Free Sample   Foundations Of Business Law


Students can't be Wrong!






PhD Experts


250 Words

Foundations Of Business Law

  68 Downloads   |   7 Pages 1,709 Words   |   Published Date: 03/11/2015


James owns a shop that specialises in new and second hand musical equipment. Several months ago Max came into his shop with an Ibanez guitar for sale. Max said that he had inherited the guitar from his uncle who used to play in a heavy rock band many years ago. He also said that he had no idea of its value. The guitar appeared to be a rare vintage genuine Ibanez Serpent like the one that Ozzie Manson plays in the heavy metal band, Doomsday, and James knew he could easily sell it for up to $20,000. Before buying any second hand musical equipment James would normally have an expert examine the piece to determine its authenticity, however, this time he was sure that the guitar was an original Ibanez Serpent. James offered Max $1500 for the guitar which Max eagerly accepted. James then advertised the guitar in Guitar Hero magazine as follows:

Classic Vintage Guitar – the original Serpent Ibanez – the same one as played by Ozzie Manson in Doomsday – price negotiable
Kim, the proprietor of a local night club, inquired about the guitar. As his club supported the live music industry Kim thought that such a guitar on display in his club would be a welcome attraction for both artists and patrons. Kim offered $10,000 for it which James rejected saying: “This guitar is a genuine Serpent Ibanez which I could easily sell for $20,000; however, I am prepared to sell it to you for $15,000 and that includes having it serviced before sale”. Kim said that he needed to
sort out his finances so could he let James know by the end of the week? James agreed.
During the week James took the guitar to All Guitars – Services and Repairs to have it serviced in readiness for sale. This was when he discovered that the guitar was not an original Ibanez Serpent, but a clever copy. The manager of All Guitars informed James that about the same time that the Ibanez Serpent was made in Japan a number of imitations were also made in the United States. He also said that only a few of them were made and that it would now be extremely rare to find an original Serpent Ibanez for sale in Australia.

Kim returned at the end of the week to buy the guitar for $15,000. James failed to mention that he had recently discovered it was a fake.
Kim displayed the guitar on the wall in his club proudly explaining to anyone who inquired that “it was an original Ibanez Serpent just like the one that Ozzie Manson plays in Doomsday”. The guitar did generate a good deal of interest and Kim had many offers to buy it. One such inquirer was Robbie, the lead guitarist of a band called The Rebellion. Robbie thought that the guitar would provide a good look for the band, so he offered Kim $20,000 for it. Although Kim was sorry to part with it he could not afford knock back such a generous offer.

Soon after purchasing the guitar several of the strings broke so Robbie had to take it to All Guitars to have them replaced. The manager of All Guitars told Robbie that he had only recently serviced the guitar, however, was not at all surprised that the strings had broken. He told Robbie that the guitar was not an original Ibanez Serpent, but an imitation, and was therefore of inferior quality. He told Robbie that it was not suitable for heavy duty use and probably only worth around $800.
Robbie is now demanding that Kim return his money, however, Kim is refusing because it is not his fault that the guitar is not an authentic Ibanez Serpent as this is what he was told when he bought it from Max.


1. Advise Robbie whether he is entitled to get his money back from Kim?

2. Advise Kim whether he has any cause of action against James?

3. Assuming that James never took the guitar to All Guitars for a service (so that he never found out that it was not an original) would Kim still have any cause of action against James upon discovering that the guitar was not an original Ibanez Serpent?




1) Even when it is established that the essential elements required for a legally binding contract are present, and at the same time, the terms of the contract can be identified clearly, the agreement may still not be legally enforceable due to the reason that some vitiating factors are present (Curtis v Chemical Cleaning and Dyeing Co, 1951). Therefore when fraud is present or a fundamental mistake has been made regarding the contract by one or both parties to the contract, the contract can be either totally void or it can be voidable at the option of the innocent party. In the present case, both Kim and Robbie were mistaken regarding the identity of the guitar. They both believed it to be an original Ibanez Serpent guitar while in reality it was a clever copy of the original. Due to the reason that the guitar was an imitation and of an inferior quality it was not suitable for heavy-duty use. At the same time, although Robbie had paid $20,000 for the guitar, in reality the guitar was only worth $800. But at the same time, it also needs to be noted that Kim was also not aware of the fact that the guitar was an imitation. He too believed the guitar to be an original Ibanez Serpent guitar and as a result he had paid $15,000 to James.


