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Question 1 Explain the types of mistakes and the types of misrepresentation which can give rise to a court being required to interpret a contract. What remedies are appropriate to each type? Answer A...

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Question 1 Explain the types of mistakes and the types of misrepresentation which can give rise to a court being required to interpret a contract. What remedies are appropriate to each type?
Answer A mistake is an unintentional act involving misapprehension or error in the existence of things arising from ignorance or from false belief on the point. Mere forgetfulness is not a mistake against which a court will grant relief. The contract law broadly divided mistakes into three categories unilateral mistake, common mistake and mutual mistake.
In a mutual mistake the parties involved misunderstands each other and are at a cross purpose. An example would be if Able has many cars and he is selling one of his cars, Baker believes that the offer is for Mitsubishi Lancer while Able believes he is offering a Mitsubishi Gallant. The remedy for this type of mistake is: If the contract is void at law on the ground of mistake, equity “follows the law” and specific performance will be refused and, in appropriate circumstances, the contract will be rescinded. However, even where the contract is valid at law, specific performance will be refused if to grant it would cause hardship.
In a common mistake both parties are contradicting under an error and share the same mistaken belief. An example would be for example Able intends to sell a cow to Baker and both believe the cow to be a breeder when actually it is a barren. The remedies available for a court is to refuse specific performance, rescind any contractual document between the parties or impose terms between the parties to do justice.
Unilateral mistake occurs when one party to a contract makes a mistake as to terms or object of the contract. The remedy will be that equity follows the law and will rescind a contract affected by unilateral mistake or refuse specific performance
Misrepresentation is when one of the parties to a contract made a wrong statement about some material element of the contract and, because of this statement, the other party entered into the contract. Contract common law treats fraudulent misrepresentation differently from innocent misrepresentation. There are four types of misrepresentation are identified with different remedies available:
  • Fraudulent misrepresentation: occurs when one makes representation with intent to deceive and with the knowledge that it is false. An action for fraudulent misrepresentation allows for a remedy of damages and rescission.
  • Negligent misrepresentation at common law: occurs when the defendant carelessly makes a representation while having no reasonable basis to believe it to be true. The remedies are rescission and damages in the tort of negligence.
  • Negligent misrepresentation under misrepresentation Act 1967: The remedies available are as those available in fraud unless the representor discharges the burden of proof. In particular, damages will be based in the tort of deceit rather than the tort of negligence.
  • Wholly innocent misrepresentation: this is a false statement which the person makes honestly believing it to be true. The remedy is either rescission with an indemnity or damages in lieu of rescission under the courts discretion in Misrepresentation Act 1967.
Question 2 Distinguish among duress, undue influence, and unconscionability and give two examples of each. Describe the remedies available for each. Answer Duress:
An action by a person that compels another to do what he or she need not otherwise do. It is a defense to any act, such as a crime, tort, or breach of contract, which must be voluntary in order to create liability in actor. It also includes threats of criminal prosecution, threats to disclose embarrassing or scandalous information and/or threats to person’s goods or property. An example would be if Able threads to vandalize the showroom of Baker, if Baker doesn’t buy Able’s car. Another example would be if Able makes Baker sign a contract which Baker is not willing to enter into by threating him with a knife.
Duress can only cause a contract to be voidable thus a third party cannot be jeopardized if the victim of duress seeks a remedy. If someone is forced to sell her jewelry and then the jewelry is sold to a third person, the jewelry cannot be retrieved but if stolen it can be retrieved.
Undue influence:
This is when pressure from dominant, trusted person makes it impossible to bargain freely, it is regarded as undue influence, and the resulting contract is voidable. For example, parents or guardians contracting with infant children in their care. Another example would be trustees contracting with beneficiaries.
If the party accused of undue influence can convince the court that in fact there was no such influence, any presumption is rebutted and the contract is binding. It is, therefore, advisable for a contracting party to ensure that the other party secure independent legal advice before entering into an agreement. Furthermore, it must be stressed that the terms of the agreement must be reasonable in such circumstances. The courts will resist enforcing a contract that conveys a great advantage to one of the parties, whether or not independent legal advice has been taken.
  • Unconscionable Transactions: This is an equitable doctrine that permits the court to set aside a contract in which one party has been taken advantage of because of such factors as desperation caused by poverty and intellectual impairment that falls short of incapacity.
