8.6 Misrepresentation (slides) S02Y24 - Tagged.pdf

Principles of Business Law Semester 2 2024 TOPIC 8: VITIATING FACTORS MISREPRESENTATION Misrepresentation: Overview  A representation is a statement of fact.  recall video 5.4.  If the representation is false, it is called a ‘misrepresentation’.  If a misrepresentation induce...

Principles of Business Law Semester 2 2024 TOPIC 8: VITIATING FACTORS MISREPRESENTATION Misrepresentation: Overview  A representation is a statement of fact.  recall video 5.4.  If the representation is false, it is called a ‘misrepresentation’.  If a misrepresentation induces entry into a contract, the contract may be set aside.  The right to set a contract aside on the basis of misrepresentation can be lost if the innocent party affirms the contract.  recall video 8.1. Misrepresentation: Alati v Kruger FPBCL p 302 Facts  A told K that A’s business made sales of £100 per week (on average).  K, relying on this information, agreed to purchase A’s business.  K later discovered that the statement about the average weekly takings was false.  K sought to avoid the contract on the basis of the misrepresentation made by A about the average weekly takings. Issue  Was K entitled to avoid the contract? Misrepresentation: Alati v Kruger (ctd) Decision  K could avoid the contract. Reason  The representation made by A as to the takings of the business was false.  The false representation induced K to enter into the contract.  K had not affirmed the contract.  Thus, K was entitled to rescind the contract.