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Case Introduction Will, an art enthusiast, approached Grace to express his interest in a certain painting hat was displayed in her shop specializing in the sale of art pieces especially from Indonesia. He queried whether it was the painting of an Indonesian artist who had painted that particular picture on board a rocky boat during a rainstorm. Although Grace was busy attending to other customers, she glanced at the painting and nodded her head. She related to him that she had read a similar story behind the masterpiece in an Asian art reference book a few years ago.
Will then told Grace that he had been looking high and low for the painting and that he was very impressed in the peculiar circumstance in which the art piece was made. However, Grace did not hear this remark. Following that, a contract was formed between both Will and Grace where Will paid $10,000 in exchange for the painting. A week later, Grace discovers that she had sold Will the wrong painting. However, Grace decides not to tell Will about this discovery since the contract of the sale had already been concluded and she would have been embarrassed with the situation.
Meanwhile, Will shows his masterpiece to Jack who is also an art enthusiast. Jack notices that it is indeed the wrong painting although it was by the same artist. Consequently, Will informally insults an Indonesian art expert who estimates the value of his painting to be at only $2,000. 2. Was a contract formed? The first issue to consider is the validity of the contract. There are various factors to consider in determining whether a contract has been formed.
In light of offer and acceptance, it can be seen that the display of the painting on the window of the shop was an invitation to treat. Grace was inviting anyone from the general public to make her an offer on the painting . Such was the case of Fisher v Bell (1960) where the defendant had displayed flick knives in his window shop. He was charged with the criminal offence of offering suck knives for sale, however, his conviction was quashed on appeal as the court held that the display of goods with a price ticket attached in a shop window is an invitation to treat and not an offer to sell.
As a result, Will made Grace an offer on the painting after he clarified with her that it was the painting he had been looking for. Following that, he signed a contract and purchased the work of art. Clearly, both parties had provided consideration, as Will paid $10,000 in exchange for the painting and there was an intention to create legally binding enforceable obligations as it was a business agreement. However, it could be argued that there was no consensus ad idem because although “Storm” was the painting they agreed on in the contract, it was not the painting Will had in mind.
Conversely, there was indeed a consensus ad idem for the fact that at the point of time of the contract, the “Storm” painting was the painting both Will and Grace had agreed on to be entered into the contract although they were both wrong in identifying the correct painting. Having fulfilled the criteria, it has been established that a contract had been formed. 3. Terms and Representations of the Contract There are three issues in their conversation that needs to be considered for this case. ) Will remarked that he had heard of an Indonesian artist who had painted a picture on board a rocky boat during a rain”Storm”. He then clarified with Grace whether that was the painting he was referring to. After a quick glance, she nodded her head. 2) Grace related to Will that she had heard of a story behind a masterpiece that she read about in an Asian art reference book 3) Will remarked that he had been looking high and low for the painting and that he was very impressed by the art work. However, Grace did not hear this.
A representation is a statement of fact that induces the individual to enter the contract. It is clear in the first case that Grace had made a representation through her conduct. In glancing and nodding her head, she agreed with Will’s remark, hence inducing him to enter the contract. Secondly, when she said that she had read about such a story behind the masterpiece a couple of years ago, she agreed with Will’s remark by acknowledging the fact that such a story exists. Also, when she said this, she gave him the impression that she was referring to the exact same painting that he was referring to.
Therefore, Grace made an express presentation which ultimately induced Will to enter the contract. With reference to the third issue, it is stated that if the statement made is so important that the represented would not have entered the contract had the statement not been made, the statement is likely to be a term as seen in Banner v White (1861). The plaintiff was a buyer of hops and asked whether sulfur had been used in their cultivation. He added that if it had that he would not even bother to ask the price.
The seller, the defendant, duly assured him that sulfur had not been used. This assurance was held to be a term of the contract. It was of such importance that, without it, the buyer would not have contracted. However, any representation made by any individual during negotiations not heard is not included in the contract of both oral and written. Therefore, taking this into consideration, Will’s remark was important enough to be considered a term in the contract because he would not have entered into the contract if he know it was “Storm”.
However, it cannot be included in the contract solely because Grace did not hear his remark. 4. Grace’s Misrepresentation Grace’s case can be observed as a misrepresentation on several counts: The presentation she made was a false statement The other contracting party relied on this statement and was ‘induced’ into the contract However, the classification of the misrepresentation and hence the remedies and damages due is subjected to interpretation of her actions.
