Question

Apply the legal principles to the facts given below and select the most appropriate answer.
Legal Principle:

1. 'Misrepresentation' means and includes -the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; any breach of duty which, without an intent to deceive, gains an advantage of the person committing it, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him; causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.
2. The tort of negligent misstatement is defined as an inaccurate statement made honestly but carelessly usually in the form of advice given by a party with special skill/knowledge to a party that doesn't possess this skill or knowledge.

Factual Situation: The plaintiff, Mr. Madan, entered into a tenancy agreement with the defendant, Esso Petroleum, in respect of a petrol station owned by the latter. During the course of the negotiation of the agreement, 'expert' advisers employed by the defendant had provided an estimate of the sales which the petrol station could expect which was based on inaccurate information and consequently was significantly inflated. The value of the rent on the agreement had been calculated based on this inflated figure. As a result, it was impossible for the plaintiff to operate the petrol station profitably. Whether the plaintiff could have any action for negligent misrepresentation?

विकल्प

• The contract could not be held void for misrepresentation as the defendants presented the inflated figure as an estimate rather than as a hard fact.

• The defendant has no obligation to disclose as the parties contracting should obtain the necessary information themselves without relying upon the other party.

• As the defendant had taken it upon themselves to employ experts for the purpose of providing an estimate of sales, they owed a duty of care to the plaintiff to ensure that this was done on the basis of accurate information. Hence, the plaintiff can recover the losses which he had suffered as a result of the defendant's negligent misstatement.

• Both (a) and (c)

Answer 1

Both (a) and (c)

Explanation:

Where a person has entered into a contract after a  misrepresentation has been made to him otherwise than fraudulently, then he would be entitled, by reason of the misrepresentation, to rescind the contract, However, in the given situation the contract cannot be held void due to misrepresentation as estimated sales rather than hard facts were given further experts were employed by defendants themselves so the responsibility  of information provided falls on them thus plaintiff can claim damages. Hence both "The contract could not be held void for misrepresentation as the defendants presented the inflated figure as an estimate rather than as a hard fact." and "As the defendant had taken it upon themselves to employ experts for the purpose of providing an estimate of sales, they owed a duty of care to the plaintiff to ensure that this was done on the basis of accurate information. Hence, the plaintiff can recover the losses which he had suffered as a result of the defendant's negligent misstatement." holds.