CONTRACTS

Karenpurchased a used car from Paul's dealership.

Karen asked the salesman Bob, if the car had ever been in a major accident and Bob told her it had not.

Bob told her the dealership guaranteedall ofits used cars for 3monthsso she had nothing to worry about.

Karen purchased the car but didn't read the contract carefully and failed to notice that the contract stated the dealer guaranteed the car for 30 days for any problems.She provided the dealership with a $5,000 deposit, but requested the dealership allow her to make monthly payments for the balance of the cost of the car. Bob insisted that Karen's husband Steve guarantee the loan.

When Karen returned to the dealership with her husband, Steve, who is blind and does not speak English, he questioned what he was signing butKarenassured him the document was a formality and he had nothing to worry about.

Two months after she purchased the car Karen had major problems.

Another mechanic told her that her car was completely unsafe, and it had been in a major accident before she bought it.The frame was so bent the car couldnever be driven again.

Karen went back to Paul and demanded her money back and is refusing to make any payments.She said she was well within the3 monthperiod.Paul told her he was unaware that the car had ever been in an accident as they had bought the car at an auction.Also,the car was only guaranteed for 30 days as the contract clearly stated so Paul said she is entitled to nothing from them.

Karen has contacted her lawyer.Karen is now separated from Steve and the dealership has requested that Steve continue making the payments. Steve does not understand why the dealership is pursuing him for his ex-wife's car loanand alsorefuses to pay.

a. What legal principle would the dealership use to try and enforce the30 dayreturn policy in the contract? (includeadefinitionand application to the facts)(3Mark)

b. If Karen was unsuccessful at enforcing the 3monthguarantee she was promised, what other legal principle could she use to try and get the contract rescinded? (includea definition and application to the facts). Secondly,whatelements would Karen need to provein order forthis argument to work?(4Marks)

c. What two legal principles could Steve rely on in hisdefence? (providedefinitionsfor each along with an application to the facts)(4 Marks)

d. Assume that prior to Karen discovering her car was unsafe, a wheel broke off while she was driving on thehighwayand she was seriously injured as a result.As well, assume that during the discovery process, emails were uncovered showing that Bob not only knew Karen's car had been in an accident, but joked about how he "sold anothersalvaged wreck this week". In response, his boss wrote "Great work Bob!Your bonus for sellingtotaledcars will be added to this month's pay!"

What type of damages could Karen seek in this type of situation?Identify and define thetypes of applicabledamages.(6Marks)