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  3. Peter wants to buy a comer store. When negotiating in January, he was told by Da

Peter wants to buy a comer store. When negotiating in January, he was told by Da

游客2025-06-21  32
问题 Peter wants to buy a comer store. When negotiating in January, he was told by David, the owner of the store that the business of the store was very good and the average net profit from the store was＄100,000 per month for the last year. However, in March, a supermarket opened near the store and the business at the store became very slow. Then a contract for the sale of the store was signed between them, all the time David didn’t mention anything to Peter.
Could Peter make a claim against David for misrepresentation. Advise Peter supported by cases.
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答案 There are the factors that affect the validity of a contract, misrepresentation is one of them.
A representation made by one party to another to induce him to enter a contract must be a positive and true statement of some existing facts or past events, otherwise, it shall constitute a misrepresentation, which is misleading and induces other to enter into the contract, and may amount to invalidity of the contract.
In With v.O’Flanagan (1936), where the defendant, who wished to sell his practice, informed the plaintiff that the income from the practice was ￡2,000. Five months later when the contract was signed the income had fallen considerably due to the defendant’s illness and no mention of this fact was made to the plaintiff. The plaintiff claimed rescission of the contract. It was held that he could not rescind as there was misrepresentation.
In Gordon v.Selico Co. Ltd.(1986), where a flat in a building which had been converted by a developer was taken by the plaintiff on a 99-year lease. Soon after he moved in, dry ret was discovered. It was held that deliberate concealment of the dry rot by the developer could amount to fraudulent misrepresentation, therefore, damages were awarded to the plaintiff.
It’s a general rule that mere silence does not normally amount to representation as well as misrepresentation, except in the case where a statement, true when it is made, subsequently becomes false before the conclusion of the contract.
Here the prior representation concerning the income of the store stated by David has become untrue at the time the contract was signed, due to the opening of the supermarket. David, therefore, take the obligation to correct his former representation, and the silence here amounts to misrepresentation.
Peter was induced by and relied on the misrepresentation and entered into the contract, thus he could make a claim against David for misrepresentation.
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