Business Law Questions: Misrepresentation and Mistake

Questions

1                    Where a pre-contractual statement is one of opinion, under what circumstances can the resulting contract be voidable for misrepresentation?

2                    S has an old book.  B says, ‘That is a fine first edition of Milton.’  S replies, ‘Do you think so?’ B offers £5,000 for it and S accepts.  As S knew it is a second edition worth £1,000.

Discuss.

How, if at all, would your answer differ at all if B had not made the remark to S but S was aware, from hearing a conversation between B and X, that B thought the book was a first edition?

Or if from the overheard conversation S knew that B thought that S was undertaking that the book was a first edition?

3                    ‘Rescission is the primary remedy for misrepresentation.’ In what sense is it primary?

4                    Under what circumstances will a misrepresentee need to seek damages?

5                    When will the misrepresentee be denied damages and confined to an equitable indemnity? How is such an indemnity calculated?

6                    Vendor buys a smallholding from Xavier for £100,000. Because of a change of circumstances, Vendor wishes to sell the property within three months of taking possession and enters into negotiations with Purchaser. Vendor tells Purchaser that the smallholding has made average profits of about £10,000 (grossed up to allow for inflation) over the last ten years and that it will support 100 sheep without difficulty. The first statement was based upon what Xavier told Vendor when Vendor bought from Xavier; the second was based on what Vendor was told by his elderly uncle, a retired sheep farmer.

The contract entered into by Vendor and Purchaser makes no mention of either matter, but it says that ‘the purchaser is deemed to have satisfied himself as to the accuracy of any statement made by the vendor.’

Within a year of taking possession Purchaser discovers that much of the land is infertile, that it will support no more than 30 sheep, and that it will not cover its cost of upkeep.  At the time of the sale its real value was about £50,000.  Since then the value has been further depressed to about £30,000 by the withdrawal of EC smallholding subsidies.  Furthermore, Purchaser, as owner of the property, has been required under statutory powers exercised by the local authority to make a contribution of £10,000 to a road improvement scheme in the neighbourhood.

Advise Purchaser.

7.  What is the effect (if any) of mistake by one party to a contract as to the identity of the other party?

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