To escape from the liability of such a contract, it must be shown that the contracting parties were having unequivocal bargaining power, that one party dominated and took advantage of the other, and that the consideration involved was grossly unfair. An example would be where a purchase is made from a poor and ignorant man at a considerable undervalue, the vendor having no independent advice, a court of equity will set aside the transaction. Another example would be an elderly person selling his house for a quarter of the original price because of lack of knowledge of property prices and proper advice. Question 3
Describe the type of assignments which may occur. Give two examples of each. Consider what requirements are necessary to make an enforceable assignment. Answer An assignment is a transfer of one party’s contractual rights to a third party. The parties who transfer their rights are assignors; the third parties to whom rights are transferred are assignees. There are two major types of assignments; they are equitable assignment and statutory assignment respectively. Each of those two types has two categories of assignment of a thing or chose in action. They are equitable assignment of legal choses, equitable assignment of equitable choses, statutory assignment of legal choses and statutory assignment of equitable choses.
  • Assignment of contractual rights: this is when a person buying goods under contract is free to resell them, so can a person entitled to receive a benefit under a contract transfer that benefit to a third party. In other words, the person who has acquired a right or a benefit under a contract has the right to assign that benefit to another. For example, when Sara does carpentry work for Smith and is owed money for those services, Sara is free to assign that claim to Saeed. Another example would be when a dealer sells the car to a person, the person then has the rights to transfer or assign the benefits of the contract to another party. Two things to remember while enforcing this type of assignment is that firstly, only benefits can be assigned. Secondly, assignee is no better position than assignor.
  • Statutory assignment: In this case, the assignee can enforce the claim directly without involving the assignor only if the assignment meets certain qualifications. For example, usually A would have had to bring an action in B’s name, to collect funds owing under the contract by C. Now, if the assignment qualifies as a statutory assignment, A can simple sue C for the money directly. Another example would be when A owes money to B and enters an agreement with C to renovate the kitchen if C will pay A’s debt to B.
The requirement for this assignment is firstly, the assignment must be absolute, meaning that it must be both unconditional and complete. Secondly, the assignment must be in writing, signed by the assignor. Thirdly, the original party obligated to pay must be notified in writing of the assignment.
  • Equitable assignment: Any assignment other than statutory assignment qualifies for the equitable assignment. This assignment involves the assignee’s bringing an action against the original contracting party through the assignor and is referred to as “joining” the assignor in the action. As other assignments, this assignment also requires the clear intention before implementation. In other words, it could be oral or written.
The requirement for this assignment involves three parties; assignor, assignee and promisor.
There are also involuntary assignments as well. Such as:
  • Death and bankruptcy: rights and obligations are automatically transferred to the administrator or executor of the estate when a person dies. For bankruptcy, the bankrupt assets are transferred to a trustee, called receiver, who will then distribute them to pay the creditors as much as possible.
Question 4 Describe the various ways in which a contractual relationship can come to an end, including partial performance, conditions and warranties, tender of performance, impossibility, anticipatory breach, fundamental breach, frustration, impossibility, and exemption clauses. Answer Partial performance is the less then complete performance of ones obligation under a contract. Where the shortfall is insignificant, the party may be discharged, subject to the compensation of loss suffered as a consequence. The severity of the violated term has important legal consequences. A breach of condition is breach of an important term in the contract and effectively destroys the value of the contract for the victim of the breach so that he or she is deprived of most or all of the value of the contract. If the breach is one of warranty only, it is less serious term that has been breached. So, the injured party will not be able to treat the contract as discharged but will only be able to claim damages.
The act of offering to perform the obligations under a contract is called tender of performance or tender of payment. The performance must comply exactly with the terms of the contract, or the tender need not be accepted by the other party. Once all obligations are performed, the contract is discharged.
In the case of anticipatory breach, the injured party has the option of waiting for the date on which the performance is due. If the other party fails to perform on that date, the anticipatory breach becomes an express breach or express repudiation, and the injured party may proceed according to the nature of the breach. However, the injured party also has the option of claiming a remedy as soon as he or she learns of the anticipatory breach. Fundamental breach is the failure to perform a primary obligation under a contract, which has the effect of depriving the other party of substantially the whole benefit of the contract. To determine whether it is a fundamental breach, the court must investigate the underlying purpose and nature of the contract, the benefits that the parties intended to obtain and the consequences of the breach.
Where performance is impossible, the doctrine of frustration may be relevant. Frustration is not a breach of contract and does not give rise to damages; the contract is annulled and the parties are returned to their original positions.
