Involving Misrepresentation of Information in a Contractual Agreement on the Sale of Property - Case Study Example

Law Essay Students Name Institution Supervisors Name Date Introduction This is a case involving misrepresentation of information in a contractual agreement on the sale of property. In this case the Representor made representations to the Representee, which relate by way of affirming to information that is provided by the Representor with an intention to sell the property. However the Representor appeared to have known that the statements of the terms by which the property as sold were not real to what the Representee soon found out. According to the English law, any form of misrepresentation cannot be recognized if it is made in silence and also in a case where one party has proceeded to sell the property knowing very well that the sell is based on false information half information with regard to the property in question. The facts given during the selling of the property, provided half-truth on the property though others may argue that the person sold the property on the utmost good faith (Zhou, 2009). However, when the case is looked at clearly, it can be agreed that there was no fair dealing in the whole process and especially at the time when the negotiations were done just before the actual contract was concluded and agreed upon. In this case, Mr. Manfredi purchased a vegetarian café from Happy Hippie Pty Ltd on the faith of Elvis Eggplant who was the director. However some information was hidden to him and other figures inflated in form of a historical account so as to induce Mr. Manfredi to purchase the café. Other hidden documents included receipts and old tax documents. These document proved that the figure presented by Elvis were not true and that they were inflated. Discussion Looking at the above document, it is an open case of misrepresentation by Mr. Eggplant. When we look at the Australian law, there is actually a charge that is imposed if Mr. Eggplant is found to have acted in good faith or fair dealing during the time that he negotiated with Manfred. In this way, the law provides for defense against a contract that was made under grounds of deceit or rather non-disclosure of information that are not guided under the principles of acting in good faith. In this case, the duty will also extend to areas that prove the agreement between Manfred and Mr. Eggplant was not actually fulfilling in terms. A good example is where there was a breakdown of negotiations, or where one of the two was hiding information from the other party. In this case, Mr. Eggplant was hiding information from Mr. Manfred. This positive to act in good faith is also found in other jurisdictions and common law systems too (Ayres & Klass, 2006). When it comes to the breach of terms of sales, the law can also provide remedies for the way that Mr. Manfred was misrepresented by Mr. Eggplant in the estimation of the actual value of the café, but this will depend on the type of misrepresentation that has occurred. For example, in a case it can be proven that Mr. Eggplant acted in deceit. The law will also look at the way that Mr. Eggplant misrepresented Mr. Manfred and the level of financial and mental damage that the Misreprentation might have caused him in the long run. However, the level of damage will also look at the contributory negligence from Mr. Manfred point. In addition, one has to also look at whether the Representor, in this case, Mr. Eggplant was blameworthy for the misrepresentation act. By being blameworthy means that Mr. Eggplant was at fault and deserves to be charged for the act, this is the course that is taken when the issues is looked at from a moral point of view. The act of blameworthy will also look at the actions that Mr. Eggplant is accused of, like hiding the receipts and inflating the costs of some items and judge whether he deserves reproach or punishment. But the law will also look at the reasonable consistency, and a general policy of not punishing Mr. Eggplant if he had not done it intentionally. If Mr. Eggplant is found to be blameworthy, then one of the basic solutions for the wrong doing is to order him to compensate Mr. Manfredi for the damages, this will be weighed by looking at Mr. Manfred’s loss and the reason for providing remedy. In the end Mr. Manfredi will be in a better position in being the owner of the café. However the grounds on which these remedies will be developed will need to be approached in a place far beyond this, having a punitive nature in their application. Fraudulent Misreprentation by Mr. Eggplant In this case, we can say that Mr. Eggplant fraudulently misrepresented Mr. Manfredi in the purchasing of the café. This is because the statements that were presented to Manfredi were not true and were also inflated. According to the law, when Misreprentation is made through deceit or other forms of ill