In: Operations Management
Apple and Banana hire wedding planners over the phone. The wedding planner told them he had experience in this field. Apple and banana prepaid him $100. The wedding planner recommends a professional wedding photo photographer. Apple and Banana were satisfied with the proposal and paid a prepayment of $50 for the photography service. Apple and Banana were shocked by the results of the disaster (the photographer does not have any experience in this field), and the photographer told them that the true identity of the wedding planner was a liar. Advice apple and banana. (ENGLISH law)
This is a case of misrepresentation of facts. Misrepresentation is an untrue statement or fact made by one party to the other to induce the latter to enter into the contract.
The types of misrepresentation are –
Ø Fraudulent misrepresentation – a false statement or fact told knowingly, without belief in its truth or recklessly careless about whether it be true or false.
Ø Negligent representation – a false statement carelessly made.
Ø Innocent misrepresentation – the party who made a statement honestly believes in truth of statement and had reasonable grounds for their belief.
Elements of misrepresentation –
Ø An untrue statement
Ø Parties to contract
Ø Misrepresentation resulting in inducement to enter contract.
The English Law also states that a party to a contract is not required to disclose facts which if known would affect the other party’s decision to enter into the contract.
A contract entered into as a result of misrepresentation can be voidable. The party affected by the misrepresentation can rescind the contract and also claim for damages.
In this case, the wedding planner convinced Apple and Banana that they had experience in planning wedding. The wedding planner also recommended a wedding photographer stating that they were professionals. But the results of both did not match the facts stated.
Apple and Banana were misrepresented by fraudulent facts and the contract is voidable. They can rescind the contract and claim for damages in terms of what was paid as prepayment and for other damages caused due to the misrepresentation.
The court will be in favour of Apple and Banana.