The exemption clause transfers the risk of defective performance from the promisor to the person with whom the promise is made. In order for an exemption clause to be effective, the promisor must give adequate notice of its existence to the promisee. Question 5
Discuss the remedies available for a breach or non-performance of a contract. Include a discussion of how damages may be limited, the difference between a deposit and a down payment, the requirement of mitigation, and the availability of specific performance and injunction. Answer Damages are defined as a monetary value determined by a court to compensate the victim party. When the damages cover specific costs and expenses, they are known as special damages. While the damages that are awarded based on an estimate of the loss suffered are called general damages.
There are certain limitations on damages i.e. some losses are not recoverable; remoteness and mitigation are the two limitations on recovery. Remoteness simply means that breaching party is only responsible for normally expected damages but not for unusual damages. Recently courts have awarded monetary compensation for mental distress.
Mitigation, on the other hand, simply means that victims of breach have a duty to mitigate their losses. The victim may not be compensated for losses that could have been avoided. Although, any costs incurred in the process to mitigate losses are recoverable.
Deposit is forfeited in the event of a breach. For example, to buy a car, the vendor usually requires a substantial payment when ordering. While down payment is just the first payment and may be returned. To qualify for damages, a deposit must be an honest attempt by the parties to estimate the damages that would be suffered if the contract were breached.
Specific performance occurs when the court orders the defaulting party to live up to the expectations and/or terms of the contract. In other words, if a person is bound to do something and failed to do as was required by the terms of the contract the court may order the party to perform what is expected of them. However, courts are reluctant to order specific performance where the defaulting party was required to provide personnel services. Specific performance is only available as a remedy if damages are inappropriate.
Injunction involves an order to refrain from doing something. An example would be if a singer violates a contract to perform at a concert and instead wants to perform at another concert. The court may order an injunction refraining him/her from singing at the other concert. The injunction, usually, is not limited to breach of contract. Courts may not order injunction in the following situations
  1. Where a person can no longer earn a living.
  2. Where damages are more appropriate.
  3. Where the injunction would hurt a third party.
Question 6 Discuss condition precedent and condition subsequent. Answer When the contract itself specifies that an event and/or requirement has to be satisfied before the parties are bound by the contract. It is also referred to as the “subject to” clause. Condition precedent is usually used to refer to two situations. 1) It refers to the situation where the two parties’ respective offers and acceptances are contingent upon the happening of an event. In order words, no contract comes into being unless and until this event takes place 2) It is also used to refer to the situation where the parties do indeed form an agreement, but it is an agreement where the execution or full execution of which is subject to the happening of an event – the condition precedent. The condition precedent may be contingent on the occurrence or non-occurrence of a specific event.
The term “conditions subsequent” is used to refer to the term in a contract which is in existence (but which has yet to be performed or, if it has been partly performed, then one which has yet to be fully performed) according to which the happening of an event will either terminate the contract or will vest in a party or both of them the right to terminate it. This event which fulfils the condition subsequent may be an act (or failure to act) on the part of one or both of the parties. Alternatively, it may be an event (or non-event) which is independent of them.
CASE ONE Facts: Hatfield, the owner of a large farm, wanted to change his combine because of the time it took to do the harvest though the current equipment. At an agricultural exhibition, he found a new self-propelled combine and placed an order for it through his local dealer. The dealer was unfamiliar with the new machine and was provided assurance from the manufacturer for the fitness of equipment for Hatfield. The machine did not work well and got a lot of problems. Hatfield endured inconvenience and the time it took to harvest was not much different from his old equipment. So, Hatfield wanted to return the machine and demanded a refund. However, the dealer refused his request and showed him agreement which showed that there was no warranty or condition on the product.
Issues: Does Hatfield have the right to return the machine and claim a refund? Is the dealer liable under the agreement? Is the manufacturer vicariously liable?
