Principles of Business Governance

Camita Quilla is an experienced driver who has owned and driven cars for over 16 years. She wishes to sell her current car and advertises it for sale in a newspaper for $10,000. She gives a brief description of the vehicle in the advertisement. Camita had purchased the car one year earlier from its original owner. When Camita bought the car, she was told it had travelled 30,000 kilometres and that it had never been involved in a collision. Camita reviewed the record books of the car before buying it and had no reason to doubt the first of those two statements. However, since buying the car, her own mechanic has told her that the car was extensively damaged in a collision by its previous owner, but that this damage had been well repaired and the car performs as well as can be expected for its age and condition.

Matthew comes to inspect the car. He is a young man, a seventeen year old, first year university student. He works part time to pay his university fees and lives by himself as his parents are no longer alive. He cannot afford a nice place and lives some distance from the city centre, where his university and work are, and where public transport is not so good. In fact, this is Matthew’s first car. He is particularly interested in the mileage of the car and any accident history and asks Camita a number of times about these. Camita tells Matthew that the car had done 50,000 kilometres as she herself had travelled 20,000 kilometres during the one year she owned the car and that, as far as she knows, it had never been involved in a collision. Mathew decides on the spot to buy the car from Camita for $10,000 and they make the deal to transfer the car into Matthew’s ownership.

Two weeks later, Matthew visits Camita and complains that he has had expert advice from a mechanic that the car has been involved in a serious collision and that the odometer has been tampered with and should actually read 70,000 kilometres. Matthew asserts that Camita has lied to him about the condition of the car. He claims that his mechanic’s expert advice is that the true value of the car is about $6,000 and not $10,000. Matthew demands that Camita either takes the car back and refunds $10,000 to Matthew, or alternatively, gives Matthew a refund of $4,000, being the reduction of value of the vehicle, with Matthew keeping the car.

Ignoring statutory law and using only the common law of contract, outline in essay style format the legal issues that are involved in this case study.

Monday class students are to advise Matthew.

Tuesday class & External students are to advise Camita.

Based on the conclusions to those issues, do you think both parties have any legal obligations to each other.

Sample Solution