Reference no: EM13832593

Hugo, a manufacturer, wanted to retire. His business had some good contracts. For this reason, Ian wanted to buy the business. Hugo showed Ian his accounts for the last three years, his orders for future work not yet carried out and the debts owed to the business. The accounts showed a profitable business with good future potential and Ian therefore signed a contract to buy the business. He later took copies of the accounts to his accountant. The accountant pointed out several errors and also that the business was only just making a profit. Ian also discovered that, after Hugo had provided him with the accounts and information, but before he signed the contract, one of Hugo’s biggest debtors had gone out of business owing Hugo $100,000. When Ian complained that Hugo had not told him about the $100,000 owed, Hugo merely said, ‘That’s for me to know and you to find out.’ Ian had a contract to provide equipment for the refurbishment of a factory in a Middle Eastern country. He had received an initial payment of $2,500,000 with the balance to be paid by instalments at intervals during the contract. He had all the necessary export permits by September. In December the Government passed a law banning trade with the country concerned.

Required:

ai Explain the three types of misrepresentation;

aii whether Ian could bring a successful claim against Hugo for misrepresentation.

Assume for the purposes of this question that Ian is successful in his claim against Hugo. Explain:

bi the remedies available for the three types of misrepresentation;

bii to Ian which remedies may be available to him.

ci Explain what is meant by frustration of a contract and identify the circumstances in which a contract might become frustrated.

cii Explain whether or not Ian’s contract to supply equipment to the Middle Eastern country has been frustrated.

d Explain whether Ian will be able to keep the initial payment of $2,500,000.