Chapter 41 - Misrepresentation

Question 1

Misrepresentation definition

Answer 1

A false statement of material fact made by a party to the contract that induces the other party to enter the contract

Question 2

Voidable Contract

Answer 2

A contract which could be made void if there has been misrepresentation

Question 3

Void Contract

Answer 3

A contract that is declared to be null. It never had any legal effect

Question 4

Rescission

Answer 4

When the innocent party ends the contract because of a misrepresentation. Rescission makes the contract a nullity.

Question 5

Elements that must be present for misrepresentation

Answer 5

-A false statement
-of material fact
-Made by a party to the contract
-That induces the other party to enter the contract.

Question 6

False statement

Answer 6

-A statement is usually written or verbal
-Can be anything that would influence the others decision
-Must be a statement that is untrue or inaccurate
-Seen in Spice girls Ltd v Aprilla World Service BV

Question 7

Factors that may cause a statement to be false

Answer 7

-Change of circumstances, With v O’Flannagan
-Half Truth, Dimmock v Hallett
-Confidential relationships, Tate v Williamson

Question 8

Change of circumstances

Answer 8

-Even if a statement is true when it is made, it can still become a misrepresentation
-Shown in With v O’Flannagan

Question 9

Half-Truth

Answer 9

-Silence can be misrepresentation
-What is not said is non-disclosure
-Maker of statement has a duty to reveal the whole truth
-Dimmock v Hallett

Question 10

Confidential relationships

Answer 10

-Where the relationship between the parties is based on trust then silence may be a misrepresentation
-Seen in Tate v Williamson

Question 11

Contracts made on good faith

Answer 11

-Where a contract is made on the basis of good faith then all material facts must be disclosed, whether asked about it or not
-Seen in Lambert v Co-operative Insurance Society

Question 12

Material Fact

Answer 12

-Misrepresentation must be of material fact
-Means that it must have led a person to make the contract
-Must be a statement of fact rather than of opinion

Question 13

Statements of opinion

Answer 13

-If a person honestly believes in their statement of opinion and it proves to be false, it is not misrepresentation
-Seen in Bisset v Wilkinson

Question 14

In the case that someone does not honestly believe their own opinion

Answer 14

-If the person does not believe their own opinion, it will be regarded as a statement of fact
-Seen in Smith v Lan and House Property Corporation

Question 15

Statements of intention

Answer 15

-This is a promise to do something in the future
-Typically not a statement of fact
-Can become a statement of fact if the maker of the statement has no intention of carrying it out

Question 16

Made by a party to the contract

Answer 16

-A person is not liable for statements made by others, unless it is by their agent.

Question 17

Induces the other party to enter the contract

Answer 17

-The statement must be a critical part of leading the other party to make the contract
-Must have relied on the statement made rather than own opinion, Attwood v Small
-Irrelevant of whether the reasonable person would’ve entered the contract, Museprime Properties Ltd v Adhill Properties Ltd

Question 18

Types of misrepresentation under the Misrepresentation Act 1967

Answer 18

1 Fraudulent
2 Negligent
3 Innocent

Question 19

Fraudulent Misrepresentation

Answer 19

-Occurs when a person induces the contract by making a statement that they know is untrue.
-Can include hiding defects, Gordon v Selico Ltd

Question 20

Negligent Misrepresentation

Answer 20

-Is a false statement made by a person who believe the statement was true, but had no reasonable ground for believing it to be true.
-Useful when claimant cannot prove fraud
-Howard Marine v Ogden and Sons

Question 21

Innocent Misrepresentation

Answer 21

-A representation which is genuinely held on reasonable grounds.
-Where person honestly believed the statement they made was true

Question 22

Remedies for Misrepresentation

Answer 22

-Rescission, Put parties back in their original position
-Damages can be awarded under Misrepresentation Act 1967

Question 23

Innocent Misrepresentation - Rescission

Answer 23

Cannot be applied when:
-Restitution to original pre-contract position is impossible. Clarke v Dickinson
-The contract is affirmed. Long v Lloyd
-Delay. Leaf v International Galleries
-A third party has gained rights over property. Lewis v Avery

Question 24

Innocent Misrepresentation - Damages

Answer 24

-Court has discretion to award damages instead of rescission under S 2(2) of Misrepresentation Act 1967