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Unit 21 Aspects of Contract and Business Law - P3
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Unit 21 Aspects of Contract and Business Law - P3
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P3 - Describe the law with respect to misrepresentaton in a iven situaton Kojar AhmedIn this report, I will talk about the factors which may invalidate a contract and what elements are
required for a contract to be invalid.
Misrepresentaton is when a seller misrepresents the truth, either unintentonally or intentonally to
encoura e a buyer to a ree to a contract. It is important for all businesses to ensure that their contracts
are fully valid and do not have any hidden details which may be unfair towards the customer. Another
definiton of misrepresentaton is a false statement of fact or law which induces the representee to
enter a contract. Where a statement made durin the course of ne otatons is classed as a
representaton rather than a term or acton for misrepresentaton may be available where the
statement turns out to be untrue Source:http://e-l/awrle-sourl罿e-sou罿uur//issole-tple-soe-ntuatiuntutphtpu
Now I will explain the factors that invalidate a contract and what businesses should do to avoid makin
invalid contracts. The first factor which may invalidate a contract is misrepresentaton.
Misrepresentaton is when a seller encoura es an individual to buy a product or service by
misrepresentn it or providin invalid informaton, this could essentally be called false advertsement.
An example of misrepresentaton would be if a product was advertsed as bein fit for use on a certain
product and it wasn’t. The three types of misrepresentaton are innocent, ne li ent and fraudulent.
Innocent is when one party makes an innocent mistake and provides a false statement but reasonably
believed that statement was correct, this relates to a T-Mobile contract where a consumer honestly
believed their monthly payment was only £20 whereas it was actually £30. Ne li ent is where an
individual has not intended to make a false statement, but a false statement has been made due to
incompetence or a simple mistake, this relates to T-Mobile because an employee may make a mistake
whilst on the phone to a customer and misquotes a price to be cheaper than it actually is, leadin the
customer to a ree to the contract.
Lastly, Fraudulent is where an individual has purposely published a false statement with the intent to
commit fraud, an example of a fraudulent misrepresentaton occurred in “De-lly v Pe-e-/ (1889) 5 T.L.R.
625 where in a company prospectus the defendant stated the company had the ri ht to use steam
powered trams as oppose to horse powered trams. However, at the tme the ri ht to use steam
powered trams was subject of approval of the Board of Trade, which was later refused. The claimant
purchased shares in the company in reliance of the statement made and brou ht a claim based on the
alle ed fraudulent representaton of the defendant. It was held that the statement was not fraudulent
but made in the honest belief that approval was forthcomin ” Source: htp://www.e-
lawresources.co.uk/Derry-v-Peek.php
Another factor that may invalidate a contract is mistakes. In this case, an individual may believe they are
a reein or si nin a contract for one product or service but instead si n for another. This can also
happen when an individual has been duped into si nin a contract they have not had the chance to read
or it was hidden from the oferee when they were si nin it. Also, some mistakes can be made where
one party does not fully understand the terms of the a reement and misinterprets these terms.
Misrepresentaton is outlined in the Misrepresentaton Act of 1967 which clearly outlines that any
breach of the act can lead to le al acton whether or not it was breached maliciously. In order to
determine if the buyer intended for the customer to rely on the informaton iven to them. To do this,
certain elements need to be distn uished. These are advertsin pufs, representaton of
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