BSP1702 Tutorial 6 (Contract Law, Factors Vitiating a Contract)(Self) new - 2015.doc - Tutorial 6(Contract Law Factors Vitiating a Contract 1 Chee Ter

BSP1702 Tutorial 6 (Contract Law, Factors Vitiating a Contract)(Self) new - 2015.doc

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Tutorial 6 (Contract Law, Factors Vitiating a Contract) 1. Chee Ter Bak wants to sell his furniture business to Soo Yu. He represents to Soo Yu that he has checked with HDB and that his checks show that a new HDB town is coming up within 1 kilometre of the furniture business within the next two years. Because of this, he says, business will double. He asks Soo Yu to check with HDB to verify his claim. Soo Yu decides to buy the business, partly because of closeness of his home to Chee Ter Bak’s shop and partly because of Chee Ter Bak’s representations about the new HDB estate. As it turns out, no HDB estate is planned for the vicinity anywhere in the near future and Chee Ter Bak had actually told a blatant lie and had never checked with HDB. When he finds out the truth a month later, Soo Yu wants to rescind the contract and get back his money. (a)Can he do so? The issue here is whether there is misrepresentation involved, which induced the formation of thecontract. In this case, since Chee Ter Bak has told a blatant lie, it means that he himself did not believein the truth of his own statement, even though it was a statement relating to the future, Chee Ter Bakstill knew that the statement was false and there could have been misrepresentation. This isrepresented in Edginton v Fitzmaurice (1885). Next, to for misrepresentation to be actionable, themisrepresentation must have induced the formation of the contract. In this case, as it states that Soo Yudecides to buy the business, partly because of closeness of his home to Chee Ter Bak’s shop and partlybecause of Chee Ter Bak’s representations about the new HDB estate, this show that Soo haddepended on Chee’s representation of the HDB estate, and as Soo had entered the contract because ofa false statement by Chee and as well as his own erroneous belief that there is a new HDB estate, thecourt would say that although the false statement given by the company was not the sole reason toinduce the formation of the contract, it was still possible to sue for fraudulent misrepresentation, asshown in Edgington v Fitzmaurice. Moreover, it can be pointed out that if the person relying on theinformation is given an opportunity to verify the truth of the statement, but he does not make use ofthe opportunity, generally it would appear that does not deprive him of his right to sue formisreprentation, this is seen in Redgrave v Hurd (1881).On the other hand, his statement regarding the business doubling cannot be considered a statement offact, but merely a “puff” or a “sales talk”, an action for misrepresentation in this case would not lie, asa reasonable person would not have taken that statement seriously.The issue is fraudulent misrepresentation. (followed by definition of representation) Misrepresentationis a statement of exsiting fact or past event that is not true. The representation made by chee ter is thatthere is a new HDB estate that will be built. (show that the fact or opnion is not true) However in thiscase it is a statement of fact that was made to soo yu and it induced soo yu to enter the agreement. Soo
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