Contract Law, Is a Contract

¶ … contract law, is a contract for goods void when both the buyer and seller are mistaken as to the quality and value of the goods sold? Does the seller's incorrect labeling of a products quality amount to a misrepresentation if he makes no effort to confirm the nature of the his goods.

Rule: Misrepresentation Act of 1967- Contract is voidable if induced by misrepresentation, i.e., A false statement of fact has been made, the statement was directed at the suing party and the statement had acted to induce the suing party to contract. The contract between Jules & Harry was induced by misrepresentation and is therefore voidable. Harry had no reasonable basis to assume that the horns were original valuable Veteran horns. The person he brought them from merely stated that he thought came form his father's old car.

Harry then stated that they were "Veteran car brass horns" and marked up the price by 2000 per cent. Harry made a false statement of fact when he marketed these horns as Veteran horns, when in fact they were not. Common sense dictates that the statement was directed towards Jules as Veteran car owner. Finally, Jules can prove he was induced to buy the horns by way of the fact that he had recently purchased a veteran car.

Whether Harry's misrepresentation is deemed fraudulent or negligent is a question of fact for the jury/court to determine. Harry's experience in specializing in brass horns for veteran cars and lack of diligence regarding his pricing of these horns is likely relevant in this analysis. Jules can also claim mistake of fact because he bargained for original horns, not "cheap copies." There was a mistake as to the actual subject matter (original or copies), as opposed to the quality of the items (Leaf v International Galleries [1950] 2 KB 86; (1950) 1 All ER 693 (pg 155)).

Conclusion: The contract is voidable based on Harry's misrepresentation. In the alternative, the mistake in the actual subject matter of the transaction renders it void. Question 3 (a) Issue: Under Should Lana be entitled to bring her threatened action against Phoebe? Rule: Section 52 of the TPA provides a corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive and that this law extends to all situations in the course of trade or commerce.

Application: While section 52 of the Trade Practices Act is designed to primarily protect consumers, it also protects fellow merchants and businesses. Part IV of the TPA specifically makes illegal practices which restrict competition or free trade. Furthermore, the Act authorizes private actions to be brought to enforce this provision. Lana believes that Phoebe's practices amount to an unfair restraint on free trade (and her ability to compete), thus her action is covered under the statute.

Conclusion: Under section 52 of the TPA, Lana is entitled to sue Phoebe for damages as she has been involved in misleading and deceptive conduct which has caused Lana's business no good. Question 3 (b) Issue: Is Lana's threatened action likely to succeed? Rule: Section 52 of the TPA provides that: (pg 291) A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Application: By advertising that her gelati is the best in town and made with the best quality natural ingredients, Phoebe may be stretching the truth, but she probably has not violated Section 52 of the TPA. A statement must induce consumers to buy a product in error or deception. Stating the product is the best in town probably does not rise to the level as either, as it common marketing parlance not likely to have a significant on most consumers.

The fact that Phoebe's ingredients arrive in a tin does not in any way mean that they are not natural, either. Therefore Lana has not proven that Phoebe committed any actual deceptive.