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Business Law Essay

1453 words - 6 pages

This case consists of mainly two parts: one is the formation of a contract and the other one is the operation of the contract. Thus in this paper I will discuss it in two individual parts.
[PART I]
ISSUE:
Is the advertisement “mere puff”? Or is there a binding contract between Michael and Slimy Motors Pty. Ltd.or the manufacturer who authorized the advertisement?
RULE:
Five elements which must be established before a contract can be formed- offer, acceptance, agreement, consideration and intention;
If a statement is mere puff, it will not be an offer because the maker of the statement did not intend it to be so.

FACTS:
Let us analyze these five elements in this case one by one:
...view middle of the document...

[Agreement]
Although there is no traditional written agreements in this case, in Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523, it was said ‘Where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them in circumstances which indicate that they were to be paid for in accordance with the offer, it is open to tribunal of fact that the offer was accepted according to its terms.’ So in this circumstances it can be shown that each party has assented to the contract.
The case does not mention whether there is another contract between the dealer and the manufacturer, but they must have close relationship and we can believe the dealer is aware it will involved in the contract between customers and the manufacturer thus has a binding contract with Michael as well by tacit even if there is no written agreements with the manufacturer.
[Mere puff]
“Full details will be made available at the time of test driving the car” showed the serious intention of attracting audiences to be involved in the competition which evidenced that the advertisement was not a mere puff.
[Conclusion]
Michael has a binding contract with both the manufacturer who authorized the advertisement and the dealer who gave him the test drive.
The representation -”The best car in the world” is a mere puff thus is not a binding promise. And after testing driving the car, Michael asked for the details of being eligible, which implies Michael basically was satisfied with the quality of the car.
[Part II]
ISSUE:
1) Is the representation -”The best car in the world” mere puff? (Or can Michael get compensation because of the disappointment of the quality of the car)
2) Regarding to the disclaimers, is this a misleading or deceptive conduct or it is Michael’s mistake.
2) Is the competition a fraudulent misrepresentation then will be a breach of the contract?
3) What kind of damages did Michael suffer? (Or can Michael get the $ 10,000 back?)
4) Are the damages not too remote?

RULE:
A misrepresentation is a statement that is not true.
A misrepresentation is fraudulent if it is made with knowledge of its falsity, or with reckless indifference as to whether or not it is true. The contract can be rescinded and an action for damages launched- in the tort of deceit- for fraudulent misrepresentation. A person who was induced to enter a contract by reason of a fraudulent representation may resist any attempt to enforce the contract. P147 [1]
A representation that was deliberately not true- a fraudulent misrepresentation- would enable the buyer to rescind the contract and obtain a refund of any money paid or to sue for damages in the tort of deceit.P290 [1]
To rely on the misrepresentation, a plaintiff must prove three factors.
1) A representation of existing fact
2) The statement must be false
3) The statement must have induced the contract.
Legislation such as the TPA and the...

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