Question 5 Eddie purchases a Persian carpet from Khali the Rug Dealer in High St, Prahran. On the back of the rug is an authentication certificate that says the rug is from Baluchistan in Iran, a region noted for its fine carpets. Khali assures Eddie that this is true, and Khali believes it to be so. On the basis of Khali's assurances Eddie pays $25,000 for the carpet. Three years later when Eddie tries to sell the carpet, a prospective buyer brings Ali Khan, a famous valuer, to inspect it. Ali says it is not a Baluchistan carpet - "the knots are tight but the silk is not of the finest quality. This one is from a small village near Herat in Afghanistan - it's nice but worth only $4,000." Eddie packs it up and heads off to see Khali. Please advise Eddie of any rights he may have under the common law of misrepresentation. Question 6 Mr and Mrs Samnath migrated to Australia from Sri Lanka in 2005. They are dependent on their only son, Jayantha, for advice and support. They have limited education, no business acumen, poor language skills and their only income is the aged pension. They own their own home which is valued at around $400,000. Jayantha is a charming but feckless businessman, who is always on the verge of something great. In June 2012, he needs $150,000 to pursue a dot com opportunity that will make him rich. He is able to borrow money from the West Bank but only after he persuades his parent to act as guarantors. He misleads his parents as to the extent and purpose of the loan. The bank is unaware of this. After investigating their financial position, the bank manager meets with Mr and Mrs Sarath and goes over the guarantee contract. He asks whether they have any questions and, when they do not, they sign the documents as required. Jayantha uses the money to invest in an internet company. The company is worthless and Jayantha loses his entire investment. When he is unable to repay the loan, West Bank looks to the parents to honour their obligations as guarantors. Advise Mr and Mrs Sarath