Is Joe Entitled to Get His Money back from Harry - Assignment Example

Case Law Name: Course: Tutor: Date of Submission: Is Joe entitled to get his money back from Harry? Issue Whether Joe can rescind the contract and get his money back from Harry will depend on whether there was innocent misrepresentation by Harry. The misrepresentation here can only be innocent since the seller was unaware that the piece was not authentic. Rule Misrepresentation is deemed to have occurred where untrue statements regarding facts that are substantial are made and end up provoking another party to agree to a contract. Misrepresentations can be fraudulent, negligent or innocent depending on the intentions of the person who commits the tort. The remedies for each of them also differ depending on the liability of the person who gives the misleading information and the subsequent loss suffered by one who relies on such information. The Misrepresentation Act (1971) and Civil Law (Wrongs) Act 2002 do recognise innocent misrepresentation as a proper defence in law (Collins, 2003). As a result, one cannot claim damages in cases of innocent misrepresentation. However, the defendant must prove they had reasonable grounds to believe that their statement was true .The remedy provided for in law for innocent misrepresentation is rescission only at the will of the party to whom the information was misrepresented. Under common law however, rescission was not possible in cases of innocent misrepresentation. Application Indeed there was an untrue statement made by Harry that induced Joe to enter into the contract of sale. However, it was an innocent misrepresentation since Harry had reasonable grounds to believe the “Red Rocks at Sunset” was an original Bobbi Brown. Harry had obtained it from a museum which normally deals in pieces certified as authentic by experts on the field. Had Harry found out the piece was not real before handing it over, then the position would be different-fraudulent misrepresentation. In addition, Harry’s actions were not meant to defraud Joe but rather he was selling the piece for value which he thought it possessed. In this case, Harry will only be liable to for the price Joe had paid for the piece should Harry choose to avoid the contract. Conclusion Under common law, the contract would not have been rescinded but with new legislation regarding the seller’s responsibility to the buyer, this means of redress is now available. Where common law and written legislation conflict, the written law prevails since some of it is enacted to remedy the shortcomings of common law (Collins, 2003). In conclusion, Joe has a claim on Harry up to the extent of the amount he had paid for the painting. He should also return the inauthentic piece to Harry. The net effect will be as if the contract of sale had never happened. It is worth noting that rescission can only occur in cases where it is not impossible to treat the contract never happened. But in this case it is possible for Joe to return the piece to Harry and for the latter to reciprocate (Cartwright, 2002). Advise Harry whether he has any cause of action against Red Pepper Gallery. Issue Whether Harry can successfully sue Red Paper Gallery will depend on whether it can be established that there was misrepresentation on the part of the gallery. The details of the case will determine whether the curator’s actions indeed constituted innocence, negligence or fraud. As to whether he can rescind the contract, get damages or both will depend on the type of misrepresentation, if any and the details of the case itself. For instance, a contract involving a service that has already been delivered would be virtually impossible to rescind. Rules Misrepresentation is deemed to have occurred where untrue statements regarding facts that are substantial are made and end up provoking another party to agree to a contract (Cartwright, 2002). Here, both negligence and fraud are perceivable. Negligence occurs when there exists a relationship between two parties where one holds information that is unavailable to others. They must exercise due diligence when providing this kind of information since they are liable for any losses occurring to persons relying on such information if it is misleading (Collins, 2003). The remedies available for this misrepresentation are rescission and damages. This can be drawn from Shaddock Vs City of Parramatta (1981) 150 VLR 225 and Esso Petroleum v Mardon [1976] QB 801 (Craswell, 2006). Fraudulent misrepresentation occurs when a party knowingly and intentionally gives false information so as to make an unfair gain off the other party. The intentions of the doer defendant act as an indicator on the type of misrepresentation and in this