Contract 5 - Misrepresentation Flashcards
What is the difference between a condition and a warranty?
Condition: important term going to root of the contract ⛓️
Warranty: less important term not going to root 👍
What’s the difference in remedy between a condition and a warranty?
- Condition can result in terminating 💥
- Both can result in damages 💵
What are the respective consequences for breach of condition or warranty?
- Condition⛓️: right to repudiate 💥& damages 💵
- Warranty👍: only damages 💵
What is the starting point for determining the classification of a term?
- Has term been classified by
(i) statue 🇬🇧
(ii) the parties or 🥳
(iii) previous judicial decision 🧑⚖️ - does it go to root 🌳
- If can’t determine, apply test for innonimate term ⚛️🐈
What is the test for an innominate term?
Does breach deprive the innocent party of substantially the whole benefit from the contract?
- yes = condition ⛓️
- no = warranty👍
What vitiating factors are there?
- Mistake 😳
- Misrepresentation🤥
- Unfair Contract Terms 📝
- Duress & Undue Influence 🔨😈
- Illegality 👮
What are the requirements for an actionable misrepresentation?
🤥
- clear 🔍
- False 🤥
- Statement of fact 👇
- Addressed to Claimant 🫵
- Induces C to Enter into Contract 💝
What is a statement of fact NOT?
👇
- Statement of opinion (unless unbalanced parties) 🤷
- Statements of intention 🔮💡
- Silence (unless previous statement becomes un true) 🤐
How does one determine if a misrepresentation ‘induced C to enter contract’?
- objective: 🗣️ would’ve influenced 💝a reasonable person 🧑💼 then inducement inferred & burden shifts to 👉D to rebut
OR - subjective: representee shows it was personally 😵💫 was induced 💝by statement 🗣️
When can a statement not be an inducement for misrepresentation?
Statement:
- not communicated to representee
🫢
- known to be untrue to representee
💩
- did not affect representee’s decision
🙉
What is the position on inducement where representee made their own investigations?
If they relied on their own investigations, not the misrepresentation, cannot bring a claim
🔍
Is there a duty to check a misrepresentor’s statement?
No
- but if unreasonable, contributory negligence may be possible. 🤪
- The more commercial 👨💼 they are, the likelier court will consider it reasonable
When may statements of opinion form a claim for misrepresentation?
If representor considered to have a greater knowledge than representee,
🤓
When can statements of future intention form a claim for misrepresentation?
misrepresented their existing intention 💡
When can silence form a claim for misrepresentation?
- Half-Truths: technically true statements but misleading 🤥
- Continuing Representations: at beginning of negotiations, statement is made but becomes false prior to entering the contract, representor must correct the representation ⏱️
- Contracts uberrimae Fidei: duty to disclose material facts in some contracts where one party is in a particularly strong position to know material facts 🏥🩻
What is the effect of misrepresentation on a contract?
Makes contract voidable - must take action to rescind
What are the different behaviour categories of misrepresentation and their definitions?
- Fraudulent: made knowingly or w/o belief in truth, or recklessly (flagrant disregard for truth) - failure to disclose must be deliberate/dishonest
- Negligent: representor fails to show reasonable grounds to believe, or did believe up to time contract was made, that statement was true - an easier claim but treated liked fradulent
- Reasonable: Representor proves they had reasonable grounds to believe in truth and did so until time of contract
What remedies are there for misrepresentation for fraud
- Damages: greatest for fraudulent, but neg will often match;
- can recover for all losses even if not foreseeable 👀
- C must mitigate;
- value of damages will be reduced by benefit received
- contributory negligence not available for Fraud 🕳️🚶♂️
OR - Rescission: put parties back in position before contract - only awarded where this is possible 🔁
What remedies are there for misrepresentation for negligent
- No right to damages but at Court’s discretion
- Damages: greatest for fraudulent, but neg will often match;
- can recover for all losses even if not foreseeable 👀
- C must mitigate;
- value of damages will be reduced by benefit received
- contributory negligence is available for negligence 🕳️🚶♂️
OR - Rescission: put parties back in position before contract - only awarded where this is possible 🔁
- Indemnity: covers expenses for obligations assumed due to contract - not granted where damages given💰
What remedies are there for misrepresentation for reasonable care
- Rescission: put parties back in position before contract - only awarded where this is possible 🔁
- Indemnity: covers expenses for obligations assumed due to contract - not granted where damages given💰
- no right to damages but at Court’s discretion
Are exemption clauses allowed for misrepresentation?
Only if it is reasonable
⚖️
Can a misrepresentation be carried out by actions alone?
Yes, concealment of dry rot was found to be a misstatement.