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Fraud And Misrepresentation In Commercial Contracts – A Law Post Covid Pandemic Hypothetical Case Study:

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By Author: premkumar nadarajan.
Total Articles: 10
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The gun worked very well at first but later exploded. Subsequent examination of the remnants revealed that a part of the breach chamber suffered from a patent defect in that it was soft and spongy and a metal plug had been driven into the breach over this soft part. Obviously this had been done to conceal the defect. If the defendant had examined the gun when it was delivered, he might have seen the defect. But the defendant had accepted the gun without examining it.The defendant, having made part payment refused to settle the rest of the bill. The plaintiff sues for payment of the rest of the bill. The defendant resists the plaintiff's claim on the grounds of misrepresentation; alleging that the weapon had been defective and that the defect had been fraudulently concealed from him.
The writer in this case study investigates the effect of possible fraud and misrepresentation committed by the defendant against the plaintiff. In doing so, this paper will also look at the various elements involved in proving fraud and misrepresentation from a statutory and case law perspective. The statutory laws discussed here are specific ...
... to the country of Malaysia whereas the case law are mostly English cases (which are suitably reflected accordingly in Malaysian case law).

Analysis:
Fraud and misrepresentation have been well defined in the case of Horsfall v. Thomas (1862) 1 H & C 90; 158 ER 813. Accordingly both fraud and misrepresentation have been embodied in the Malaysian Contracts Act sections 17 and section 18.Common elements are as follows: there must be a representation of fact; opinion is not generally a statement of fact; because opinion does not warrant the truth of its contents; merely a statement of belief. (Bissett v.Wilkinson); the representation of fact must be untrue; the representation was addressed to the party misled (before or at the time the contract was made); it must have intended to induce the contract (the party misled must show that the representor intended the misrepresentation to be relied, or acted, upon by the representee. (Langridge v. Levy) (even if it did not appear that the representor intended the false representation itself to be communicated to the party misled).the representation must have in fact induced the contract (i.e. the party misled must have entered the contract in reliance on the representation) (Explanation to section 19 Malaysian Contracts Act). If a party never knew of the existence of the representation (Horsfall v. Thomas) (if the party misled was not aware of the misrepresentation (never knew of the existence of the representation); he cannot claim to have been induced into the contract by the same. If a representee did not allow the representation to affect his judgement (i.e. by acting not on the representation but on the result of independent investigation, inspection or assessment, there is no fraud or misrepresentation. (Attwood v.Small)If the representee knew the representation to be false ( if knowing the falsehood, the representee still goes ahead and contracts, then he cannot be heard to complain has no remedy ) ( Cooper v. Tamms). The representation must be material to the contract (i.e. played a role in inducing the contract) (Smith v. Chadwick).The misrepresentation need not be the only inducing factor (so long it is one of the factors that caused the misled party to enter into the contract) (Edgington v. Fitzmaurice).


Conclusion:
It is the submission of the writer that the plaintiff should fail in his claim against the defendant; the critical point was that he had not examined the weapon prior to purchase. As he had not examined it, he had not been aware of the concealment. That being so, he could not say that he had been misled by the concealment. Consequently he had not been misled and there had been no fraud or misrepresentation. The case law suggested note that for latent defects, the manufacturer of the said article has to point it out to the purchaser. If the defect is patent (as in this case), that the purchaser is capable of judging for himself on an equal level to the manufacturer, the manufacturer is not obliged to draw the purchaser's attention to it.

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