Misrepresentation in the Law of Contracts - Report Example

Jemima’s case There is a requirement that for a contract to be binding there has to be an involvement of two ormore parties, who strikes an agreement. The agreement however, becomes binding if there is an offer and acceptance made (Arthur, 46). In this case, Jemima who is an artist wants to establish a printing press. Due to lack of sufficient knowledge in this field, she sought the help of Chris, who has been in the field for long enough to understand everything about it. Chris subsequently introduces Jemima to David, who sells machinery necessary for use in the printing press. Jemima explains to David the type of machinery she desires. She gives the machine specification to the effect that it should turn out 15,000 sheets per hour, and produce good quality copy to a maximum print size of 40 mills. David shows Jemima a printing press, which he says will be just right for the job. Chris confirms David’s statement, adding that it is a good deal that Jemima had got. Later, while the printing press is put under use, it is discovered to perform differently from the specification required. Though David confirmed that the machine was just right for the job, it is found to operate at a level very low from the expectation, where it only produce 5,000 sheets per hour and produce copy to a maximum print size of 20 mills. From this case, there is an indication that the parties involved in selling the printing press ended up giving false information to Jemima. Therefore, the case falls under misrepresentation in the law of contracts. In our case above, there was a binding agreement reached by the parties involved, to the effect that the machinery in question would perform as expected. Following the realization that the machinery did not perform as expected, then there is a breach of the agreement by one party, the seller, for giving false statement to the potential buyer. There are four elements that qualify an agreement to be legally binding. There must be an offer, which is the subject for which the two parties are entering an agreement upon (Barnett, 105). In our case above, David is the offeror, who offers to sell a printing press to Jemima. The other element necessary for a legally binding agreement is acceptance. Once an offer has been made, there should be an acceptance from the other party, the offeree, who in our case is Jemima. She accepts to purchase the printing press offered by David. There should be an intention to create legal relations between the parties involved in the agreement, for the agreement to be considered binding (Humphrey, 12). Owing to the fact that the agreement in this case is a commercial agreement between the buyer and the seller, there is therefore, an intention to create a legal relation. Finally, for an agreement to be legally binding there has to be a consideration. This refers to the price paid for the subject upon which, the agreement is reached (Arthur, 59). In our case, the consideration for the printing press was set at 30,000 pounds, which Jemima accepted to pay. From our case, all the elements necessary for a legally binding agreement to be reached are present, qualifying the case for consideration under the law of contracts. Though the agreement in this case is legally binding, there occurred a breach of the contract, where the subject for agreement was observed not to perform as agreed. It is apparent that David, gave false statement to the effect that the printing press would work as desired by Jemima. This is misrepresentation of facts under the law of contracts (Michael, 15). David is liable for misrepresentation of facts, as well as Chris, who also added that Jemima had got a good deal, yet he had been in the field for long enough to understand all the facts about the printing press. The second element of false information or misrepresentation of facts is observed from the fact that the printing machine is found not to be worth the price it was sold. The consideration made for the printing press was 30,000 pounds, yet the printing press was later found to have been worth only 20,000 pounds. Therefore, there are two counts of misrepresentation of facts regarding this agreement. There are various remedies that are available for the breach of any contractual agreement. These remedies range from payment of damages for the losses incurred to actual performance of the contract as it should by the party who breached the contract (Filly, 190). There are two types of misrepresentation under the law of contracts. The first is the Fraud in the factum, which deals with whether the parties to the agreement actually knew that they were entering into a contractual agreement that was legally binding (Arthur, 74). If the parties happens not to know they were entering into an agreement that is legally binding, then the element of intention to create a legal relation is absent in the agreement and consequently the agreement null and void ((Filly, 190)). The second type of misrepresentation is Fraud in inducement. This form is in relation to the inducement of one party to enter into an agreement with the other party, where the inducer is aware that they are giving false statements and information. This misrepresentation focuses on the false dissemination of information and material facts, which makes the induced party enter into a contract, for which he would otherwise have not indulged in, if they knew all the truth and the material facts regarding such information (Filly, 192). This misrepresentation makes the contract entered into voidable, where one party can decide to terminate the contract and seek legal redress for the breach of contract by the other party (Humphrey, 38). In our case above, the misrepresentation by David on the facts about the printing press he sold to Jemima is the Fraud in inducement type, and it thus gives Jemima the right to rescind the contract and take legal action against David, on the account of false representation of material facts about the machine and on the account of misrepresentation on the value of consideration for the printing press. Therefore, Jemima has a course to sue for payment of damages by David and Chris, who gave false statements about the printing press. The course open for Jemima is to sue the two in a court of law, to obtain the legal redress. However, Jemima should prove that there was a misrepresentation of facts before the court. To succeed in getting paid damages, Jemima has to satisfy the following before the court. She has to show the courts that false statements had been made (Barnett, 110). This, she needs to do by providing to the courts the information about the specificity of the machinery she sought to purchase, which David and Chris confirmed were present in the printing press they recommended and sold to her. Secondly, she has to show that the printing press was not worth the price she paid for, and thus there was an account of misrepresentation of facts regarding the consideration paid. Jemima also needs to show the courts that the statements made by the two were directed to her and that they acted as the basis for her to enter into that contract (Humphrey, 40). There is also an element of negligent misstatement by Chris, who is purported to know much about the printing press field, and is thus required to take responsibility for confirming that the deal Jemima got was good (Michael, 44). However, to the extent that Chris was not aware of the misrepresentation, then there are no grounds for such reliance. However, there is an element that can limit Jemima from rescinding the contract and seeking legal redress. If she fails to terminate the contract within reasonable time after she realizes the breach of contract, then she is not amenable to be compensated damages when the reasonable time duration has lapsed (Michael, 15). The law requires that a contract is concluded once it becomes impossible for one party to perform. In seeking compensation for the breach of the contract, there are some considerations that are always made. If the breach did not cause serious damage to the innocent party to the contract, then the party is required to seek compensatory damages that are limited to the loss they have incurred from the breach of the contract. Thus the essence of compensation is to restore the offended party to the same position they would have been if the contract was not breached (Barnett, 112). In some exceptional cases, the gains obtained by the party breaching the contract through the misrepresentation can be stripped off and awarded to the claimant. In our case above therefore, Jemima should file a civil suit against David. The court is then to determine the amount of damages that are to be awarded to Jemima. The accounts for which Jemima should be compensated are false statements made by David and Chris, as well as the misrepresentation for the consideration for which the printing press was to be paid for. Work Cited Arthur, Peterson. The Rise and fall of Freedom of Contract. Clarendon Press, 1979. 42-87. Print. Barnett, Randy. Law of Contracts. Aspen Publishers, 2003. 105-112. Print. Filly, Scott. Reciprocal Altruism as the Basis for Contract. University of Louisville Law Review, 2009. 189-194. Print. Humphrey, Jones. The elements of law of contracts. Journal of Civil Law. Springer, 2009. 11-40. Print. Michael, Evan. Contract Law - Text, Cases and Materials. Oxford University Press, 2005. 10- 45. Print. Read More