Question

.Belinda wants to buy a second-hand car and visits a number of car dealers before deciding to purchase an as new 1998 Ford Mustang from American Car Sales. The sales person, Jaxson, tells Belinda that the car was manufactured in 1998 and had only done 54,000 kms.

Three months later, Belinda has the Mustang serviced with her local mechanic who was a Mustang enthusiast. He comments on the fact that the car was in pretty good condition for a 1994 Mustang, though he was surprised that it had only done 54,000 kms. He would not have been surprised if it had done 100,000 kms.

Belinda makes further inquiries and discovers that the Mustang was in fact made in 1994 and she has paid about $5,000 more than the actual market value of the car. Belinda intends to approach American Car Sales about this issue.

Does Belinda have any contractual rights against American Car Sales? (10marks)

Required:

You are expected to discuss legal rules learned regarding terms of a contract, in particular statements and representations, and conditions and warranties.

Do not answer this question based on Australian Consumer Law principles. No credit will be given if you do so.

Answer 1

• This point is whether representation or statements made by Jaxson was a term of the contract and if it is a term, whether it is a condition or a warranty.
• Jaxson made a representation that the car was manufactured in 1998 and had only done 54,000 km.
• This is not only a representation because she relied on it and was induced to enter into the contract because of it and thus a reasonable person would expect it to be a term of the contract.
• The point then is whether the term is a condition or a warranty.
• A condition is an essential term of the contract and a condition goes to the root of the contract, the breach of which allows an innocent party to terminate the contract and sue for (monetary) damages. In this case the representation is not a condition. It is not an essential term of the contract and it does not go to the root of the contract.
• The statement made by Jaxson seems to be a warranty, that is, a non-essential or a lesser term, the breach of which gives rise to an action for damages only.
• Jaxson has breached the oral representation or warranty and Belinda have a remedy in the form of damages (monetary compensation).
• Belinda's damages would be the extra $5,000 that she paid above the actual market value of the car.
• Accordingly, the advice is that Belinda can successfully sue Jaxson for damages.

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