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?

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:

Answer 1

The question is whether representations 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 stated or made a representation that the car was manufactured in 1998 and had only done 54000 km. This is not a mere 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 question then is whether the term is a condition or a warranty. A Condition is an essential term of the contract, a condition goes to the root of the contract, the breach of which allowance an innocent party to terminate the contract and sue for ( Monetary ) damages. In this condition the statement is not a condition. It is not an essential term of the contract and it does not go to the heart of the contract. The statement made by Jaxson appears 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 would have a remedy in the form of damages (monetary compensation ). Example may be seen in Di*k Bentley productions ltd v Harold Smith motors, a false statement about mileage ( 20000 versus 100000 miles) was held to be warranty but in that case the seller as a car dealer who as an expert was expected to be making a promissory statement to a person relying on this important statement when deciding to buy the vehicle.

While the fats are different, Belinda could argue that the representation was a warranty, the breach of which would entitle Belinda to claim damages. Belinda's damages wood be the extra $ 5000 shepherd above the actual market value of the car. Accordingly, the advice is that Belinda can successfully sue Jaxson for damages.