How To Answer A Question On Misrepresentation

A contract may be define as a legally binding agreement between two or more parties, in relation to a particular subject. Contracts can cover an extremely broad range of matters, including the sale of goods or real property, the terms of employment or of an independent contractor relationship, the settlement of a dispute, and ownership of intellectual property developed as part of a work for hire. It can be said that contracts are the essential to commercial life. In Malaysia, the law of contract is regulated by the Contracts Act 1950.

1. On the 6th of Dec 2012, Ted saw an expensive Rolex watch on display in one of the shops in GS Megamall, took it and while walking to the cashier counter, saw another watch (Seiko) and was taken by it. He immediately returned the Rolex watch in favor the new one. The manager of the shop, who was watching Ted, was not satisfied with Ted’s action and told Ted he has to pay for the Rolex watch as he had picked up the Rolex watch.

Related case that can be referred is Pharmaceutical Society of Great Britain v Boots Cash chemist Ltd [1953]. The law requires that the sale of certain pharmaceuticals must be carried out under the supervision of a qualified pharmacist. Boots operated a store where the drugs were displayed on a self-service basis and the customers paid at a cash desk for the goods they have selected. A pharmacist was present at the cash desk but not at the shelves where the goods were displayed with a price tag. The Pharmaceutical society claimed that the law was contravened. The court held that the display of goods in the store was not an offer but an invitation to treat. It was the customer who made the offer and Boots could either accept or reject this offer at the cash desk (in the presence of the qualified pharmacist). The act of constituting the acceptance is the ringing up of the price on the till by the cashier and at that moment a binding contract of sale is made.

In the case of goods on display in a shop or supermarket, the law has decided that it is the customer who makes the offer by taking the goods and placing them on the shopkeeper’s or cashier’s counter, and the shopkeeper or cashier accepts the offer by accepting the customer’s money. But Ted’s offer is not yet accepted by the shopkeeper because he does not place it on the shopkeeper’s or cashier’s counter.

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It is important to know which party makes the offer and which accepts. Actually, the price displayed on the goods is not the offer, it is only an invitation for the customer to make an offer and it is only an invitation to treat. The claims from the manager which he argued, by picking up the Rolex watch Ted has accepted the offer by the shop is invalid. Thus, ted is not liable to pay for the Rolex watch.

2. This question deals with offer and acceptance. Is the flyer received by Ted is an offer or an invitation to treat? An offer is defined as “a statement made by one party of a willingness to enter into a contract on stated terms, provided that these terms are, in turn, accepted by another party to whom the offer is addressed”.

Ted received a flyer from Rayan advertising an Ipad tablet for sale , but no price of the Ipad is stated in the flyer . Therefore, from the flyer , it is observed that Rayan is not seeking any potential buyer to make him an offer but Rayan himself is the offeror. The offer from Rayan is an offer may be made to an individual or to a large number of people.

There was a case related to this situation which is Carlill v Carbolic Smoke Ball Co. (1892). Carbolic smoke Ball Co. Ltd., in its newspaper advertisement, promised to give £100 to anyone who purchased their smoke ball remedy for influenza, and caught illness within 14 days. To show good faith, the company deposited £1000 with a bank to meet any claims. Mrs. Carlill bought the remedy, caught influenza and claimed £100. The court held that the advertisement was an offer to the world at large, and Mrs. Carlill had accepted the offer by purchasing and taking the remedy. An offer must be a definite promise by which the offeror intends to be legally bound by the terms stated. In Carlill v Carbolic Smoke Ball Co., the fact that £1000 had been deposited with a bank showed that it was a firm offer and the company intended to be legally bound.

Ted wrote a letter to show his interest on the tablet and Rayan replied on the 8th of Dec offering the tablet for RM 800. Ted received the letter on 9th of Dec and posted the letter of acceptance on 10th of Dec .This showed that Ted had accepted the offer from Rayan and the postal rule is applied in the case. The postal rules only apply when the ‘acceptance’ is sent by post as stated in the case. Acceptance here takes effect when the letter is posted. In other words, where acceptance by post has been requested or where it is an appropriate and reasonable means of communication between the parties, then acceptance is complete as soon as the letter is posted, even if the letter is delayed, destroyed or lost in the post so that it never reaches the offeror.

