Banta, who was in the market for a car, heard that Santa wanted to sell his car for $5,000. On June 1, Banta visited Santa and saw the car. Banta asked Santa about the car’s condition. In response, Santa said, “The car is in tip-top shape—the brakes and clutch were replaced in the last six months. It’s in beautiful shape for a vehicle of this age. Good for another 100,000 miles easy.”

Santa agreed to sell the car to Banta for $5,000. They both signed the following document: “Santa agrees to sell, and Banta agrees to buy, Santa’s car for the price of $5,000. Banta will pick up the car at Santa’s home on June 2 and pay Santa $4,000 in cash and give Santa a cheque for $1,000 at that time.

” On June 2, Banta came to Santa’s home. Before handing the cheque to Santa, Banta said, “I’d like my mechanic to look at the car to make sure that it is as you represented it.” Santa responded, “Don’t waste money on a mechanic. The car is exactly as I described it.” Even though Banta, while at Santa’s home, had no way to tell if the brakes and clutch were as represented, Banta thought that it would be a waste of time and money to visit a mechanic and thus decided to proceed with the transaction. Accordingly, after briefly inspecting the car, Banta gave Santa $4,000 in cash and a $1,000 cheque drawn on CFH Bank. Santa handed Banta the keys to the car, and Banta left with the car.

On June 3, Santa went to Chinappa, where he endorsed the back of Banta’s cheque by signing his name with no other words and handed the cheque to the clerk in exchange for $950 in cash. Chinappa was unaware of any facts about the transaction that gave rise to the cheque.

On June 10, the car broke down and Banta had it towed to a mechanic’s shop. After looking at the car, the mechanic accurately told Banta that the clutch had failed because it was old and needed to be replaced. The mechanic also warned Banta that the brakes were unsafe and that the engine needed a complete overhaul or it wouldn’t last another 10,000 miles. The mechanic told Banta that if the car had been as represented by Santa, it would have had a market value of $5,000, but in its current condition, the car was worth only about $500—its value as salvage for parts.

On June 11, Banta hand-delivered a letter to Santa. The letter informed Santa that Banta was revoking his acceptance of the car and that Santa could recover his car at the mechanic’s shop. Banta also visited CFH Bank and instructed it to refuse to pay the cheque that Banta had given Santa.

On June 12, an agent of Chinappa went to CFH Bank and demanded payment of Banta’s cheque. CFH Bank refused to pay the cheque because of Banta’s instruction and gave the cheque back to the agent. Chinappa then promptly gave notice of CFH Bank’s refusal to pay to both Santa and Banta.

a) What rights, if any, does Banta have against Santa? Explain with reference to the Fiji Sales of Goods Act. (7.5 marks)

b) What rights, if any, does Chinappa have against Banta and Santa? Explain with reference to the Fiji Sales of Goods Act. (7.5 marks)

Answer rating: 100% (QA)

1 Banta can either rescind the contract of sale or collect damages from Santa because of misrepresen... View the full answer