Business Law: Misrepresentation Law Essay


Define the Business Law for Misrepresentation Law.


Issue: (Tom and Steve)

Based on the facts, the issue that arises here is whether Steve can be held liable for misrepresentation of facts in the contract and whether the contract between Steve and Tom is voidable or not?

Relevant Rule

There have been many cases in the contract law that relates to contract formation and breach of contract. To make a distinction between a valid contract and an invalid contract it is important to determine the existence of the formalities needed to make a contract valid. For making a contract enforceable in the eyes of law, offer, acceptance, consideration and legal capacity of a contract should be determined. If these elements are present, a contract becomes valid. However, there are certain situations that make a contract voidable, such as misrepresentation, fraud or coercion. Misrepresentation means stating facts of the case in a wrongful manner, to such an extent, that the other party enters into a contract depending on the facts that were stated to him. Misrepresentation makes the contract voidable if the person suffers a loss or harm resultantly (Furmston et al., 2012).


In the case of Tom and Steve, the contract may become voidable at the option of Tom, as he was the one who suffered loss of 5000 dollars profit per day. Steve gives assurance to Tom that his truck is capable of carrying 12 tons of cargo. He does not check with the specifications and gives assurance to Tom.


The legal position in the case of Steve is not strong and if Tom wishes, he may make the contract voidable that is either reject the contract or affirm the same.

Issue: (Steve and Pamela)

Based on the facts, the issue that shall be discussed here is, whether Steve shall be liable for non-performance of contractual obligation to Pamela.

Relevant Rules:

If one of the parties to the contract, voluntarily performs an act, and the other party makes a promise that based on the voluntary action of the person, such a consideration shall be deemed to be past. For example, A voluntarily gives lift to B on his car. At the time of arriving B promises that he shall pay 15 pounds to A. However, later B fails. This is a non-enforceable consideration as it took place in the past (Schwartz & Scott, 2016). However, there are exceptions to the simple rule of past consideration such as:


Business transactions

If the act of the party is done at the request of the other party to the contract then the contract shall based on past consideration and it shall make the contract enforceable. Likewise, even in business transactions the contract, even if on past consideration, shall be considered as enforceable (Burrows, 2016).


In the case of Steve and Pamela the contract between them becomes non-enforceable as it was done voluntarily and not at the request of Steve. If Steve would have requested Pamela to water his garden in his absence, the contract could have become enforceable. However, since Pamela on her own wish watered his garden and Steve failed to act on his promise, the contract cannot be enforced later.


The legal position of Steve, in this case is strong as his contract is not enforceable and he shall not be considered liable for non-performance of contractual obligation.

Issue (Steve and Danny):

Depending on the facts provided in the case study, the issue that shall be discussed here is, whether the contract becomes non-enforceable on the doctrine of frustration.

Relevant Rules:

If any event takes place that is beyond the control of parties to the contract and if due to the occurrence of such an act, it becomes impossible to fulfil the contractual obligations then the contract is discharged and none of the parties can be held liable for non-performance. In the case of Taylor v. Caldwell, the Court opined that it was important for the existence of the music hall for the parties to fulfil their contractual obligations. Since the music hall was destroyed the contract was discharged making none of the parties liable. This is called doctrine of frustration (Campbell, 2014).


In the case of Danny and Steve also the subject matter of the contract was destroyed, that is, Toyota Corolla. The destruction of the car was beyond the control of both the parties to the contract and none of the parties to the contract was aware about the destruction. Thus, the contract between Danny and Steve was discharged due to destruction of the subject matter of the contract.


The legal position of Steve in this case is strong as the contract was discharged between them due to destruction of subject matter of the contract.

Issue (Steve and Cool It Aircon Ltd):

Based on the facts, the issue that arises here is, whether Steve can be held liable for non-performance of contractual obligation and can the contract be enforced on Steve.

Relevant Rules:

As per the receipt rule of contract law, an offer is said to complete its stage of acceptance, the moment the accepted is faxed to the other person, even if it does not reach the offeror or the offeree sends it by mistake. The contract shall become enforceable the moment the acceptance is posted. The offeror often use the defence that he was unaware of the acceptance that was faxed to him or that he did not receive it, likewise, the offeree may also use the defence that he faxed the acceptance by mistake (McKendrick, 2014). Under both the circumstances, the contract becomes enforceable as acceptance was duly carried out (Adams v. Lindsell).


Applying the receipt rule in the case of Steve and Trisha, one may conclude that the contract that existed between them was enforceable as the stage of offer and acceptance was carried out formally. Though, Steve sent his acceptance by mistake, the contract shall be enforceable as Trisha acted on the belief that the offer is accepted by Steve. Thus, in this case, Steve is bound by contractual obligations that existed between Trisha and Steve


In this case, the legal position of Steve is not strong, as he has to perform his contractual obligations even if the acceptance was posted by mistake.


Burrows, A. (2016). A Restatement of the English Law of Contract. Oxford University Press.

Campbell, D. (2014). Review of C. Mitchell, Contract law and contract practice. Law Quarterly Review, 130, 526-529.

Furmston, M. P., Cheshire, G. C., & Fifoot, C. H. S. (2012). Cheshire, Fifoot and Furmston's law of contract. Oxford University Press.

Kenny, C. S. (2014). A Selection of Cases Illustrative of the Law of Contract. Cambridge University Press.

McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press (UK).

Schwartz, A., & Scott, R. E. (2016). The Common Law of Contract and the Default Rule Project. Virginia Law Review, Forthcoming.

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