Alfaro v Monti

In *Alfaro v Monti* [1998] NSWCA 10, the New South Wales Court of Appeal considered a dispute between the parties concerning a contract for the sale of a business. The appellant, Mr Alfaro, was the vendor and the respondent, Mr Monti, was the purchaser. The central issue revolved around whether the purchaser was entitled to terminate the contract due to alleged misrepresentations made by the vendor regarding the business's financial performance.

The Court of Appeal was required to determine whether the representations made by the vendor constituted actionable misrepresentations at common law, and if so, whether the purchaser had validly rescinded the contract. Specifically, the court had to assess whether the representations were false, whether they were material to the purchaser's decision to enter into the contract, and whether the purchaser had affirmed the contract after becoming aware of the alleged falsity of the representations.

The Court of Appeal found that the representations made by the vendor were indeed false and that they were material to the purchaser's decision to buy the business. The court applied the principles of common law misrepresentation, emphasizing that a misrepresentation need not be the sole inducement for entering into a contract, but must be a material factor. The court also considered the purchaser's conduct after discovering the misrepresentations, concluding that he had not affirmed the contract and had acted promptly to rescind it.

Consequently, the Court of Appeal dismissed the vendor's appeal and upheld the trial judge's finding that the contract had been validly rescinded by the purchaser. The court ordered that the appeal be dismissed with costs.