Contract - False Preliminary Statement

Question 1

If the party making the statement has greater skill/ knowledge the statement is likely to be a term

Answer 1

Dick Bentley

Question 2

If the statement is of vital importance to the contract and the recipient made this known the statement is likely to be a term

Answer 2

Bannerman v White

Question 3

If the maker of a statement tells the recipient not to bother verifying it, the statement is likely to be a term

Answer 3

Schawel v Reade

Question 4

Where a party makes a statement about something out of his control the statement is likely to be a term

Answer 4

Birch v Paramount Estates

Question 5

If the recipient had greater skill/ knowledge the statement is likely to be a representation

Answer 5

Oscar Chess

Question 6

If there was a long time lapse between the statement and the contract the statement is likely to be a representation

Answer 6

Routledge v McKay

Question 7

If the maker of the statement asks the recipient to verify it the statement is likely to be a representation

Answer 7

Ecay v Godfrey

Question 8

If the statement is oral and not repeated in the written contract it is likely to be a representation

Answer 8

Routledge v McKay

Question 9

What is requirements did Hadley v Baxendale set out for remoteness of damages?

Answer 9

1- Natural; and

2- Contemplated

Question 10

What is the definition of misrepresentation?

Answer 10

A false statement of fact
Made at the time of or before the contract (by one party to another)
To induce the other party to enter into the contract

Question 11

The statement must be one of fact, not opinion

Answer 11

Bisset v Wilkinson

Question 12

A misrepresentation can be made by conduct

Answer 12

Spice Girls v Aprila

Question 13

General Rule: Silence does not constitute a misrepresentation

Answer 13

Hamilton

Question 14

Failing to disclose a change of circumstances that renders a previously true statement false is misrepresentation (exception to silence rule)

Answer 14

With v O’Flanagan

Question 15

Telling of a half-truth is misrepresentation

Answer 15

Curtis v Chemical Cleaning and Dyeing

Question 16

There must be reliance on the statement for it to have induced a party to enter into a contract

Answer 16

Attwood v Small

Question 17

A statement need not have been the only inducement to be a misrepresentation

Answer 17

Edgington v Fitzmaurice

Question 18

Failure to verify the truth by a representee will not prevent a claim for misrepresentation

Answer 18

Redgrave v Hurd

Question 19

What is the effect of misrep?

Answer 19

Makes the contract voidable. The innocent party can affirm or rescind

Question 20

What is the effect of rescission?

Answer 20

1- Parties return money/ property to each other

2- Both parties are released from future obligations

Question 21

What must be done to allow rescission?

Answer 21

The party wishing to rescinding must notify the other party of their intention to do so

Question 22

What are the 4 bars to rescission?

Answer 22

1- Delay (from time misrep should have been discovered to rescission)
2- Affirmation (e.g. claimant paid whilst not under pressure)
3- Impossible to return property (Chrystal Palace v Iain Dowie)
4- Innocent third party acquires an interest in the property (e.g. by sale of goods)

Question 23

What else may the innocent party claim on rescission?

Answer 23

1- An indemnity for expenses (but this is restricted to precise terms of the contract) (Whittington)
2- Damages

Question 24

When will damages be awarded in lieu of rescission?

Answer 24

1- If the misrep was about a minor matter and it would be unjust to allow one of the parties to rescind
2- Will not be possible if rescission itself has been barred

Question 25

If the misrepresentation was fraudulent, how would you claim for damages?

Answer 25

Sue in tort of deceit

Must show statement was made without belief in its truth/ recklessly (Derry v Peek)

Question 26

Usual rules around remoteness do not apply for claims to damages following fraudulent misrepresentation

Answer 26

East v Maurer

Question 27

If the misrepresentation was not fraudulent, how would you claim for damages?

Answer 27

Under s 2(1) Misrepresentation Act 1967:
C only needs to show that there was a misrepresentation and he suffered loss
(basically removes need to claim for fraudulent misrep)

Question 28

Usual rules around remoteness do not apply for claims to damages following non-fraudulent misrepresentation

Answer 28

Royscot Trust v Rogerson

Question 29

What defences are available to a defendant accused of misrepresentation?

Answer 29

ONLY for non-fraudulent misrep under s2(1) Misrepresentation Act 1967:
Reasonably and honestly believed facts were true
hard to prove (Howard Marine v Ogden)