Contract law - misrepresentation

Essay by kajones17University, Bachelor's March 2004

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Contract Law Assignment

Advise Grab

From looking at the facts laid out by Grab regarding the purchase of a sandwich shop, it seems that the most likely action is that of misrepresentation.

A misrepresentation is defined at common law as "a statement of fact made by one party to the other party, which is false. While not necessarily forming a term of the contract, is yet one of the main reasons which induces the one party to enter into the contract" and is supported by the Misrepresentation Act 1967.

From the facts of the case according to Grab, it seems that he is unhappy about the purchase of the shop. There are two issues present here concerning misrepresentation. Firstly, he 'specifically inquires' to Dino whether Porthampton Institute (who are the shops main customers), if it was going to re-locate out of town, which was said to be rumoured. Grab refers to the statement made by Dino explaining that he had asked a neighbour, who is a senior planning official with the City Council, and assured Grab that "no move is planned".

Once buying the shop the institute moved out of town, causing the income of the shop to be substantially reduced.

The second issue concerning misrepresentation is that of the business turnover for the previous three years. Dino explained to Grab that the shop was receiving 'up to �,000 per year'. But after purchasing the shop Grab asked his accountant to look over the figures and found that it had only reached �,000 in the last year and was below �,000 for the previous two years.

However for Grab to have an action for misrepresentation, he must first prove that Dino's statements were those of fact and were false. It is necessary to discover whether the statements are a...