LST2BSL Introduction to Business Law and Ethics - Common Law Questions - Assignment Help

Question 1

Issue: In inducing Joanna to buy MowMaster 6000, which is a brand of lawnmower, the shopkeeper Jimmy has made certain representations which praise the product by defining its qualities and characteristics that appear to be rather exaggerated and biased view of the product. Does these constitute legal terms (express and oral) as a part of the sale contract between Joanna and Lawnmower City?

Rule:

• If the contract is reduced in writing, courts will not allow any term outside of the written agreement that would add to, modify or contradict the existing written agreement (Parol evidence rule).
• In deciding whether a representation made by buyer is a term of the contract, the courts shall conclude in order to give proper commercial effect to the transaction in order for it to meet its intended purpose.
• If the maker of statement possessed certain special skill or knowledge and the other party relied on it, it could be treated as a promise (or a term) within the contract.
• If a representation or term can be interpreted in more than one way, courts have to determine the true intention of the parties through an objective bystander test.

Application: In the instant case, Joanna (the buyer) explains her needs to Jimmy (the seller), who makes certain representations based on his specialized knowledge of the equipment he is selling. Joanna could not verify the truthfulness of statements made by the seller without testing / using the equipment itself, and she relied on those statements to make her purchase decision. Although the statements with exaggerated praises such as “it’s amazing!”, “these blades cut through anything”, and “you’ll get through your jobs in no time” have no legal value as these are merely statements of opinion and belief rather than statement of fact that the seller intends to be bound thereby, these would be considered mere puffery in inducing the seller to buy the product as held in Dowling v. NADW Mktg., Inc. However, the representation stating that he product is designed in Germany could be considered misrepresentation (and not a term within the contract) if the seller made it recklessly having no belief in its truthfulness. 

Conclusion:

In view of above, the courts would objectively evaluate the intention of the parties and in case of fraudulent misrepresentation by the seller, Joanna could sue the seller for damages.