The two possible categories this operative misrepresentation could fall into would be innocent misrepresentation and negligent misrepresentation. Fraudulent misrepresentation, which is defined as a representation made knowingly or recklessly without belief of its truth, is clearly absent in the initial representation as there is no malice and ill anent before the contract was formed. Furthermore, her silence and lack of action after the discovery of her misrepresentation, though showing a blatant lack of integrity and professionalism, cannot be classified as a misrepresentation.
A representation ceases after the contract has been concluded, which in this case is be entered Into the contract lethal correct painting. Having fulfilled the had been formed. 3. Terms and Reel There are three Issues in their com case. 1) Will remarked that he had picture on board a rocky boat druid whether that was the painting he her head. 2) Grace related to Will TTT hat she read about in an Asian art looking high and low for the painter However, Grace did not hear this.
A the individual to enter the contract representation through her conduct with Will’s remark, hence inducing said that she had read about such ago, she agreed with Will’s remark Also, when she said this, she gave exact same painting that he was re representation which ultimately Inc the third Issue, it is stated that if the represented would not have enter the statement is likely to be a term was a buyer of hops and asked whiff He added that if it had that he woo defendant, duly assured him that s led to be a term of the contract. It would not have contracted.
However during negotiations not heard is NC Therefore, taking this into consider considered a term In the contract b contract If he know it was “Storm”. Solely because Grace did not hear Grace’s case can be observed as a r representation she made was a FAA The other contracting party relied c contract However, the classification and damages due is subjected to IR categories this operative misrepresent misrepresentation and negligent m which Is defined as a representation its truth, is clearly absent In the nil intent before the contract was form after the discovery of her misreport integrity and professionalism. Ann representation ceases after the corp. when the money and painting have exchanged ha there is significant evidence to believe that she try was true up till the point of discovery. The case of reinforces this point that the law considers repress effect and that the represent has a duty to ensue true up to the point of contract. In this case, the p into a contract with April World Service but Engle group would be departing. The court rules that a full and frank disclosure of statements made earlier to provide information that is true to his knolled
Negligent Misrepresentation Grace’s case can be perceived as innocent misers are taken into account: 1. Grace had an objectively statement having relied on information from the did not hear the critical comment that Will had SP searching for the believed painting and stressed t circumstance involved in the formation of the pap almost identical with the exception of the brush s that Grace had made her representation with hon. carefulness considering that she quoted information points out that she was not aware of the severity intentionally try to coax him into purchasing the p the believed painting.
Lastly, it could be said that have been honest errors made in the process oft can be said that the above stated points are valid case, it does not take into account the important position as the owner of the shop. As such, the eve taking into the context of her duty and position an obligated to give to each and every one of her cuss the shop, it would be expected that she should ha about the inventories and paintings in her shops. There is considerable difficulty in differentiating ” both are in the same store – her shop – makes it familiar with the works.
Furthermore, there is a h of the paintings. Therefore, this should definitely reminder that this requires more care and attention point presented in innocent misrepresentation. T insufficient care has been rendered and definitely addition, it also casts doubts her familiarity with t the works. The case of the dusty reference book al consistently consulted with the information in the considering that her knowledge is not as complete based on the book can be considered negligent b without confirmation of the facts. There is also a representation of the painting.
She was busy Tate attempted to acknowledge Will’s statement about the picture by nodding to him. This nod constitutes as a representation by conduct and implies that his beliefs of the painting are correct. It could be said that more care should be given and she should have clarified with him again after helping the previous customer. She also affirms his statements and clears his doubt by telling him the story about “Storm” which given the closeness in timings of the speech, serves as further advertisements of the uniqueness of the prescribed painting.
It is this negligent act in the constructing of information that has induced him into a contract. As such, given her responsibilities ND duties as shop owner, it can be concluded that Grace has been negligent in her representation and that although some care was rendered, it was insufficient considering the strength of her position and the dependence of Will’s decision on Grace’s representation. 5.
Remedies Available to Will Having established that negligent misrepresentation would be the most appropriate terminology for Grace’s representation, it is necessary to consider the possible actions that are available to Will for him to redress this wrong done unto him. This section shall consider the pros and cons with regards to suing by negligent serialization and fraudulent misrepresentation and assess the relative success each one holds. 5. 1 Fraudulent Misrepresentation If Will were to sue for fraudulent misrepresentation, he bears the burden of proving fraud.