Law: The court would decide that there was an innocent misrepresentation which induced Mr. Hatfield to purchase the machine: Royal Bank of Canada v. Chorkawy [1994] M.J.No. 561 (Quicklaw). The court may also do the interpretation of the agreement because there might be a mistake in the contract: Couturier v. Hasitie XXXXXXXXXXHL
Arguments: Interpretation of contracts, Mistake, Misrepresentation Answer: Misrepresentation occurs when one of the parties alleges that it entered into the contract on the basis of false information given by the other party. To save the harvest time, Hatfield decided to replace the current machine and showed his interest in a combine with new technology. Since the local dealer assured Hatfield that the new machine would definitely help him to improve the efficiency, Hatfield finally went through the deal with the dealer. But, the actual performance was object to the promise. If the dealer did not assure Hatfield of the performance of the combine, Hatfield would not have made the deal. So, Hatfield had the right to sue for the damages for misrepresentation. Misrepresentation is a statement 1) of a false material fact, 2) made by one party to the other, 3) made during the course of negotiations leading to the agreement, 4) which was meant to induce and did induce the other party to enter into the contract, but 5) which was not intended to be a binding term of the contract. Hatfield’s case met all of these elements. During the process of negotiations the dealer assured Hatfield about the performance of the machine. It could be argued that that the dealer got confirmation from the manufacturer and was honest with Hatfield.
The clause in the question is escaping any liability in case the equipment doesn’t meet the requirement of the customer. The words used are very general and can encompass a wide range of scenarios. In case like this court might take a more liberal approach, looking behind the agreement in order to determine the most reasonable meaning in the circumstances. As Hatfield made it clear why he wanted the new combine i.e. to save time in the harvest and the dealer understood this requirement when he confirmed it from the manufacturer. The court might be willing to interpret the meaning in favor of Hatfield. In which case he could ask for a refund and return the machine.
Hatfield might not be able to sue the manufacturer directly for the loss suffered because of privity of the contract, but the dealer may sue the manufacturer for false statement.
CASE TWO Facts: Graham was a well-known and highly regarded architect. Campbell who was a country man from Scotland asked Graham to design a classic Galloway cottage (a type of stone cottage from southwest Scotland) in southern Ontario on his return from his vacations in a remote part of Scotland. Campbell indicated that it was important for the plan to be ready before the construction season so that he can build the cottage on his own. Graham was requested to complete the design within two weeks and should be compliant with all the regulations and bylaws. Graham had difficulty with approving the design in the limited time and had to put in overtime to complete the work on time. On his return, Campbell was happy with the design but was unwilling to pay the discounted price of $14,000 for it. Campbell sued for lateness of the designs while Graham sued him for the full amount of $21,000.
Issues: Is Campbell liable under the contract? If so, what would be the remedies for Graham? Is Graham liable under the contract? If so, what would be the remedies for Campbell?
Law: The court might uphold that Campbell’s breach of the contract might entitle Graham to terminate the agreement: Lalonde v. Coleman 67 Man. R. (2d) 187
Arguments: Discharge by performance; Remedies for the breach of contract.
Answer: When two parties enter into a contract, both parties have to adhere to their side of the bargain. On Graham’s side, based on the agreement between Graham and Campbell that Campbell accepted the price and performance Graham offered, Graham would be an injured party in this case. During the negotiations, there were no any questions on the price. Also, Campbell was very satisfied with the discount rate and final design. So, Graham performed well on this project. In addition, because of a lot of details on legal issues and tight timeline, the total time, 100 hours here Graham spent on the design was quite reasonable here. Thus, based on the rate of $200 per hour for the work and according to the promise of the discount, the final bill with the amount of $14,000 should be fair to both parties. If Campbell persists in refusing to pay for the work, Graham could have the right to declare the breach of the contract and require the equitable damages for it. The fact that Campbell did not want to pay $14,000 for the work and was only willing to pay $5,000 instead could lead an inadequate performance which occurs when the promisor is capable of performing the contract but does not do so. So, Graham might get the payment of $14,000 from Campbell but not $21,000, since Graham promised to give the discount at first. Also, Graham does not need to take the responsibility of the delay in building, since it was caused by Campbell’s late payment.