intentions, then the person who has been misrepresented, in this case Mr. Manfredi can choose to rescide the contract, which is the common solution that is selected for all types of misrepresentation. Mr. Manfredi may also recover all the funds that he had invested in the café, by the law compelling Mr. Manfredi to pay him back every single cent. This will be done in relation to the contract that was made between the two before the revoking the whole deal. Mr. Manfredi can also take it to court and claim for damages in the tort, claiming that he was utterly misrepresented and that there was a breach on the terms of representation by Mr. Eggplant. He can argue that Mr. Manfredi acted in total deceit and that the compensation for damages will be vital in restoring him to the position that he was before he was misrepresented by Mr. Eggplant (Eggers, 2009). To add on the above, one will also test for damages that the misrepresentation caused to Mr. Manfredi. These damages are usually divided in to two categories, one of them being the reduction of the value and the loss as consequence to this. These are the same as damages that are related to negligence where it is confirmed by law that Mr. Eggplant who was the Representor, shall be called upon by the law to pay the total sum of money that Mr. Manfredi has undergone as loss stemming from the fact that he had inflated the price of the café and fraudulently misrepresented Mr. Manfredi in terms of selling the café to him (Bourne, 2013). Negligent Misrepresentation of the Property There is also another possibility that the misrepresentation by Eggplant can also give rise to an action for the damages caused according to the tort of negligence, in the following ways; first of all if the statement leading to the sale of the café was made knowingly by Mr. Eggplant and if it was also made without belief in its truth and lastly if the statement was made on carelessness since the two parties had a special relationship. This type of proximity would arise in professional relationships, such as those made with barristers and estate agents, and also in purely commercial transactions where the Representor has superior knowledge and experience to that of the Representee and it is reasonable for the Representee to rely on statements made by them. In all cases, it must be just and reasonable for the duty of care to be imposed (Bourne, 2013). Section 2(1) Misrepresentation Act 1967 However, when we look at Section 2(1) of the Misrepresentation act of 1967, it clearly shows that the loss that is recoverable shall not go beyond the consequences which will arise from the act of negligence or misrepresentation. Looking at this, it is narrower that it is recoverable loss which is allowed for a deceitful misrepresentation as in the case of Mr. Eggplant and Mr. Manfredi. To add on the above, the court can also decide to reduce the sum of money owed to Mr. Manfredi, if in investigating the issue, the find out that Mr. Manfredi contributed to the misrepresentation that is is complaining of. The damages that are found under section 2(1) are actually based on the immediate results of the misrepresentation rather than what can be foreseen in a reasonable manner. This is agreed upon when we look at the Royscot trust, where the court appeal held that the correct measures to be taken when there is an act of misrepresentation is for the plaintiff to recover all the losses that were suffered by the complainant whether actual of the unforeseeable losses, provided they were not otherwise too remote. Therefore, the measure for damages for innocent misrepresentation under Section 2(1) is the same measure as for fraudulent misrepresentation. Conclusion Looking at the above facts, it can be said that Mr. Manfredi was intentionally misrepresented by Mr. Eggplant in the sale of the Café. This is because the terms that were laid for the sale of the property were not made innocently, and there is proof of intentional fault with the documentation involved in the deal. In order to remedy the fault, the court will choose to award discretionarily through coming up with a deed or other form of instrument in the restitution of the café with other form of adjustments that will be deemed necessary on the way of accounting for the loss that Mr. Manfredi may have suffered. And even though there is not actual proof of damage from the sale of the property, the evidence that exists in the documents discovered by Mr. Manfredi can be used to reconsider the deal (Ayres & Klass, 2006). Bibliography Ayres, I., & Klass, G. (2006). Insincere Promises: The Law of Misrepresented Intent. Yale University Press. Bourne, N. (2013). Bourne on Company Law. Routledge. Eggers, P. M. (2009). Deceit: The Lie of the Law (Lloyd's Commercial Law Library). Informa Law from Routledge; 1 edition. Zhou, Q. (2009). Economic Analysis of Misrepresentation in English Contract Law. VDM Verlag. Read More