Jim runs a shop that sells all sorts of antiques, paintings, and handicrafts. Betty who was walking by the shop noticed a painting displayed in the shop’s window that caught her attention. She walked into the shop to have a closer look at it. She liked it. She told Jim, “This is such a beautiful landscape painting. The work of art must be by the famous artist, Ivan van Hendrik. I have a collection of some of his paintings”. Jim kept silent. He knew that it was not a painting by Ivan van Hendrik. It was a painting by an unknown local artist. The painting was priced at RM2,000. Betty purchased the painting for the stated price.

A week later, when Betty discovered that the painting, she purchased from Jim’s shop was not a painting by Ivan van Hendrik, she returned to the shop and demanded a refund of the money she had paid alleging that Jim had committed fraud by failing to disclose that it was not a painting by Ivan van Hendrik. Jim refused to return the money insisting that they had a valid and binding contract.

Discuss Betty’s rights under the law of contract.