Question

Massy Incorporated advertised via the daily newspapers and on its web page, offering to sell brand new   Ferrari sport cars, with complete details and price, to anyone who interested. The advertisement was for two weeks duration and can be extended as needed.

Massy’s salesperson, KC is responsible for all interaction with customers pertaining to the sale of any Ferrari motor vehicles; however, he has absolutely no knowledge about cars, but is excited to sell this car.

Jamie called KC and enquired about a new Ferrari car; KC told her that “this is the best car on the market, with value for money”. Jamie based on KC’s feedback thereafter offered to purchase the Ferrari as per listed price, which Massy accepted. She later paid and collected her car. One week after, the car broke down and had to be towed to Massy’s Service Department. After an urgent diagnostic check, the mechanical technician indicated that the car had a faulty engine and will cost about $100,000 to repair. This cost however, is not covered under the warranty for which Jamie has to personally meet. Jamie has no savings because the purchase of the Ferrari drained all of her savings.

Jeb, who is a mechanical engineer, also saw the advertisement and called KC. He enquired about the various gadgets associated with the Ferrari for which KC duly advised. During the conversation, KC told Jeb that from his view

“this is the best sport car on the market and he had nothing to worry”. Jeb thereafter made an offer to Massy Car Department, paid and collected his Ferrari. The next day Jeb’s Ferrari broke down, while he was on his way to his wife’s birthday party. Jeb is very upset and embarrassed because several of his friends saw him on the road side and alluded that he needed to purchase a better car.

Both Jamie and Jeb has alluded that they bought the Ferrari based on KC’s representation about the features of the car and if not for his statements they would have not entered into any agreement to purchase.

Advise Jamie and Jeb on this matter, on whether or not KC committed any misrepresentation or operative misrepresentation when he sold the Ferrari to them.

Answer 1

Misrepresentation refers to untrue or misleading. In other words one party makes use of false statement or misrepresents the facts in order to induce the other party to enter into a contract. This is the case of negligent misrepresentation. KC when selling the car must have full knowledge about the working condition of car. He must have taken reasonable care that while selling the car hew should be aware of all the facts of the car and should disclose the same to buyers. in this case claimants can pursue both damages and a rescission of the contract.