then such statements is fraudulent in nature. The courts have held in Car & Universal Finance v Caldwell [1965] & Doyle v Olby (Ironmongers) Ltd [1969] that once a fraudulent misrepresentation are made then the aggrieved party have the right to rescind the contract and claim damages in common law.

When the law laid down in Derry case are applied in Bob situation, it was found that Mr Spoky is aware of the truth of the statements that he is make to Bob so that he could be induced to purchase the store. The concealment of truth were made fraudulently. Thus, there are fraudulent misrepresentation that is caused upon Bob.

It is concluded that all relevant evidence and case laws is laid down in the present essay to establish that Mr Spoky have acted in all such manner so that misrepresentation could be caused upon Bob. He had exaggerated the exact figures of the store, he had concealed the truth of the statement of facts, he had induced Bob to rely upon such material statements. Thus, a clear fraudulent misrepresentation are caused upon Bob and Bob had every right in law to cancel the contract and claim damage from Mr Spoky he could also file a case of injunction againt Mr Spoky so as to restore him at the same position.