Whipp then returned the property to Iverson and brought this action seeking rescission of the contract. Should the contract be rescinded? Explain.
Iverson owned Iverson Motor Company, an enterprise engaged in the repair as well as the sale of Oldsmobile, Rambler, and International Harvester Scout automobiles. Forty percent of the business’s sales volume and net earnings came from the Oldsmobile franchise. Whipp contracted to buy Iverson Motors, which Iverson said included the Oldsmobile franchise. After the sale, however, General Motors refused to transfer the franchise to Whipp. Whipp then returned the property to Iverson and brought this action seeking rescission of the contract. Should the contract be rescinded? Explain.
Misrepresentation, in law, means any information stated as a fact, in a contract turns out to be false or an untrue statement, which can harm the other party,which then has the right to call off the contract.
The contract, here was made in misrepresentation of the fact that while purchasing Company I, Franchise O will be transferred with it, which did not happen as Company G refused to transfer Franchise O to the purchaser.
Here, the purchaser- Company W has the right to terminate the contract in respect to misrepresentation of an information in the contract.
The case is an example of misrepresentation. The contract can be declared void as after Company W bought Company I, Franchise O was considered to be a part of Company I.
The contract was made on the term that with Company I, Franchise O will be also be purchased, which did not happen. Company G refused to transfer Franchise O, which makes the contract void.
Hence, mistake made intentionally or innocently makes the contract unacceptable in the terms of law.