Introductory business law in australia QUESTION 2 Norris had

QUESTION 2 Norris had decided for some time that he wanted to purchase a motel. After looking at several different areas, he settled on Port Stephens in New South Wales as offering both the potential for a business and the lifestyle he was seeking. He rang a number of real estate agents, inquiring whether they had any motels listed for sale. He finally found a motel and general business listed with an estate agent called Evatt. Evatt told Norris that once he got going in this business it would be a gold mine. Norris sought an/accountant\'s advice and then proceeded to buy the business. Within six months of buying the motel and general business Norris was broke because there were neither the tourist numbers nor the local population to sustain the business. Advise Norris on whether he can sue the estate agent for his statements about the business and whether you think he can succeed.

Solution

In this scenario, Caveat Emptor rule might apply. It means, let the buyer beware, that is the buyer is responsible in taking precautionary measures before purchasing anything.

In this case, Norris did a background work in selecting the place where to start the motel and entered into agreement with Evatt.

Evatt, a real estate agent is the professional who is responsible to give fair advice to Norris. Based on Evatt\'s say as the motel being \"gold mine\" , Norris has purchased the same and incurred losses.

“People who unintentionally or carelessly give false advice, information or opinions on business or professionals matter may be liable for negligent misstatement if the receiver reasonably relied on the false material and suffered economics loss”, based on this, Evatt is liable for negligent misstatement.

Norris can sue the estate agent for his statements about the business and he can succeed, because the real estate agent misled Norris and provided deceptive information about the motel purchased.

.

Hope this is helpful!!