Contract Law -> Vitiation 2: Misrepresentation

Question 1

Define misrepresentation

Answer 1

A false statement of fact made by one party to another which induces the other party to enter into a contract. The misrepresenting party may be held liable for damages or the contract may be rescinded.

Question 2

Describe Fraudulent misrepresentation

Answer 2

False statement of fact that the defendant made knowing it was false with the intention to deceive or trick the other party into an agreement that harms them.

Question 3

Describe Negligent misrepresentation

Answer 3

Occurs when someone makes a statement about a subject without regard to the true facts or without reasonable care to verify them.
(Innocently but with lack of care)

Question 4

Describe innocent misrepresentation

Answer 4

The person making the false statement had reasonable grounds to believe it was true.

Question 5

When can silence amount to an actionable misrepresentation

Answer 5

Silence does not usually amount to a misrepresentation, except where a party makes a statement which is a half-truth, or where a statement is true when it is made but becomes untrue before the contract is made.

Question 6

Is non-disclosure false representation

Answer 6

No. It will not be given as rise to a claim in misrepresentation as parties must look after their own interests when making a contract.

C/L: Keates v Cadogan [1851] - Keates enters a contract with Cadogan for the lease of a property. Cadogan fails to mention the state of the property is rundown and could collapse anytime. The court held that no obligation is placed on a landlord to inform a tenant about the state of a property prior to entering into a lease.

Question 7

Remedies for misrepresentation

Answer 7

Rescission: The court can ‘rescind’ the contract which means returning both parties to the position they were in before the contract was signed.

Damages: The right to rescind the contract may be lost in some circumstances. The claimant may claim both rescission and damages under s2 (1) of the Misrepresentation Act 1967.

Question 8

Case law for remedies for misrepresentation

Answer 8

Doyle v Olby [1969]

Doyle bought the Olby’s business for £4500 and stocks for £5000. It was detailed the business would be “all over the counter” however half of business was through a travelling salesman. Doyle faced heavy losses and sold the business to a 3rd party for £3700 but amassed debt.

Court awarded him £1500 in damages. He appealed this decision (court of appeals) and was awarded a further £5000 and stated: “The damages should put the complainant into the position he would have been in if there had been no false representation by the defendant in the course of the sale”