However, on Campbell’s side, Campbell can sue Graham for the delay. Since Graham did not give the design to Campbell, Campbell could not start his construction immediately. Because of the short building season the whole project might not be finished at the moment. So, Campbell might have the right to sue for the damages for all the loss caused by the delay. Discharge by agreement occurs when the parties agree not to perform the contract. In the case, although Graham finished the design, he was not going to offer it to Campbell because of the conflict on the amount of the payment. It might lead to an express repudiation since Graham did not intend to perform its obligations that he had to offer the design within two weeks. Before Campbell’s vocation, he reached an agreement with Graham and was satisfied with the rate Graham offered. Usually, Campbell thought that the cost of this project should be around $5,000 totally within two weeks. Graham mentioned that during Campbell’s trip he tried to contact Graham to talk about the overtime work because of too many details he had to figure out. But, it failed. And also, it is hard to find a standard measuring the hours Graham used for the whole project. So, it is reasonable for Campbell to pay those extra hours. Campbell was willing to pay for the work, but not $14,000. So, it is not all Campbell’s responsibility. If Campbell can offer the evidence that those work can be done within 2 weeks without the extra hours, he might win in the court and got the relative damages for the delay in building. However, in assessing the amount of the lass, the courts will take two other factors or principles into account: the obligation of the injured party to mitigate its loss and the remoteness or foreseeability of the damage. CASE THREE Facts: John Brown ordered a custom-made bedroom suite with an expensive French finish from Joe’s Custom Cabinetry and put down a deposit of ten percent of the price of $7,500. A few days later when he decided to purchase the bedroom suite from the Harvest House Store, he called Joe to cancel the order. But Joe refused to cancel the order and stated that John Brown would have to go through with deal.
Issues: Is John Brown liable under the agreement? If so, what will be the cabinetmaker’s remedy?
Law: Henderson & Co v Williams [1895] 1 QB 521
Conclusion: John Brown is liable under the agreement, and the cabinet-maker can take the deposit and sue for the price of the good.
Arguments: The Sale of Goods Act is applied to the transaction. When the buyer defaults, the seller has an unpaid seller’s lien against the goods. Answer: Transfer of Title is that “who has title not only can determine who bears the risk but also may affect what remedies are available in the event of a breach. If title is transferred, the seller can sue for the entire price; otherwise, only damages for breach of contract are available. ” According to the Sale of Goods Act, rule 5 can be applied in this case. Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer, and such assent may be express or implied and may be given either before or after the appropriation is made. Because the bedroom suite is custom-made, it was not available right now. So when John put down the deposit, Joe started to make the suite.
Breach of contract occurred when one of the parties wrongfully fails to perform wholly or partly its obligations under the contract. Depending upon the seriousness of the breach, the injured party will be able either to claim damages or to treat the contract as discharged. In this case, John Brown placed the order and put down the deposit, and Joe began to start it. The title passed to John. If John breached the contract, Joe could sue John for damages. He could sue for the entire price for the loss of sales. Since John put the deposit, if he refused to buy the suite, Joe could keep the deposit and sue for his loss.
CASE FOUR Facts: Fiona MacFarlane was a door-to-door sales representative in the business of selling computers and all their peripherals. Mrs. Mackay, a retired elderly schoolteacher, wanted to send pictures to her grandchildren, she wanted immediate delivery. Because of this need, Fiona convinced Mackay to buy her powerful computer and its peripherals. But the computer happened to be crashed to the ground by Mackay’s old blind dog. Since the deal had been reached, Mrs. Mackay had to pay for it. it turned out that the particular scanner purchased from Fiona could only work with the model of computer that Fiona had been selling. When Mackay went to Fiona’s store, she found that the product she bought was a “grey market” product which is illegally sold in Canada. Then, she refused to pay for the computer, the scanner or the digital camera.
Issues: Explain the legal positions and liability of the parties.
Law: The court might uphold that Fiona hid the truth and breach Consumer Protection Act: Prebushewski v. Dodge City Auto XXXXXXXXXXLtd. Http://www.canlii.org/
Arguments: Part of the contract did not confirm to the requirements set out in the provincial consumer protection act. The SGA is applied to this situation. Consumer protection legislation. Answer: Considering the case, these specific goods are in a deliverable state; that is, nothing needs to be done to them by the seller before the buyer will take possession of them. This is an unconditional contract and title to the goods and risk for their loss passes when the contract is formed. Since Mrs. Mackay agreed to pay for the products and kept the goods, the title has passed to her.
According to the SGA, there is an implied condition that the goods must be suitable for the purpose for which they are bought if 1) the buyer informs the seller about the particular purpose for which the goods will be used; 2) the buyer is relying on the seller’s skill or judgment; 3) these goods are sold by the seller in its normal course of business. Mrs. Mackay told Fiona the purpose for those products. The product is a good that she sells in the normal course of his outfitting. But Fiona made misleading or false statements to persuade Mrs. Mackay to buy the product.
