Chapter 7: Misrepresentation

Question 1

What is misrepresentation?

Answer 1

Misrepresentation is a vitating factor. These are circumstances that can lead to a contract being held as void or voidable

Question 2

What is the purpose of misrepresentation?

Answer 2

It concerns the effect of express statements made prior to entering a contract.

These consists of 4 different statements that caused the party to enter into contract, and the actions that can be brought to court

Question 3

What are the 4 statements made prior that may cause the party to enter into contract. And what are the actions that can be brought against them to court?

Answer 3

1. Terms - Some of these statements would end up as part of the contract (Action for breach of contract)
2. Representation - Statements made during negotiations/pre-contract statement that entice the other party to enter contract (Action for misrepresentation)
3. Mere puff - Sales talk/exaggerated statements (Not actionable)
4. Collateral terms (Like an action for breach of warranty)

Question 4

What are the disctinctions between the statements made prior

Answer 4

Terms

• Remedy lies for Breach of Contract

Repressentation

• Remedies available for Misrepresentation

Question 5

What is the act that gave more remedies to Misrepresentation

Answer 5

Misrepresentation Act 1967

Question 6

What was the situation before the Misrepresentation cat 1967

Answer 6

• There were limited remedies for Misrepresentation
• If there was a statement, the person would rather bring the terms, as a course of action
• This would increase their chances to get a remedy as breach of contract had more remedies

Question 7

What happened after the Misrepresentation Act 1967?

Answer 7

• Everything then changed due to this Act - Today, it doesn’t really matter which problem you bring to court
• Section 2 of MA 1967 - Allows much more extensive remedies in damages for misrepresentation
• Section 1(a) of MA 1967 - Provides that a contract may be rescinded (revoked) for misrepresentation, even if the misrepresentation is also a term of the contract

Question 8

What is the contractual cartography test? What case laid down the rules?

Answer 8

When judges not sure, there can refer to certain guidelines to help them decide (not mandatory/just guidelines)

Heilbut, Symons & Co v Buckleton (1913) Lord Moulton

• It all depends on the intention (objectively ascertained) of the parties
  Whether their words and conduct indicate to a reasonable person that the statement was intended to be mere representation or, alternatively, that it was intended to be a contractual term

Question 9

What are the 5 guidelines that judges could refer to?

Answer 9

1. The importance of the statements to the parties
2. The relative degree of knowledge / skill between the parties
3. Was the statement reduced in writing
4. The time the statement was made
5. Accepting responsibility / advising on verification

Question 10

What are 3 scenarios with cases that put the importance of the statements to the parties

Answer 10

1. When buyer puts extreme importance on the statement, and would have not entered into contract if it was untrue (Bannerman v White (1861))
2. Where buyer specifically ask the seller to confirm a statement in the catalogue before the sale (Couchman v Hill (1947))
3. Where the statement was made not in the same transaction as the sale, this would most likely not be a term (Hopkins v Tanqueray (1854))

Question 11

What is the principle regarding, the relative degree of knowledge / skill between the parties

Answer 11

• When a person is more skilled and has special knowledge than the other party. If so, then judges are more inclined to infer the statement as a term.
• Contrarily, the degree of knowledge is the same, then it is treated as representation

Question 12

What are the cases for The relative degree of knowledge / skill between the parties

Answer 12

Oscar Chess v Williams (1957) - Representation

Dick Bentley v Harold Smith Motors Ltd (1965)

Question 13

Oscar Chess v Williams (1957)

Answer 13

Facts

1. C brought a second-hand Morris car on the basis it was the 1948 model
2. C asked for the brand new Hillman Minx that was purchased from Oscar Chess
3. D stated that it was in fact the 1948 model, and on the basis that Oscar Chess offered £290 off the purchase price
4. 8 months later found out that it was a 1939 model, that was worth much less

Held

1. The statement relating to the age of the car was not a term, but representation

representation

Question 14

Dick Bentley v Harold Smith Motors Ltd (1965)

Answer 14

Facts

1. Dick Bently knew the D, which was a car trader had a greater knowledge than the C
2. C asked D to look out for a well vetted Bentley car
3. D told him that the car had been owned by a German Baron, and had been fitted with a replacement engine and gearbox and had only done 20,000 miles since the replacement
4. Turns out it did about 100,000 miles since the refit

Held

1. It was a term, as Mr Smith had greater expertise and the claimant relied on it

term

Question 15

What are the principles whether the statement was reduced in writing

Answer 15

Parole evidence rule

• Oral evidence is inadmissible (not valid) and the PCS cannot adduce extrinsic evidence to add to vary or contradict written document

Question 16

What are the 2 scenarios and cases for whether the statement was reduced in writing?