case the actions or inactions must demonstrate intent to defraud. Silence can also be deemed misrepresentation as was in the case of With v O’Flanagan [1936] 1 Ch 575 (Craswell, 2006)v. Application First and foremost, the museum policy requires that all pieces be authenticated. When this particular piece is not inspected, there is neglect of duty. There was a statement of fact made albeit unknowingly. However, this changed when the piece was later inspected. When Simon realised the fault in the Brown, he was under duty to inform the Harry of the irregularity in the piece he had bought. At the time, the contract of sale had not yet been completed. Withholding the information that would have swayed Harry’s willingness to enter the contract indeed constitutes fraudulent misrepresentation. Simon’s intentions are clearly fraudulent since he knew that Harry was not going to get value for the money he would end up paying. As pointed out silence can indeed be a form of misrepresentation. Due to this silence, Harry made a wrong choice relying on Simon’s information. The professionalism that the museum’s is supposed to uphold makes the negligence all the more audible. However, the curator’s silence turns the liability into one of fraudulent nature. The agency relationship between them makes the museum also responsible. Conclusion In conclusion, Harry has a pursuable cause of action against Red Pepper Gallery. He can sue for fraudulent misrepresentation where the remedies are rescission of the contract and damages. In this case he can sue for the price of the piece .In exchange; Harry will have to return the piece to the gallery. For the action of damages to really hold, he must demonstrate that he indeed suffered a loss or opportunity cost owing to the fraudulent misrepresentation of facts by the gallery’s curator. If Red Pepper Gallery did not know that the painting was a forgery, advise Harry whether he would still have any cause of action against them? Issue In this case, the actions available for Harry against the lack of knowledge on the part of Red Pepper Gallery will depend on whether it can be proven that there was indeed negligence to spot a forgery. On the issue of remedies, Harry would be seeking to rescind the contract and get damages for losses borne. Rule When untrue submissions are made as actualities, that constitutes misrepresentation ( these must have induced another part to enter a contract) (Craswell, 2006). Where made unknowingly, it is innocent misrepresentation but where a professional duty is incumbent on a person to take good care before giving information that may induce another to commit to a contract, the misrepresentation is negligent. In other words, negligence arises where there is a special liaison between two parties owing to the fact that one holds information that is not in normally accessible to the common person. The law provides for rescission and issue of damages for negligent misrepresentation. In the cases of Shaddock Vs City of Parramatta (1981) 150 VLR 225 and Esso Petroleum v Mardon [1976] QB 801 (Craswell, 2006), the rulings made show that professionals who give misleading information are liable for the damages suffered by those who rely on such incorrect information (Stone, 2009). Application A statement of fact was misrepresented when Red Pepper Gallery purported to sell an authentic Brown Harry. Red Pepper Gallery normally subjects pieces of art to scrutiny as regards their authenticity before issuing them for sale. However when Simon, the caretaker and their agent in this matter, failed to subject the ‘Red Rocks at Sunset’ to the same checks he neglected a professional duty and put the museum at a risk of a suit. The museum cannot claim that that was an innocent misrepresentation since there was a fiduciary liaison between them and Harry the customer. Harry indeed relied on the information and ended up selling the piece to a third party thus exposing himself to the same risk of a suit for innocent misrepresentation. Conclusion Since there was a neglect of a professional duty and as a result Harry did not get value which he had paid for, the contract can therefore be rescinded. Again, there is an opportunity cost on Harry for the profit he would have made on the piece and as such damages should be awarded (Stone, 2009). REFERENCES “FBL – Lecture Notes 2013”. Cartwright, J 2002, Misrepresentation, London, Sweet & Maxwell. Collins, H 2003, The Law of Contract (Law in Context), London, Cambridge University Press. Craswell, R 2006, ‘Taking Information Seriously: Misrepresentation and nondisclosure in Contract Law and Elsewhere’, Virginia Law Review, vol. 92, no. 565, p. 57-60. Stone, R 2009, The Modern Law of Contract, London, Routledge. Read More