Contract - Misrepresentation Cases Flashcards
McInerny v Lloyd’s Bank Ltd
Definition of misrepresentation
“An unambiguous false statement of fact made by one contracting party to another before the contract was made and which was one of the factors that induced the other party to enter into the contract”.
Bisset v Wilkinson
Farm + sheep
Statement must be one of fact, not opinion (unless C can show that the opinion was not held)
If person making the statement doesn’t have the knowledge to know, likely to be opinion not fact.
Smith v Land and House Property Corporation)
Tenant in arrears - “most desireable”
Statement must be one of fact unless there are no reasonable grounds for maker to believe it is true.
Edgington v Fitzmaurice
Company borrowed money to expand - really to cover debts.
Statement of intention will only be misrepresentation when intention was never really held.
Misrepresentation must be at least one of the reasons for C entering contract.
Keats v Earl of Cadogan
Silence does not constitute a misrepresentation.
With v O’Flanagan
Exception to Keats (Silence is not misrep):
Failing to disclose a change in circumstances that would render a previously true statement false.
Dimmock v Hallet
Exception to Keats (Silence is not misrep):
Telling of a half-truth.
Also - “mere puff”
JEB Fasteners v Bloom
Misrepresentation must be material re. C entering contract.
Pan atlantic Co. Ltd v Pine Top Insurance Ltd
Objective test for misrepresentation materiality:
“The test was whether the information would have influenced the reasonable insurer to decline the risk or to have stipulated for a higher premium”.
Attwood v Small
There must be reliance on the statement / representation.
Redgrave v Hurd
C may claim misrepresentation despite failing to verify truth of a representation
(subject to exceptions e.g. C is experienced in the area)
Peekay v Australia and New Zealand Banking Group Ltd
Exception to Redgrave v Hurd:
Misrepresentation may not be found where written contract contains terms differing from those orally communicated.
Derry v Peek
Fraudulent misrep occurs when false representation is made:
- knowingly, or
- without belief in its truth, or
- recklessly, “careless whether it be true or false”
Car and Universal Finance Co. Ltd
In the event of rescission, the innocent party must notify the other of the intention to rescind (a reasonable attempt may suffice).
Long v Lloyd
Bar to rescission:
Where the innocent party affirms the contract.
Leaf v International Galleries
Bar to rescission:
Where there has been an undue delay between the point at which the misrep. should have been discovered and the point at which it was actually discovered.
Crystal Palace FC v Dowie
Bar to rescission:
Where it is impossible substantially to restore goods / property to the other.
Erlanger v New Sombrero Phosphate
In rescission, restoration need not be exact.
Whittington v Seale-Hayne
On rescission, innocent party may claim an indemnity for expenses incurred from contract (claims restricted and only cover the precise terms of the contract).
Doyle v Olby (Ironmongers) Ltd
Remedies - damages - fraudulent misrep.
If fraudulent misrep - sue in tort of deceit - all direct damages, usual foreseeability rules don’t apply.
Royscot Trust v Rogerson
Remedies - damages - non-fraudulent misrep.
Damages assessed in the same way as fraudulent (i.e.remoteness doesn’t apply).
Smith New Court v Scrigemour Vickers
Remedies - damages - non-fraudulent misrep.
Damages includes losses flowing from misrep, not transaction.
Howard Marine v Ogden
Potential defence for non-fraudulent misrep.
D must prove that he had reasonable grounds to believe, and honestly did believe up to the time the contract was made, the facts were true.
Difficult to prove as contains both subjective and objective elements.
Smith v Chadwick
If the statement is material, inducement is inferred.
Phillips v Brooks
Barriers to rescission - 3rd party purchaser
