Business Law

Cheong and Chow entered into a contract with the seller to buy a pair of breeding African Grey Parrots each. However the parrots did not mate after a month so Cheong and Chow took legal actions against the seller.

Issue 1: Whether the statement 'proven breeders' constitutes a term or representation.

Law: The main criterion in distinguishing between a term and a representation is whether there was intention to establish contractual liability in respect of the statement.

Application: 1. Statement made close to contract It is reasonable to assume that the statement was reiterated prior to the sale of the parrots because $3600 is a princely sum for 2 pairs of parrots so Cheong and Chow ought to have demanded reassurance before purchasing.

2. Statement was important.

Cheong and Chow were specifically looking for proven breeders, which explains why they were bought in pairs. Moreover they could have bought non-breeding pairs at a much lower price.

Chow Puppy

Chow Puppies

English: A pair of african grey parrots (Psittacus...

3. Seller had special knowledge The seller claimed to have bred successfully for a few years and is thus expected to have the relevant expertise and superior knowledge vis-Ã -vis Cheong and Chow.

4. Invitation to verify the statement The seller claimed there was opportunity to select and inspect the birds, which might indicate that he was unwilling to bear responsibility for his statement and be bound by it.

The statement can thus be reasoned to be a representation.

Conclusion (issue 1): My opinion is that there is a stronger argument that the statement constituted a term. Even if it's a representation, the seller cannot deny responsibility because he had made a wrong statement of fact and there was inducement. Point 4 from issue 1 do not in my opinion undermine inducement because the buyers were simply choosing which pairs they like and did not...