In a commercial sale, the vendor answered the buyer's written pre-contract enquiry by stating the site had never been contaminated, knowing this was untrue. The buyer discovers the contamination after exchange but before settlement. What remedy is most likely available?
Correct Answer
A) Rescinding the contract and claiming damages for the vendor's misrepresentation
A vendor who knowingly makes a false statement that induces the contract commits fraudulent misrepresentation, which is also misleading conduct under the Australian Consumer Law. Before settlement, the buyer can usually rescind the contract and recover the deposit, and can claim damages for losses caused. Mere silence about contamination in a commercial sale would not necessarily give these remedies, because caveat emptor applies unless there is a statutory duty or a misrepresentation.
Why This Is the Correct Answer
The vendor made a positive, knowingly false statement about contamination in answer to the buyer's enquiry. That is a fraudulent misrepresentation that induced the contract, and it is also misleading conduct under the ACL. The buyer can rescind before settlement and recover the deposit, and can claim damages for loss caused by the misrepresentation.
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