Question
Wesker owned a small fashion store called Umbrella Pty Ltd which he wished to sell. Chris was in the market to buy such a business.
Wesker owned a small fashion store called Umbrella Pty Ltd which he wished to sell. Chris was in the market to buy such a business. During negotiations,Wesker made the following representations regarding the business.
- That the local council was proposing to build a new car park which was expected to attract a substantial number of new shoppers to the area.
- The business has been very successful for the past 3 financial years
- The Umbrella Pty Ltd Facebook page has 500,000 likes, which indicated customer satisfaction is very high.
Chris decided to buy the business. The main reason for his decision was the healthy state of the business (which were accurate). However, Chris was also persuaded by the potential for increased trade suggested by the car park proposal.
Chris has been operating the business for six months when he inquired from local council about when the construction of the car park will begin. To his shock, he discovered the local council never actually proposed to build a car park. He also realised that 90% of the likes in the Umbrella Facebook page were purchased, and not from legitimate customers. Chris wants to keep the business, but feels that a premium was paid based on the information about the carpark and the representation regarding the Facebook likes.
Advise Chris if he can argue the representations made by Wesker are in breach ofs 18 of the ACL.
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