Law Case Study

Law Case Study Ian, an investment broker, was approached by Victor who asked him

whether he should invest in Wonder Electronics Ltd. Ian said “ You

certainly should, Lord Wellybob is a director. It is a very sound

company. It is my view that it will go from strength to strength. In

fact, I own 5,000 shares myself which I can let you have.Â’ Victor then

bought the shares for ₤10,000 . The company went into liquidation a

month later. The shares are now worthless. It now turns out

(a) that Lord Wellybob resigned from his directorship a week after

IanÂ’s statement was made.

(b) that IanÂ’s statement regarding the prospects of the company was

based on a report in a financial journal which was intended to refer

to Wonder Electronics Ltd but gave the name of Wander Electronics by

a printing error.

Advise Victor;

SUGGESTED ANSWER:

In advising Victor it has to be determined whether he can sue Ian for

misrepresentation on breach of terms of contract. Victor will first be

advised whether he can sue for misrepresentation.

Misrepresentation has not been defined as a statement of fact which is

untrue and which induces the other to enter into the contract. To sue

for misrepresentation Victor must prove that:-

i) the statement made by Ian were statement of fact

ii) and the statement had induced him to enter into the contract.

The following 3 statement made by Ion are relevant for an actionable

misrepresentation

i) tha...

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...rm of the contract and not mere

representation. The courts have formulated the following guideline for

this :

i) time lapse between representation and conclusion of the contract .

Routledge v Mekay (1954)

ii) was the oral statement followed by a written contract

Birch v Paramount Estates

iii) Did the representor have special knowledge or skill Dick Bentley

Production v Harold Smith (1965)

iv) Important of the statement Bannerman v White

The representation may also be treated as collateral contract, Evans

and Sons Ltd v Andrea Mezarao . The act may regards IanÂ’s statement as

mere representations and therefore itÂ’s advisable for Victor to sue

for misrepresentation, further by virtue of S1(a) M.A 1967 Victor can

cue for misrepresentation even though the representation is a term of

the contract.