Misrepresentation or fraudulent representation

Suppose you offer your car for sale. Your car was submerged up to the windows in a flood three years ago, but the car currently seems to be operating fine for you.

A potential buyer asks you, “Has your car ever been in an accident?” If you say “no,” have you committed a misrepresentation? What must happen for a fraudulent representation to occur?

Suppose the person instead asks you “Has your car ever been damaged?” What other types of misrepresentation are there?

If a potential buyer does not ask you any questions regarding the condition of your car, must you voluntarily disclose that your car has been in a flood? Should you? Could a misrepresentation occur by remaining silent?

Would this person be able to rescind a contract due to a misrepresentation or mistake?

Be sure to draft your answers in paragraph form discussing each question thoroughly. You will also need to reply substantively to a classmates’ posting. Remember that the questions may be asking you for your opinion and not necessarily a specific answer from the text. Use your new knowledge to work it out!

ANSWER

Misrepresentation

Misrepresentation in a business can either result into good or poor sales of a given product. In case a buyer shows interest in my car which had submerged earlier on, and asks whether my car has ever gotten involved in any accident, I would not admit to that owing to the fact that it has not shown any sign of mulfuntionality over the past three years. The fact that I would deny any accident related to the car does not mean I have misrepresented anything. A fraudulent misrepresentation will occur when the car got submerged into floods and later developed some mechanical issues then I fail to disclose that information to the potential buyer.

In case a potential buyer does not inquire about the status of the car, it is out of good will that I would voluntarily disclose the current status of the car to the buyer. I would disclose the flood incident, and later emphasize on how it did not interfere with the normal operations of the car. Remaining silent would lead to a misrepresentation since the buyer would assume the vehicle has never incurred any accidents that might affect its operating system. Depending on how the buyer interprets the misrepresentation, he/she can decide to revoke the contract. Business requires honesty, and any buyer would prefer to be given a clear narration/analogy of the product he/she is about to purchase. The chances of the contract signing being revoked in this context is quite high since the buyer would tend to believe the seller is hiding several other vital information. In conclusion, it is advisable to maintain honesty when operating a business; honesty will enhance a strong buyer-seller relationship, thereby opening doors to other future business dealings.