Business Law Case Study - 1954 Words

Case Jonathan, a moneylender makes a loan of $1,000 to Sheba on Sheba’s representation that she is 19 years old. Sheba is in fact 17 years old. She enrolled for diploma course with a private college for $500, spent $200 on a holiday, and the balance of $300 on a mini hi-fi set. She now refuses to pay Jonathan. In this case, we are acting for Jonathan (plaintiff). Jonathan sues Sheba (defendant) because of free consent and capacity. Free consent that we talk is about misrepresentation whereas capacity is about her being a minor. â€Å"Free consent is one of the essential elements of a valid contract which provides that all agreements are contract if they are made by the free consent of the parties†¦.† (Tulsian, 1998, p.53) â€Å"Capacity is legal†¦show more content†¦(Tuner, C., 2001) In this case Sheba deliberately lied about her age so that Jonathan would give her the loan. Therefore, there was an inducement dishonest misrepresentation of age by Sheba thus putting Jonathan to unfair position. Would Sheba be able to argue that Jonathan should have checked her age by asking for documents such as birth certificate or identification card and believing Sheba’s age without first checking her actual age? Then there is another question as to whether Sheba can use her own dishonest misrepresentation to disadvantage of Jonathan. We think the law would consider the fact that Jonathan did ask Sheba her age and that it is she who lied to him which was honest belief on his part. She would not be able to escape by raising the point that Jonathan should have taken a further step to actually verify her age. Another point which may need to be look at is that when the contract was entered Sheba asked for a loan from Jonathan and latter she spent the loan sum. Jonathan seems not to know the purpose of the loan. Therefore, whether the issue of the manner of the spending is relevant or not may not arise and it would purely be decided whether the contract is valid or void or voidable by either party. As for Jonathan, he will argue that Sheba is liable to pay back the loan since a valid contract was entered by the parties and the misrepresentation of age cannot be used by Sheba to say the contract is void and therefore unenforceable. 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