However, Kim had made a representation that the guitar was an original Ibanez Serpent while in fact it was only an imitation. As a result, although the contract between Kim and Robbie is not void, still Robbie can claim damages from Kim due to reason that the guitar was only an imitation and not the real one.



2) Pre-contractual statements amounting to terms also constitute representations. Although, sometimes they are not intended to be promissory in nature and as a result, do not constitute the terms of the contract however in case they proved false, the party to whom such false representation has been made, may have remedies under the common law and also under the statute. In this regard, the common law provides that when the opposite party has induced to enter into the contract by a false representation, the party to whom such representation has been made can rescind the contract (Hedley Byrne v Heller, 1964).


At the same time, the consumer law also provides a wide range of remedies related with misleading conduct that takes place in trade or commerce. An action for misrepresentation provides a remedy to a party that has entered into the contract by relying on a false statement of fact made by the other party even if the false statement has not been made a part of the contract.

In the present case, James had purchased the guitar from Max, believing it to be a rare vintage genuine Ibanez Serpent and accordingly he advertised the guitar for sale as the original. However when he took the guitar for servicing to All Guitars - Service and Repairs, he was told by the manager that it was a clever copy and not an original one. However when Kim came back to purchase the guitar for $15,000, James did not mention that the guitar was not an original Ibanez Serpent and he allowed Kim to purchase the guitar under the belief that it was an original Ibanez Serpent guitar.


In this regard, the law provides that when a contract is based on unconscionable misrepresentation, the remedy available to the innocent party is that of the recession of the contract and such a contract is voidable. This means that the contract is valid only until the same has been avoided by the innocent party. An actionable misrepresentation can be described as a false statement of fact that has been made by one party during pre-contractual negotiations and as a result of which the other party is induced to enter into the contract (Derry v Peek,1889).

At the same time, according to the general rule remaining silent does not amount to misrepresentation. However, in the present case, James had advertised the guitar as an original Ibanez Serpent it was the duty of James to inform Kim that he had been told by the manager of All Guitars that it is a clever imitation. As a result, in the present case, it can be said that James had made a false representation to Kim and as a result, Kim has a cause of action against James.



3) On the other hand, if James had not taken the guitar for service to All Guitars and as a result, would not have come to know that the guitar was not an original but it was only a clever imitation, Kim could not have the cause of action against James for fraudulent misrepresentation. However in such a case, due to the reason that both the parties would have been under the mistaken belief that the guitar was an original, Kim cannot claim that a fraudulent misrepresentation has been made by James. In such a case, it can be said that James had made a wholly innocent misrepresentation.

The reason is that in such a case, James would not be aware of the fact that the guitar was a clever imitation and not the original. Therefore, in such a case, Kim cannot be allowed to rescind the contract however; certain damages may be claimed by Kim. The word innocent can be used to describe a statement that has been made by a person who has reasonable grounds to believe that the statement is true. In the present case, if James would not have taken the guitar for service, he would not have come to know that the guitar was an imitation and therefore as a result, he had reason to believe that the guitar was a genuine Ibanez Serpent.



Case law

Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805

Derry v Peek (1889) 14 App Cas 337

Hedley Byrne v Heller [1964] A.C delivers assignment help to millions of students of USA. We have in-house teams of assignment writers who are experts on wide ranges of subjects. We have appointed teams of native writers who provide assignment help to students in New York City and all over the USA. They are skilled assignment writers who successfully cater to search terms like’ do my assignment in the USA' and readily entertain queries related to write my assignments.

