NAME: OAGILE MASEBE
STUDENT ID: 201600958
COURSE: FOUNDATIONS OF BUSINESS LAW
COURSE CODE: LAW 251
COURSE INSTRUCTOR: DR. T. I. T. MAGANG
DATE: 29 OCT 2018
ISSUE: Should Solly be held liable for fraudulent misrepresentation? Fraudulent misrepresentation is a false statement made intentionally without belief in its truth about whether it be true or false that induces someone to enter into a contract–Derry v. Peek (1889).
In this case Solly advertised the restaurant for sale and Haste made and offer After inspection which Solly declined. In turn Solly made a counter offer by deceit to get more money out of Haste. Haste then accepted the counter offer due to the false statement of material facts made intentionally by Solly to persuade Haste to contract.
RULE OF LAW: In order to enact an evidential (prima facie) case for fraudulent misrepresentation the litigant must prove that the defendant knowingly made a false statement of a material fact, with the intent of persuading the other litigant to contract and that litigant justifiably relied on that misrepresentation.
According to Bisset v Wilkinson 1927 AC 177 case The plaintiff purchased from the defendant two blocks of land for the purpose of sheep farming. During negotiations the defendant said that if the place was worked properly, it would carry 2,000 sheep. The plaintiff bought the place believing that it would carry 2,000 sheep. Both parties were aware that the defendant had not carried on sheep-farming on the land. In an action for misrepresentation, the trial judge said:
“In ordinary circumstances, any statement made by an owner who has been occupying his own farm as to its carrying capacity would be regarded as a statement of fact…. This, however, is not such a case…. In these circumstances… the defendants were not justified in regarding anything said by the plaintiff as to the carrying capacity as being anything more than an expression of his opinion on the subject.”
The Privy Council concurred in this view of the matter, and therefore held that, in the absence of fraud, the purchaser had no right to rescind the contract.
Smith v Land & House Property Corp (1884) 28 Ch D 7
The plaintiff put up his hotel for sale stating that it was let to a ‘most desirable tenant’. The defendants agreed to buy the hotel. The tenant was bankrupt. As a result, the defendants refused to complete the contract and were sued by the plaintiff for specific performance. The Court of Appeal held that the plaintiff’s statement was not mere opinion, but was one of fact.