Commercial Law Assignment #2

Darren Radons
78220100
Part A

Issue

Jim has agreed to purchase a house from Brenda closing on March 15th. Prior
to March 15th Jim discovers that the dining room was not the size that was
listed in the documents presented to him. The question is whether or not
Jim has the right to rescind under this misrepresentation.

Law

Misrepresentation from the textbook:

“Misrepresentation most often occurs during bargaining before a contract is

formed. I a misrepresentation is material- that is, if it is a statement
that could reasonable be expected to influence the decision of a party
hearing(or reading) it in favour of entering into a contract-a court may
set the contract aside at the request of the innocent party...if the
misrepresentation is made innocently and without negligence no damages will
be awarded; the aggrieved party's remedy is restricted to the right to
rescind.”

“In contracts for the sale of land the right to rescission for innocent
misrepresentation is generally lost once title to the property is
transferred and the transaction is completed”

Application

Jim relied on the information in the brochure that the dining room was of a
certain dimension Additionally, the dimension of the room was important to
Jim and he was enticed into the contract with that information in mind.
Therefore, there was a misrepresentation. Brenda relayed the information on
the room dimensions innocently and had no reason to believe that Ginny had
measured incorrectly.

Additionally, Jim notices that the room size was misrepresented before the
property has changed hands, therefore, he has the right to rescission.

Conclusion

There was an innocent misrepresentation. The remedy for this is rescission

of the contract as the representation was not important enough to become a
term in the contract.
Part B

Issue

Will a clause in the contract stating “The parties agree that there are no
representations or terms other than those included herein in
writing.” remove any representations that were implied before the contract
was formed.

Law

Any document that is signed it is assumed that the signer has accepted all
terms written.(Chapter 5)

Disclaimer: an express statement to the effect that the person making it

takes no responsibility for a particular action or statement

Application

It must be assumed that Jim read and signed the contract. Therefore, he has
accepted the terms in the contract and will be unable to rely on any other
information unless it was expressly stated in the contract.

Conclusion

Jim would be required to follow through with the contract.

Part C

Issue

Assuming the disclaimer is in place and that Jim is expected to go through

with the contract. The question now is can Jim receive legal recourse from
Frances/Ginny.

Law

Negligent Misrepresentation: an incorrect statement made without due care

for its accuracy.

Negligent misrepresentation requires only a breach of the duty of care and

skill.(p 76)

Third-party liability: liability to some other person who stands outside a

contractual relationship.

Lord Denning on duty of care: the duty need not be owed to every
conceivable person, but should be confined to a particular person or group
whom the maker of the statement could reasonably expect to rely on it.

Application
There is no contract between Jim and Frances or Jim and Ginny. Through
third-party liability, however, Frances owes Jim a duty of care through his
contract with Brenda. Frances, a license realtor, should be expected to
measure correctly and provide proper room dimensions.

From Lord Denning's definition of scope it wouldn't be reasonable for Ginny

to foresee that a realtor in the future would use her information as they
have a duty to provide correct information themselves and she has no
connection to the future buyer.

Conclusion

Since there was a negligent act by Frances, Jim would be entitled damages.
The purpose of damages would be to restore the plaintiff back to the
position he/she would be in if the tort was not committed. Therefore, if
Jim sold the house he would be entitled to the difference between the sale
price and purchase price only if the purchase price was less than the new
sale price.