Chapt 5 Flashcards
What constitutes misrepresentation ?
3 basic points
- untrue statement of fact/law which induces other to enter contract. Must be actual and reasonable reliance on the mis rep
- statement of opinion/ intention/trade puff not a mis rep
- silence not normally a mis rep but there are exceptions (see next card)
Exceptions: when silence etc constitutes mis rep
5
- Consumer Protection from Unfair Trading Regs 2008
(A retailer who misleads by failing to provide info commits a crim offence) - Half truths. (Nottingham Patent brick company v butler 1866)
- Subsequent falsity (With v o Flanagan 1936)
- Contracts of the utmost good faith i.e.- insurance proposals
- Fiduciary relationships (a trustee type relationship)
Different types of misrepresentation (3)
Remember that a Misrep is not a term!!!!
Fraudulent (Derry v Peek 1889)Knowingly false statement made/Made without belief in its truth /Reckless carelessness
Negligent (under MA 1967)- Howard Marine v Ogden 1978 and royscott v rogerson trust 1991)
s.2(1) MA 1967, a negligent misrepresentation is a statement made without reasonable grounds for belief in its truth. The burden of proof being on the representor to demonstrate they had reasonable grounds for believing the statement to be true.
Innocent - leaf v international galleries 1950
- where the representor can demonstrate reasonable grounds for belief in the truth of the statement. s.2(2)MA 1967
What remedies for negligent and innocent Misrep under the Misrepresentation Act 1967
What sections?
S2(1) negligent - damages provided for but little guidance given. CoA confirmed in Royscott that the same tortious measure of damages will apply to both fraudulent and Negligent
Rescission and or damages
S2(2) innocent. May award damages in lieu of rescission IF it would be fair to do so “having regard to the nature of the Misrep and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party”
Remedies avail in representation for
Fraudulent
Negligent
Innocent
Fraudulent
Rescission and or damages in tort of deceit (Derry v Peek1889)
Negligent
Rescission (court discretion)and or damages under S2(1)MA 1967 in tort of deceit
Case law-Royscott v rogerson 1991 and Howard Marine v Ogden 1978
Innocent
Rescission or damages in lieu of rescission under s2(2) MA 1967(either or) leaf v international galleries 1950
What are the bars to rescission?
5
- The contract is affirmed
- A “reasonable time” has passed (Leaf v International Galleries 1950)- applies to neg/innocent
- Parties can’t be restored to previous positions
- Acquisition of rights to innocent 3P
- Effect of MA 1967 s2(2)- if court chooses damages in lieu of rescission instead in case of innocent mis rep.
Negligent Misrep.
Representation will be negligent if (s2(1) MA 1967)
Two factors…
Which case?
Person making statement didn’t. Have reasonable belief in its truth or was careless
Howard marine v Ogden 1978
Royscott trust v rogerson 1991
What is fraudulent Misrep?
3 factors
Which case?
A knowingly false statement is made
Made without belief in its truth
Statement made with careless recklessness as to its truth
Case- Derry v Peek 1889
Remedies for fraudulent misrep
Which cases to use?
Damages and rescission
Damages are on a tortuous basis (Royscott Trust v Rogerson 1991)- based on tort of deceit rather than contractual damages
Defintion of fraudulent Misrep in Derry v peek
When will equitable remedies be used?
At judges discretion
When damages aren’t appropriate or as well as damages in some cases
Specific performance only given if item is unique (ie not for normal goods)
Cilex defintion of rescission
When is it used?
Take back as if never existed.
Innocent
Under s.2(2) MA1967 the trad remedies for an innocent misrep is rescission. damages in lieu of rescission can be awarded. The claimant cannot claim both. Financial Damages are assessed on normal contractual principles.
For negligent it’s rescission AND/OR damages - S 2(1) MA 1967
For fraudulent its rescission AND/OR damages
What if statement is untrue and seller suggests that buyer checks for himself and he doesn’t?
Which case?
Redgrave v Hurd 1881
No duty to verify a representation, even where it is easy and there is an invitation to do so
Contract can still be rescinded
Atwood v Small
What if the person checks out the false info and then continues.. can they later sue for Misrep?
If the representee or their agent checks out the validity of the statement they have not relied on the statement: therefore they were not induced by the Misrep and cannot sue
What is a representation?
Statements normally made outside the contract which may induce a party to enter into the contract but which do not constitute a term of the contract. This can include ‘mere puffs’ (Mead and babbington 2007)