The camera Mrs. Mackay purchased had very limited functionality. But camera can be modified. In addition, Fiona hid the truth that the scanner is a “grey market” product which is prohibited to sell in Canada and is a kind of unreliable product. So, for the scanner, it was an unconscionable transaction. So Mrs. Mackay had the right to cancel the deal and refuse to pay for the scanner. But as for the other products, Mrs. Mackay had to pay for them since the title has already transferred and they are legal to sell in Canada, as well. The computer and camera were all in good condition when she bought, so she could not refuse to pay for them. She was bound to the contract. Otherwise, Mrs. Mackay would have to be charged the expense for breach of the contract for those two items.
Conclusion
Fiona hid the truth that the scanner she sold was “grey market” product. So, she should afford the major responsibility. It is an unconscionable transaction. Except for the printer, Mrs. Mackay should pay for other products since title has transferred and they sell legally.
Answered Same Day Dec 31, 2021

Solution

David answered on Dec 31 2021
117 Votes
Assignment 2
Question 1
Explain the types of mistakes and the types of misrepresentation which can give
ise to a court being required to interpret a contract. What remedies are
appropriate to each type?
Answer
A mistake is considered as unintentional act which involves misapprehension or e
or in
different things and aspects which are the result of ignorance or false belief on the point.
As per the law mere forgetfulness is not considered as the mistake.
As per the contract law, there are particularly three kinds of mistakes which are
unilateral mistake, common mistake and mutual mistake.

Mutual Mistake:
Either party may rescind a contract if there has been a mutual mistake of a past or
existing material fact. A material fact is one that is important to the subject matter of
the contract. An ambiguity in a contract may constitute a mutual mistake of a material
fact. When the parties misunderstand each other then it results in the mutual mistake.
Considering an example of the a person who has many cars, Baker believes that he is
purchasing and is making an offer for Mitsubishi Lancer while Able believes that he is
offering a Mitsubishi Gallant. This kind of mistake is considered as the mutual mistake.
The best measure to rectify this mistake is to “follows the law” in case of the contract
eing void, and with the focus on the specific performance will be refused and, in
appropriate circumstances, the contract will be rescinded.

In a common mistake both parties which are involved in the contract are being
contradicted under a specific e
or and same belief is taken into consideration. The
emedy in this case will be based on refusing the specific performance which is based on
the contractual document between the parties or impose terms between the parties to do
justice.

A unilateral mistake exists when only one of the parties makes a mistake about a basic
assumption on which he made the contract. The rationale for this tendency is that in
cases of unilateral mistake, at least one party's assumption about the facts was co
ect,
and allowing avoidance disappoints the reasonable expectations of that nonmistaken
party.
The remedy for the same is based on the equity which follows the law and will rescind a
contract affected by unilateral mistake or refuse specific performance.

Assignment 2 1
COMM 4716EL 10 Commercial Law
Misinterpretation:
The misrepresentation means an untrue statement of facts, made by one party to the
other in the course of negotiating a contract that induces the other party to enter into the
contract. The person making the misrepresentation is called the representor, and the
person whom it is made is the representee. A false of fraudulent misrepresentation is one
made with knowledge of its falsehood, and intended to deceive. A fraudulent
misrepresentation is actionable as a tort.
There are four types of misrepresentation are identified with different remedies available
which include:

 Fraudulent misrepresentation: In the case of fraudulent misrepresentation
epresentor did not honestly believe in the truth of his statement, which is not the
same as saying that he knew it to be false.
 Negligent misrepresentation at common law: A negligent misrepresentation is one
made with no reasonable grounds for believing in to be true. It usually occurs
when the defendant carelessly makes a representation while having no reasonable
asis to believe it to be true. The remedies are rescission and damages in the tort
of negligence.
 Negligent misrepresentation under misrepresentation Act 1967: Under this act, the
est remedy which needs to be followed, the damages which relates to this
misinterpretation based in the tort of deceit rather than the tort of negligence.
 Wholly innocent misrepresentation: An innocent misrepresentation is one made
with reasonable grounds for believing in to the true, as where an honest mistake is
made.
Question 2
Distinguish among duress, undue influence, and unconscionability and give two
examples of each. Describe the remedies available for each.
Answer
Duress and undue influence also involve disputes related to the formation of contract.