There was a case related to this situation which is Adams v Lindsell. Lindsell wrote to Adams on Tuesday 2 Sept 1817. Lindsell misdirected the letter and as a result it was not received by Adams till 7.00pm on Friday 5th Sept. On that evening Adams posted a letter accepting Lindsell’s offer. The letter of acceptance was not received by Lindsell till Tuesday 9th Sept. On Monday 8th Sept, Lindsell not having received the answer on Sunday 7th Sept, as they expected, sold the wools to another person. The issue before the court was as to when acceptance took effect. The court held that acceptance took effect when the letter was posted on 5th Sept.

Since Ted’s letter of acceptance was posted on 10th of Dec , and it was only received by Rayan on the 15th of Dec, but the acceptance took effect when the letter is posted on 10th of Dec. Therefore , the conclusion is Ted shall has the right to buy the Ipad.

3. Ted had bought a new car, Proton Persona at Jason Autos whereby Jason told Ted that the mileage of the car has not done for more than 80.000 kilometers. However, on the next day after Ted bought the car, Ted’s friend, Peter, who was a mechanic, had told Ted that the car has been done around 150.000 kilometers.

In this case, it involves of misrepresentation during the process of negotiation between Ted and Jason. Before the contract is made, Jason claims that the mileage of the car was not done more than 80.000 kilometers, this is a representation made by Jason during the negotiation, which turned to be untrue when Peter told Ted that the mileage of the car was about 150.000 kilometers after the contract is made. According to Sections 19 and 20, when consent to an agreement is caused by coercion, fraud or misrepresentation, or undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused. In this case, it can be a fraudulent misrepresentation. Fraudulent misrepresentation occurs when one makes representation with intent to deceive and with the knowledge that it is false.

This can be related with the case of Derry v Peek (1889), in a company prospectus the defendant stated the company had the right to use steam powered trams as oppose to horse powered trams. However, at the time the right to use steam powered trams was subject of approval of the Board of Trade, which was later refused. The claimant purchased shares in the company in reliance of the statement made and brought a claim based on the alleged fraudulent representation of the defendant. The court held that the statement was not fraudulent but made in the honest belief that approval was forthcoming.

Lord Herschell defined fraudulent misrepresentation as a statement which is made either knowing it to be false, without belief in its truth, or recklessly, careless as to whether it be true or false.

In this case, it is believed that the representation made by Jason was recklessly, careless as to whether it be true or false, this is because the mileage of the car can be checked but Jason told Ted that the mileage was not exceeding 80.000 kilometers but in fact it reached about 150 kilometers. The mileage of the car can determine the price of the car. As the mileage is larger, the price of the car can be sold at a cheaper price. Hence, it is believed that Jason, by means of recklessly or carelessly to make the wrong representation to Ted, has an intention of selling the car at a higher rate of price. Therefore, if Ted choose to affirm the contract by performing his obligations under the contract, which is to accept the car, he has the right to claim for the loss, or to repudiate the contract by returning the car back to Jason.

4. Ted was working for Mr. Davis. Mr. Davis asked Ted to sign a contract, which declares that Ted has to transfer 17% of his properties to him. Ted agreed to sign the contract because he afraid that he would be fired from his job. After that, Ted realized that he had more lose when he agreed to sign the contract with Mr. Davis. Ted wants to escape the obligations of the contract between himself and Mr. Davis.

This may refer to the case Inche Noriah v Shaik Akkie Bin Omar (1929) whereby undue influence happened. An old and illiterate woman executed a deed of gift of a landed property in favour of her nephew who had been managing her affairs. Before executing the deed, she had independent advice from a lawyer who acted in good faith. However, he was unaware that the gift constituted practically the whole of her property and did not impress upon her that she could have equally benefited her nephew by bestowing the property upon the nephew by a will. The court held that the gift should be set aside, because there was a presumption of undue influence raised by relationship between the parties and the presumption was not rebutted.

Section 16 defines the term “undue influence”. Undue influence arises when one of the parties to a contract uses his special relationship with the other party to influence that other party into making the contract. Mr. Davis is using his dominant position in the relationship between Ted to influence Ted to sign the contract that is unfair to Ted. The effect of undue influence is to render the contract voidable at the option of the innocent party. Hence Ted does not have the obligation to follow the agreement signed and can be discharged.

In a nutshell, from the several incidents happen to Ted, the Law of Contract regulated by the Contracts Act 1950 is implemented to protect him. All of all, the world could not be perfect, the world is full of confliction, and so, law is here to protect our rights and also from being faulty accused or being framed by others.