Firstly, one has to consider that it is difficult for him to prove the fraud, because this usually requires a high degree of proof to show that Grace made the statement recklessly and had no care for its truth. Furthermore, it is also difficult for Will to ascertain the fact that Grace knew that the painting was indeed “Storm” during the pre-negotiation period of the contract as there is almost no difference teens both pictures, “Storm” and “Storm 2”.
They are of the same scene; the only difference is the brush strokes in “Storm 2” appeared bolder and more irregular. However, if he is successful in proving fraud, Will can recover damages for all losses directly flowing, whether foreseeable or not, under the tort of deceit. Under the common law, Will also has the right to rescind the contract. 5. 2 Negligent and Innocent Misrepresentation On the other hand, if Will takes a different course of action, to sue for negligent misrepresentation, he can choose to sue under common law or the Misrepresentation Act.
Under Common law, damages are said to be recoverable for all losses that are reasonably foreseeable, and he has the right to rescind the contract. However, if he chooses to sue for negligent misrepresentation under the Misrepresentation Act, SO(1) states that a negligent misrepresentation attracts the same liability as a misrepresentation that is fraudulent unless the represent, Grace, has reasonable grounds to believe his statement is indeed true.
Furthermore, under SO(2) of the Misrepresentation Act, the court may award damages in lieu of rescission. When suing for negligent representation, once Will proves that the tenement made by Grace was false, the burden of proof falls on Grace to prove that she has reasonable grounds to believe that the statement was true instead. If Grace is able to prove, under reasonable grounds, that she has made the statement with honesty and care, then the misrepresentation becomes one that is innocent.
As such is the natural course of action, Grace’s defense would be to plead that the attempted to acknowledge Will’s Staten nod constitutes as a representation by painting are correct It could be said the have clarified with him again after his statements and clears his doubt by even the closeness in timings of the uniqueness of the prescribed painting information that has induced him Into and duties as shop owner, it can be CIO representation and that although some considering the strength of her position Grace’s representation. . Remedies VA Having established that negligent miss terminology for Grace’s representation, actions that are available to Will for hair section shall consider the pros and corp. misrepresentation and fraudulent miss each one holds. 5. Fraudulent Misers If Will were to sue for fraudulent miser fraud, Firstly, one has to consider that I because this usually requires a high UDF tenement recklessly and had no care f Will to ascertain the fact that Grace km during the pre-negotiation period of the between both pictures, “Storm” and “SST difference is the brush strokes in “Stop However, if he is successful in proving directly flowing, whether foreseeable o common law, Will also has the right to On the other hand, if Will takes a differ misrepresentation, he can choose to SSL Misrepresentation Act. Ender Common all losses that are reasonably foreseeable contract. However, if he chooses to sue Misrepresentation Act, SO(1) states dhal same liability as a misrepresentation TTT Grace, has reasonable grounds to belie Ender SO(2) of the Misrepresentation A rescission. When suing for negligent r; statement made by Grace was false, the she has reasonable grounds to believe is able to prove, under reasonable grog honesty and care, then the misrepresent Is the natural course of action, Grace’s misrepresentation was made innocently. If Gar indeed made the statement with honesty and and possibly an indemnity under Equity.
Howe Misrepresentation Act, the court may award d exercising its discretion to see if it is equitable following three points in her defense: 1. Grace for making her statement having relied on info book. 2. Grace did not hear the critical come effort searching for the believed painting and circumstance involved in the formation of the almost identical with the exception of the brush established that her defense (shown above) is hold much weight. In the context of the case, t of sufficient care, there would be negligent mi she would rely on exemption clauses stated in liability. 6.
Clauses As mentioned above, it is unlikely that Grace w that her misrepresentation to Will was one that on her other lifeline which is to rely on the cal would examine if the clause were incorporate exempted from any liability. Firstly, the clause contract when Will signed it and there was us the contract. Hence, it can be said that the cal correctly implemented and Will cannot protest with regards to the incorporation. Two clauses be able to allow Grace to exclude or limit her Ii reference. Clause 3 3. Buyer and Seller agree that the terms and c entire agreement between the parties.
