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22-03-2012, 20:16   #1
number13
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contract law question

Im having an arguement with a friend can someone settle the score. If a person is in negotiations about buying property off person. He says the property makes 10,000 euro a year and offers to show me the accounts. I decline but buy the property. Couple of months later it is known by the accounts that the property made nowhere near 10,000.
I think i would have a case for fraudelent misrepresentation even though i declined to see the accounts first time around. My friend says no. Can anyone settle a bet please ?
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22-03-2012, 22:16   #2
Milk & Honey
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Bet or homework?
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22-03-2012, 22:23   #3
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Griffith did Warrenty etc a few weeks back and no one I know would be revising at this stage because its assignment week so it ain't us
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22-03-2012, 22:37   #4
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Originally Posted by number13 View Post
Im having an arguement with a friend can someone settle the score. If a person is in negotiations about buying property off person. He says the property makes 10,000 euro a year and offers to show me the accounts. I decline but buy the property. Couple of months later it is known by the accounts that the property made nowhere near 10,000.
I think i would have a case for fraudelent misrepresentation even though i declined to see the accounts first time around. My friend says no. Can anyone settle a bet please ?
For it to be any kind of misrep, you need to have been induced into the contract by the representation.

If you declined to view the accounts there is a good case to argue that you werent relying on that particular representation and you were going to purchase the property anyway.

I think your friend wins this one.
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22-03-2012, 23:08   #5
mitzicat
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Originally Posted by number13 View Post
Im having an arguement with a friend can someone settle the score. If a person is in negotiations about buying property off person. He says the property makes 10,000 euro a year and offers to show me the accounts. I decline but buy the property. Couple of months later it is known by the accounts that the property made nowhere near 10,000.
I think i would have a case for fraudelent misrepresentation even though i declined to see the accounts first time around. My friend says no. Can anyone settle a bet please ?
I'm not sure that the other side could argue that you were not induced by the representation. However, a claim of fraudulent representation will not be successful where the contractee knew or ought to have known the representation was false. Check out Mairead Enright's book on contract law.
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23-03-2012, 09:21   #6
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I'm not sure that the other side could argue that you were not induced by the representation.
Seems a solid enough argument to me. Being the sale of a property, you would assume there were more terms than just what the property makes per year. If it was that important the person would have checked the accounts.

Saying it makes €10,000 per year could be just a sales puff, it will probably fall to the context of the representation but I would rather be arguing there was no misrep that there was a misrep in this case.
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23-03-2012, 10:05   #7
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Seems a solid enough argument to me. Being the sale of a property, you would assume there were more terms than just what the property makes per year. If it was that important the person would have checked the accounts.

Saying it makes €10,000 per year could be just a sales puff, it will probably fall to the context of the representation but I would rather be arguing there was no misrep that there was a misrep in this case.
Yeah, I agree with you now that he could not really argue it induced him to contract. In real-life I cannot see a court finding for a party that did not bother to do its homework.
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23-03-2012, 10:50   #8
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Yeah, I agree with you now that he could not really argue it induced him to contract. In real-life I cannot see a court finding for a party that did not bother to do its homework.
Must show reliance, there is a rebuttable presumption of reliance.
Where it will succeed is were there the misprep is a material inducement, not just sales puff. See Spice Girls v Aprila

General reluctance of the courts to impose liability here, especially given the hypothetical party had the opportunity to investigate the grounds of the claim.

Better chance to bring a claim under negligent misstatement and claim there was a collateral contract. Pretty doubtful it would succeed as NQ points out the major problem is lack of inducement.
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23-03-2012, 13:42   #9
number13
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say if before i buy the property he tells me that there are other people looking at the property and they are going to buy it. Then i but it straight away. Would i have a case then?
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23-03-2012, 14:11   #10
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say if before i buy the property he tells me that there are other people looking at the property and they are going to buy it. Then i but it straight away. Would i have a case then?
"Judge the reason I bought the property was because other people were looking at it". Where's the loss and is the fact that other people are considering a the purchase viable grounds for inducement?

All you're demonstrating there is that you rushed into a purchase.
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23-03-2012, 14:29   #11
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Originally Posted by mitzicat View Post
I'm not sure that the other side could argue that you were not induced by the representation. However, a claim of fraudulent representation will not be successful where the contractee knew or ought to have known the representation was false. Check out Mairead Enright's book on contract law.
I think this is the key point, you had the opportunity to check but didn't. If the accounts were falisfied or you weren't offered the opportunity to check then fine but you just failed to do proper diligence.

Sometimes let the buyer beware applies.
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23-03-2012, 21:55   #12
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Saying it makes €10,000 per year could be just a sales puff
When we did this, the example given was "This farm can support X sheep". The purchaser sued and the court said that it was mere puff". There lecturer explained some people might like fat sheep and some people might like skinny sheep

However, €10,000 per year is a rather specific figure. That said, what is the basis of calculation?
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23-03-2012, 22:07   #13
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But being so specific might also help, I mean, were they saying that the property will make EXACTLY €10,000!? Obviously nobody can know the exact amount so it could be construed as a sales puff. But I take your point.
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