Most Downloaded Sample of Business Law

  232 Download  |   13 Pages 3,003 Words

IntroductionThe regulation and proper operation of any company or corporation is completely dependent on the nature and manner in which the directors and other offi...

Read More

  211 Download  |   7 Pages 1,532 Words

Employment LawExplain the constitutional basis for the Fair Work Act 2009 (Cth) with reference to the Australian Constitution and discuss the relationship with Au...

Read More

  438 Download  |   9 Pages 2,104 Words

John was an architect and was employed by a small firm in the Melbourne CBD. He worked part-time. On his days off, he enjoyed designing and printing T-shirts. He st...

Read More

  105 Download  |   13 Pages 3,118 Words

Question 1The International business law is concerned with the rights of business with each other and with international organizations. Domestic law is within t...

Read More

  258 Download  |   10 Pages 2,335 Words

 IntroductionCapital punishment is punishing of a person by the state as a discipline for wrongdoing. Law violations that can bring about capital punishmen...

Read More

  330 Download  |   12 Pages 2,752 Words

Question-Differentiated services which allow for different consumer experiences of network delivery based upon paid access or similar access control provisions pose a...

Read More

  93 Download  |   11 Pages 2,576 Words

 Table of ContentsRule ApplicationSolution ISolution IIReferencesRuleSection 180 (1) of the Australian Corporation Act (ACA) requires that t...

Read More

  224 Download  |   3 Pages 598 Words

 Table of ContentsQuestion 1Question 2Question 3Question 1 -Over the first nine weeks of the course, reflecting on what you have written in your journa...

Read More

  380 Download  |   9 Pages 2,052 Words

Question -Hamid is a refugee from Afghanistan who was recently released from the detention centre in PNG and is currently living in Adelaide. While walking in Rundl...

Read More

  185 Download  |   9 Pages 2,102 Words

Question - Use the IRAC (Issue, Rule, Application & Conclusion) method to answer below given question?  Mark, Peter and Mary were out on a Saturda...

Read More

  252 Download  |   10 Pages 2,387 Words

Question 1:Jamie is retiring from the catering business. His neighbour’s daughter Sonia has just finished college and is about to open up a restaurant. La...

Read More

  154 Download  |   8 Pages 1,989 Words

Question:John agrees to build an extension to Chen’s house. At the time they enter the agreement, the price of building materials is increasing week by week. ...

Read More

  138 Download  |   15 Pages 3,710 Words

Assignment Task 1:1) Bob goes into Sam’s bookshop and sees a book which he wants to buy on display. He takes the book to the counter to pay for it, but Sam te...

Read More

  53 Download  |   9 Pages 2,032 Words

Question:“Consideration need not be adequate or commercially realistic. It merely needs to be sufficient”Discuss what the term ‘sufficient&rsq...

Read More

  68 Download  |   7 Pages 1,709 Words

Question:James owns a shop that specialises in new and second hand musical equipment. Several months ago Max came into his shop with an Ibanez guitar for sale. Max ...

Read More

  199 Download  |   17 Pages 4,038 Words

Question:Paul Arena has a dream to open a five star hotel/motel in the heart of Fantasia Valley, approximately 50 kilometres north-east of Melbourne.Paul stumbl...

Read More

  154 Download  |   11 Pages 2,682 Words

To what extent is there now a so-called 'compensation culture' in negligence claims in the UK and if so, how are the courts reacting to this phenomenon? &nbs...

Read More

  141 Download  |   11 Pages 2,515 Words

Question:Extravaganza Inc own and run a large performance arena used for a variety of activities ranging from rock concerts to antiques fairs. Events at this venue ...

Read More

  336 Download  |   5 Pages 1,213 Words

Pennsylvania was the leader in sentencing and correctional reform in the early history of the United States. Discuss what groups were associated with this reform.Why ...

Read More

  374 Download  |   9 Pages 2,167 Words

Question 1:Cotton Limited holds 89.5% of the shares in Satin Co Limited. The remaining shares are held by Silk and several other small investors. The Board of Sat...

Read More