No 10th shall constitute any part of the Contract. Claus 4. Seller undertakes no liability whatsoever to course of negotiations or at any time before the However, whether Grace can rely on these term Misrepresentation Act – depends on whether t et out in s 1 1(1) of the Unfair Contract Terms reasonableness will be taken from Section 1 been a fair and reasonable one to be included which were, or ought reasonably to have been, the parties when the contract was made. HTH terms satisfy the conditions and framework SE exclude her liability. 6. Clause 3 This could be considered to be as an “entire a viewed as a replication of the parole evidence r prohibits the admissibility of any extrinsic vivid intention was other than that appearing on the face of the contract. Grace will rely on this clause to prevent prior oral representations or statements made before the interact to be considered to have any part in the signed agreement. Hence this implies that the oral understanding between Will and Grace will be deemed irrelevant, which would take away Will’s case for the argument of representation made by Grace.
However, since there was a fundamental error in the contract (misrepresentation by Grace), by the exemptions found in the parole evidence rule, Will is allowed to furnish the oral statements made before the contract to show invalidity to the terms of the contract. Furthermore, the effectiveness of this “entire agreement clause” is subjected to the reasonableness test under Section 11 of the ACTA. Using the guidelines found in the Second Schedule to the ACTA, Will can argue that on two cases. 1) The relative equality of bargaining power between the parties. It can be seen that Grace as the shopkeeper, would have the higher bargaining power and the final decision in accepting the offer as it was shown Grace had placed an invitation to treat. Thus making it unreasonable. (2) Consideration as to whether a party had received an inducement to agree to the clause. Since the clause was affixed to the contract and it has been established that Will was induced into the contract, it follows that he was induced to agree to the clause.
Hence by applying the guideline, it could be viewed as unreasonable. 6. 2 Clause 4 Since this clause seeks to exempt Grace from any liability, Will can try to prove this clause to be invalid under the CACTI. Using the definition found for reasonableness in Section 1 1(1) ACTA, we can find the clause to be inoperative as proven in the preceding case of George Mitchell (Cathedrals) Ltd v Finned Lock Seeds Ltd (1983). In the case of George Mitchell, the wrong seeds were delivered and it was only realized after the seeds grew.
The court found the exemption clause to be unreasonable as he seller would be able to know the mistake before delivering the good and hence able to correct that particular mistake before proceeding with the delivery. This is similar to as Will could only discover the painting was wrong only after it was delivered and sent for appraisal by an expert. Thus using George Mitchell (Cathedrals) Ltd v Finned Lock Seeds Ltd (1983) as a preceding case, it can be argued the Grace cannot rely on clause 4.
Another case for Will is that Grace, who is the shop owner, will prove to have the better knowledge and expertise since she specializes in Indonesian art pieces. This ruling to find the clause unreasonable under these particular circumstances was seen in the case of South Western General Property v Maroon (1982). In the case of South Western General Property, the courts found them to be experienced dealers and considered the clause to exclude liability to be unreasonable. In Will’s case, Grace could also be considered to be an experienced dealer, as she owns the shop that specializes in Indonesian art pieces.
Taking into consideration these two arguments, it can be found that Grace would not be able to rely on clause 4 to exempt her from any liability, as the court would deem it to fail the seasonableness test under the ACTA. 7. Conclusion Therefore, taking into consideration the burden of proof, possible remedies and establishing the fact that Grace would most likely be unable to rely on the clauses found in the contract, our group believes that Will should sue Grace under the Misrepresentation Act for negligent misrepresentation as it represents his be in winning against Grace.
He would mostly likely gain the right to rescind the contract, which is to terminate it ABA monition, which means he has to return the p “Storm”, and recover the $10,000 he paid for it. For rescission with regards to ass, we have also considered several factors, it is evident that full restitution possible, lapse of time is also reasonable, as it was only one week after the PU that Will found out that the painting he had was indeed the wrong one and s legal advice thereafter. Bothersome, in this case, it was not stated that there innocent third party, which had acquired an interest to “Storm”.
Therefore, TA these factors into account, Will is able to rescind the contract if he decides to. However, if he chooses not to or is unable to rescind the contract due to the c discretion under SO(2) of the Misrepresentation Act, and as a result is only able eek the recovery of damages, he would then be able to recover up to $8,000, the difference in value between the price he paid for “Storm” and the estimate of “Storm”. The extent of damages is only up to $8,000 because no costs were incurred in his consultation with the Indonesian art expert since the consults an informal one.
