common law claims

common law claims

QUESTION ONE

Khaled is a retired motor mechanic who has a passion for collecting antique jewellery and precious stones. Khaled has a very basic English language skills and he also has a medical condition called myopia, which requires him to wear glasses every day. On 1 August Khaled saw an advertisement:

“Rare Siberian diamonds for sale. $5,000 for one carat. Interested? Call Julia on 123 456 or email julia123456@diamonds.com”.

Khaled tried to call Julia but she did not answer her phone, so instead Khaled emailed Julia on 1 August offering to buy diamonds worth $50,000. Two days later, still no email from Julia, so Khaled decided to call Julia again offering to buy $50,000 worth of diamonds. Finally, on 3 August Khaled managed to meet Julia and buy diamonds. Julia also introduced herself as a professional jewellery trader and expert and owner of a small business called “Diamonds are Forever”. Khaled and Julia became good friends. Julia knew that Khaled did not have good English language skills and she promised to help Khaled in case he needed help.

Two months later on 3 October Khaled saw another advertisement from Julia

“One rare antique diamond brooch from Queen Victoria’s time for $10,000 or the nearest offer. Interested? Call Julia on 123 456 or email julia123456@diamonds.com”.

Khaled was excited about buying this rare diamond brooch and promptly called Julia offering to buy it.

common law claims

On 4 October on his way to meet Julia, Khaled realised that he left his glasses at home, but due to time constraints, he decided not to go back. When Khaled met Julia he was hesitant to buy the brooch because he did not have his glasses on, but Julia was very adamant and sounded reassuring and trustworthy. Julia said to Khaled “I guarantee that this brooch will make your collection richer and you will always be able to sell it for a double price because it is such a rare item.” Moreover, she told Khaled that the brooch belonged to her grandmother, who supposedly inherited it from her distant relative from Queen Victoria’s time. Khaled did not understand what Julia was saying and asked her to repeat it again. Julia also told him that the brooch had an antique seal dated back in 1860.

Khaled was still a little bit hesitant, and Julia knew that Khaled could not see properly without glasses and could not understand English well so she kept on telling Khaled that he was getting a really good deal and so on.

After one hour of deliberation Khaled bought the item and he came home to proudly inspect his new purchase. However, when he looked closely at the brooch through a magnifying glass, he discovered that this item was made from zirconium, not diamonds and the date sealed was 1960, not 1860. Khaled called Julia immediately and now he wants to return the brooch and get his money back. Julia refuses to cooperate.

REQUIRED

Advise Khaled of any common law claims he can successfully make against Julia, citing relevant Australian law.

(15 marks)

common law claims

ANSWER GUIDE

Julia’s first advertisement is an invitation to treat, there is also subsequently offer and acceptance. But, formation of contract is not an issue here, so there is no need to analyse this. Julia’s second advertisement – offer and acceptance are again not at issue.

Are Julia’s statements terms or not? Oscar Chess v Williams – consider the factors. If a term, what type of term has been breached: condition, warranty or intermediate term? Associated Newspapers v Bancks, Bettini v Gye, Hong Kong Fir Shipping. Better student mentions consequences of type of term breached, and measure of remedies (Hadley v Baxendale)

Misrepresentation : The elements of misrepresentation should be discussed: (1) – Julia is making a false statement of fact about the subject matter – the brooch (2), and it is addressed to Khaled (3); moreover Julia is reassuring Khaled that the brooch is a genuine item etc; there is an inducement (4) –Khaled is hesitant to buy the brooch and Khaled would not have bought the brooch if the false statement was not made – he is unlikely to be interested in buying a fake item for $10,000. Students should discuss the types of misrepresentation that may apply on the facts. Fraudulent: Derry v Peek – rescission and damages. Negligent Misrepresentation: Shaddock v Parramatta City Council; Esso Petroleum v Mardon – rescission and damages. Innocent misrepresentation does not look likely, but if it were to succeed, Khaled may terminate the contract: Whittington v Seale-Hayne. Better students compare and contrast options.