Answer 16

Statement put in writing, then it is more likely to be terms

• Routledge v McKay (1954) - Representation

Also possible that terms are written & oral. In this case, whatever is written then is terms, whatever is oral is representation

• Birch v Paramount Estates (1956) - Term

Question 17

What is the principle of ‘The time the statement was made - Any time lag between the making of the statement and the eventual conclusion of the contract’

Answer 17

Intervals between the time the statements made, and the contract entered into must be taken into account - Routledge v McKay (1954)

1. Statement that was made at the start/beginning of negotiations (Highly likely representation)
2. If it’s during or very close to the negotiation (Then it would be terms) -Seen in Schawel v Reade (1913)

Question 18

What is the issue of accepting resonsibility/advising on verification. What are 2 cases?

Answer 18

Whether the statement was accompanied by a recommendation that it be verified

• Ecay v Godefroy (1947)
• Shawel v Reade [1913]

Question 19

Ecay v Godefroy (1947)

Answer 19

Facts

1. Plaintiff said motor cruiser was sound
2. Allowed the D to go check the boat by himself

Takeaway

1. In this case, he made no responsibility, thus it was misrepresentation

Question 20

Shawel v Reade [1913]

Answer 20

Facts

1. C wanted to buy a stud (high-class horse)
2. D told C that if there were any problems with the horse then he would tell the C (he put trust on him)
3. Horse was totally unfit for stud purposes

Takeaway

1. Statements spoken can be misrepresentation

Question 21

How is should Misrepresentation structured?

Answer 21

Actionable misrepresentation

1. Unambiguous false statements of fact or law
2. Addressed to the other party
3. Induced him to enter into the contract

Types of misrepresentation

1. Fraudulent misrepresentation
2. Negligent misrepresentation at common law
3. Negligent misrepresentation under Section 2 of the Misrepresentation Act 1967
4. Innocent Misrepresentation

Remedies (determined by the type of misrepresentation)

1. Damages
2. Recission

Question 22

What is an actionable misrepresentation?

Answer 22

Must be an unambiguous false statement of existing fact or law which was addressed to the other party which induces him to enter into the contract

Question 23

What are the 4 elements of actionable misrepresentation

Answer 23

1. It must be unambiguous
2. Representation must be made false
3. There must be a statement made
4. Facts or law

Question 24

What is meant by ‘statement must be unambiguous’? What is the case that supports this rule?

Answer 24

A degree of certainty is required, statement has to be clear

• Dimmock v Hallett [1886]
• Where the land was described as ‘improvable’

Question 25

What is meant by ‘representation must be made false’

Answer 25

1. Total truths
2. Half truths (Dimmock v Hallett)
3. Change in circumstances (With v O’Flanagan (1936); Spice Girls Ltd v Aprilia World Service BV [2000]; Shankland & Co. v Robinson & Co – Lord Dunedin)

Question 26

What is meant by ‘there must be a statement made’?

Answer 26

General rule

• There’s no duty to disclose facts based on the principle of caveat emptor (let the buyer be aware). But if they do start saying something, then it has to be the truth; either by conduct or silence (Keates v Earl of Cadogan)

Exceptions

• In certain circumstances silence can amount to a ‘statement’

Question 27

What are the 3 exceptions with cases that silence can amount to a statement

Answer 27

1. Silence or inaction in the face of the changed circumstances (With v O’Flanagan; Spice Girls Ltd v Aprilia World Service BV [2000])
2. When the whole truth is not disclosed (half truth) (Dimmock v Hallet (1886))
3. Contracts of good faith (uberrimae fidei). Parties are obliged to disclose relevant information, even if it is not asked for (Lambert v Co-operative Insurance Society Ltd [1975])

Question 28

What is meant by ‘facts or law’?

Answer 28

• General rule - Statements of opinions are not misrepresentation (Bisset v Wilkinson [1927])
  1. Exception - If someone has an expertise, skill or knowledge. Then can sue if they give a wrong opinion (Esso Petroleum Co Ltd v Mardon [1976])
  2. Exception - Person expressing the opinion is aware of facts which indicate that the opinion cannot be sustained (Smith v Land House Corporation [1884]). Statement of intention (Edgington v Fitzmaurice [1885])