However, in light of his claim for damages, the court may alls specific performance by Grace instead of requiring her to pay damages accord Section 52 of the Sales of Goods Act. However, the usual principles as to the g of specific performance would be when the courts after exercising its discreet lives that damages would not adequately compensate Will. Therefore undo specific performance, Will would return the painting, “Storm” to Grace in exec – “Storm 2”, this is highly possible as the sale of “Storm 2” is regarded as a sale unique item.
Will would be recommended to sue under the Negligent misrepresentation under the Misrepresentation Act. In addition, the clauses t Grace will use to exempt any liability will prove to be inoperable by the exam allowed in the parole evidence rule and ACTA. Case 2 Instead of not knowing that she had “Storm 2” in her inventory, Grace was n ware that “Storm 2” was already sold and delivered to another customer, the no longer in her possession. Even with that knowledge however, Grace contain lead Will into thinking that “Storm” was “Storm 2”, and under that impression, signed a contract and bought “Storm” for $10,000. Months later, Will overhear Grace telling her friends how she managed to trick Will into buying “Storm”. U realizing that what he bought was in fact the wrong painting, he tried, at much efforts and expense, to sell the painting at the supposed market value of $2,0 was unfortunately not successful. 2. Misrepresentation Based on this scenario, the first obvious issue is that of misrepresentation. Essentially, Grace knowingly made representations to Will that gave him the impression that he was buying “Storm 2”, which in fact it was “Storm”.
Based circumstances during the making of the representations, Grace had no areas grounds to hold the opinion that the painting she was selling to Will is “Storm she already had knowledge that “Storm 2” was already sold and delivered to a customer. This therefore amounts to a false statement of fact. During the Tara there was only communication between Grace and Will, thus these were only made to Will. Finally, these representations did indeed purchase the painting, as he thought it was “Storm 2”. Without HTH would not have purchased it.
Therefore, this issue is certainly on misrepresentation as it satisfies the four elements constituting to to consider is the type of misrepresentation involved. In the test f representation is made that is knowingly false, without belief in it made without concern of its truth, that representation amounts t This principle can be illustrated in the case of Deere v. Peek (1889 company’s prospectus stated that the company had permission t rather than horse powered ones. However, it in fact did not have because the right to use steam power was subjected to the Board which they did not attain.
The company, however, honestly believe get it because they believed that permission was merely a formal prospectus was issued, they did not get permission. Shareholder purchased their stakes in the company on the faith of the states when the company’s business went down. The court held that the unsuccessful in the suit as it was not proved that the company la in what they had said. In this case, Grace definitely did not pass t the fact that she had knowledge that “Storm 2” was not in her POS recorded to sell Will the wrong painting.
This clearly shows that indeed to trick him into buying the incorrect art piece. This is in c part of the case where Grace sold the wrong painting to Will by a not aware that the painting is hidden in her storeroom. Thus, it c with even more certainty that Grace indeed made a fraudulent m Will. Concerning issues pertaining to the exemption clauses, it is of this case is found to be fraudulent. 3. Remedies Available to Under common law, there are two main remedies that the repress damages and rescission. 3. Damages In the case of fraudulent misrepresentation, damages recoverable presented would be all losses directly flowing from the mistier foreseeable or not. Therefore, Will can sue Grace for damages am the difference between the amount he paid and the value of the his direct loss. Furthermore, he can also sue for an additional us losses derived from his other “efforts and expense” which could p of advertising and the cost of Will spending his time and effort t painting on top of all that frustration. 3. Rescission If Will wants to, he will be able to rescind the contract in which a achieved. ABA monition basically is the restoration of both parties to t state, as those the contract never existed. In this case, Will would Grace and Grace would return $10,000 to Will. As to which remedy that would depend on his decision. There is, however, a second point – the right to rescission. Upon affirmation of the contract b or conduct means, the right to rescind is lost. In this case, Will trip painting upon realizing that it was not the painting he wanted.
T whether the fact that Will tried to sell the painting does actually amounts to affirmation of the contract by conduct. Although there is some subjectivity on constitutes affirmation by conduct, the intention of the party can be interpret without too much difficulty. For example, if Will publishes a large and visible advertisement on the newspaper to sell “Storm”, or he signed a separate con with another person to sell “Storm” to that person, it could very well mean that accepted the fact that he has bought the wrong painting and thus, effectively affirmed the contract with Grace.