Question Digital Economy

Assignment question

Mr Jones recently purchased a cafe from Mr Smith. Mr Smith had decided to retire and to sell his practice. A contract was signed. Prior to signing the contract Mr Smith told Mr Jones that the practice produced an annual income of $900, 000. He said this to obtain the purchase. Mr Jones decided to enter the contract influenced by the fact that the annual income generated by the business was high. Mr Jones later discovered that Mr Smith had falsely stated the situation and that the cafe only generated an income of $400, 000 per annum.

Frustrated, Mr Jones confronted Mr Smith about it but he was told that there was a clause in the signed contract stating: "The seller bears no responsibility with regard to the income generated from the business once it is sold." In fact, the clause was printed in very small font and went unnoticed by Mr Jones.

a) Mr Jones seeks your advice. He wishes to know whether or not he can escape from the contract.

b) Can Mr Smith rely on the exemption clause in the contract?