Duress occurs when the free will to bargain is lost because coercion, involving threat of
violence, imprisonment, scandal, damage to property, or even inappropriate financial
pressure is exercised by one of the parties. If someone threatens to harm your family or
vandalize your business to force you to enter into a contract, the agreement would be
voidable because of duress. Another example of duress would be an employer who finds
an employee stealing stock or money and agrees not to report him or her to the police if
the employee will agree to repay the money by working overtime at regular wage or for
some other advantage
Assignment 2 2
COMM 4716EL 10 Commercial Law
An example would be if Able threads to vandalize the showroom of Baker, if Baker doesn’t
uy Able’s car. Another example would be if Able makes Baker sign a contract which
Baker is not willing to enter into by threating him with a knife.
Undue influence:
Undue influence is more common. It also involves the loss of free will to bargain causing
the resulting contract to be voidable. But instead of force, the unique influence of the
other contracting party takes away the free will of the victim. In certain types of
elationships undue influence is presumed. Examples include professionals such as
lawyers, doctors, and trustees taking advantage of their clients as well as guardians
contracting with wards, religious advisors with parishioners, and adults with infant
children or aging parents. The presumption of undue influence means that in the absence
of other evidence to the contrary, simply showing that the relationship exists is enough
for the court to allow the victim to escape the contract on the basis of undue influence.
Professionals doing business with their clients often find themselves in such
elationships, and they are well advised to ensure that the client obtains independent
legal advice before committing to the transaction. That will normally provide sufficient
evidence to overcome the presumption of undue influence. There are other situations,
however, where undue influence can arise based on the unique circumstances involved.
For example, parents or guardians contracting with infant children in their care. Another
example would be trustees contracting with beneficiaries.
 Unconscionable Transactions: This is an equitable doctrine which allows the court
to set aside a contract in which one party has been taken advantage because of the
poverty and intellectual impairment that falls short of incapacity. All involve
different ways that merchants may deceive the consumer, whether intentionally or
y mistake. These statutes also control unconscionable transactions where the
consumer is taken advantage of because of factors such as undue pressure, a
particular vulnerability results in the victim paying an unfair price, or some other
harsh or adverse terms that are imposed in the contract. Such unconscionable
transactions are unenforceable against the consumer. Some jurisdictions limit this
unconscionability protection to mortgage contracts where the courts have been
given the power to modify, limit the obligations, or otherwise change the terms of
the agreement to make them more equitable. In most provinces, legislation also
makes any false or misleading statement made in the course of the sale, whether in
advertising or by the salesperson, a term of the contract, thus making it actionable
as a
each with all of the normal remedies available. Other remedies against the
merchant engaging in unacceptable business practices include injunctions and
damages, fines, and other penalties. These provincial statutes aimed at consumer
protection are typical examples of statutes creating provincial offences.
Assignment 2 3
COMM 4716EL 10 Commercial Law
Question 3
Describe the type of assignments which may occur. Give two examples of each.
Consider what requirements are necessary to make an enforceable assignment.
Answer
An assignment is a transfer of one party’s contractual rights to a third party. Assignment
involves the assignor transfe
ing a benefit to which they are entitled under a contract to
a third party, called the assignee. In effect, they are selling an entitlement or claim to
someone else. For example, if a debtor owes money to a creditor, that creditor can assign
the claim to a third party. Merchants selling goods on credit, such as car dealerships,
often do this. Their business is selling cars, not extending credit. So they assign the credit
transaction they have entered into with their customer to a finance company for a fee,
and the payments are then made to the finance company. Assignments are of two major
types i.e. equitable assignment and statutory assignment respectively
Assignment of contractual rights: This happens when a person buying goods are free to
esell them, i.e. the benefit acquired from this can be transfe
ed to the other person. For
example, when Sara does carpentry work for Smith and is owed money for those services,
Sara is free to assign that claim to Saeed. Another example would be when a dealer sells
the car to a person, the person then has the rights to transfer or assign the benefits of the
contract to another party. Two things to remember while enforcing this type of
assignment is that firstly, only benefits can be assigned. Secondly, assignee is no better
position than assignor.
Statutory assignment: The problems arise when the person owing the obligation that has
een assigned fails to perform. Because of the rule of privity, the assignee cannot sue
directly; the assignor and assignee must join together to sue the debtor. This is a
cumbersome process and most jurisdictions have enacted statutes that allow the assignee
to sue directly if certain criteria are met. This is called a statutory assignment, and to
qualify the assignment must be absolute. This means it must be complete and
unconditional; it must be in writing; and proper notice of the assignment must be given
to the person owing the obligation that has been assigned. In the example above, the car
dealership would make the assignment of the original debt owed by the purchaser to the
finance company in writing. The finance...
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