Prestia v Delaney

In *Prestia v Delaney* [1996] NSWCA 435, the New South Wales Court of Appeal considered an appeal from a decision of the District Court concerning a dispute over a contract for the sale of a business. The appellant, Mr. Prestia, was the vendor and the respondent, Mr. Delaney, was the purchaser. The central issue revolved around whether the purchaser had validly terminated 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 concerning the business's profitability constituted actionable misrepresentations that entitled the purchaser to rescind 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 contract law relating to misrepresentation, emphasizing that a party induced to enter a contract by a false statement of fact, which is material and relied upon, may be entitled to rescission. The court also considered whether the purchaser had, by his subsequent conduct, affirmed the contract, but concluded that he had not done so.

Consequently, the Court of Appeal dismissed the appeal, upholding the District Court's finding that the contract had been validly rescinded by the purchaser.