Vera agrees to sell her grocery store and fittings to Petra for $750,000. Petra was induced to

buy the store by Vera's representations that the store had made a profit of more than

$100,000 in each of the last two years, and that apartment building in the area had

increased the popularity of the store. In fact, the accounts (which Petra had not checked)

showed that the store had made a small loss in each of the last two years, and that a new

supermarket opened the previous year was likely to reduce profitability even further.

In an attempt to increase turnover, Petra completely refurbished the store, including

replacing most of the fittings. She also engaged in extensive advertising in an unsuccessful

attempt to increase custom. A year after buying the property, Petra wants to return the store

to Vera and to be repaid the price.

Advise Petra.

question 2: Delia is an elderly widow who suffers severe mobility problems. Her nephew, Gavin, visited

her once a week and shopped for her. Apart from her home, Delia's only substantial asset is a

small Nolan painting which was given to her mother by the artist over seventy years ago, and

then left to Delia. Delia is grateful for the help Gavin has given her and on her ninetieth

birthday she says to him, 'You have been so good to me. Please take this painting. It's not

worth much but it is a small token of my gratitude'. Gavin knows that the painting is worth

far more than Delia realises. He sells it for $1.5 million and uses the proceeds to pay off

numerous business debts he has contracted. Delia never sees him again.

Delia realises that she has made a mistake in giving Gavin the painting. Advise her on the

equitable relief available to her.

Discussion topics

2. Should a trustee have to disclose its reasons for making decisions in a particular way? Should the purpose of the trust (e.g. superannuation or charity) influence the matter?
4. Should the Schmidtreasoning be adopted in Australia?
6. When, if ever, should a court exercise the trustee's discretion in the trustee's place?
8. What is comprised in the 'irreducible core' of obligations that make up a trust? Is the list provided by Millett LJ in Armitagea complete description?
10. Should professional trustees be entitled to negotiate exclusion of liability for their own negligent acts? Are there any equitable doctrines that might be relevant to determining whether an exclusion is permissible?

Answer rating: 100% (QA)

For petraPetra may have grounds for rescission of the contract based on misrepresentation Vera made ... View the full answer