False Prelim Statements

Question 1

The primary test for determining whether a statement is a term or a representation is the…

Answer 1

…common intention of the parties when they entered the contract.

Question 2

If the maker of the statement has the greater skill or knowledge, as in Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd, then the statement is more likely to be a….

Answer 2

…term.

Question 3

If the statement is repeated in the written contract, it will usually be a…

Answer 3

…term.

Question 4

If the recipient of the statement did make it clear that it was important - the statement is more likely to be a term as in (which case?)

Answer 4

Bannerman v White

Question 5

If it is the recipient of the statement who has the greater skill or knowledge, as in Oscar Chess Ltd v Williams, then the statement is more likely to be only a ..

Answer 5

…representation.

Question 6

If an oral statement is not repeated in a written contract. then it is more likely to be a representation as in the case of…

Answer 6

….Routledge v McKay.

Question 7

If the maker of the statement asks the other to verify it, then the statement is more likely to be a…

Answer 7

…representation. (Ecay v Godfrey).

Question 8

If the maker of the statement tells the other not to bother checking it out, this points to the statement being a..

Answer 8

..term (Schawel v Reade ).

Question 9

The longer the time lapse then the more likely it is that the statement is..

Answer 9

…just a representation (Routledge v McKay)

Question 10

If the statement is a TERM of the contract, the maker of the statement will be in..

Answer 10

…breach of contract.

Question 11

If the court decides that the term is a condition, and the contract has not been fully performed, the innocent party will usually have the option of..

Answer 11

…terminating the future performance of the contract, as well as obtaining damages for any additional loss suffered.

Question 12

If the court decides the term is a warranty, the innocent party..

Answer 12

…cannot terminate the contract but can only sue for damages for loss suffered.

Question 13

Some terms should be classified as innominate or intermediate terms, in which case it is necessary to wait until..

Answer 13

..the breach of contract has occurred to decide whether the innocent party should be allowed to terminate the future performance of the contract. If the breach deprives him of substantially the whole benefit of the contract he can terminate, but not otherwise. Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962]

Question 14

Termination is only viable if the performance of the contract is..

Answer 14

..ongoing.

If the contract has already been discharged by performance - termination is no longer an option.

Question 15

As it is a common law remedy, it is subject to the common law bar of..

Answer 15

…affirmation.

Question 16

To recover damages, the claimant must prove that he has suffered loss or damage as a result of the defendant’s breach, and the loss or damage must not be too..

Answer 16

…remote a consequence of the breach.

Question 17

Two limbs of Hadley v Baxendale are normal loss and ..

Answer 17

….unusual loss which should have been in the contemplation of the defendant as being a likely possibility of breach bearing in mind what he knew at the time of the contract.

Question 18

The rule at common law when assessing damages is that where a party sustains loss by reason of a breach of contract, he is so far as money can do it,…

Answer 18

…to be placed in the same situation with respect to damages as if the contract had been performed. (Robinson v Harman) .

Question 19

When claiming for expectation loss, the claimant can claim for…

Answer 19

…any harm to the person or property of the claimant and any injury to his economic position. This means that the claimant can recover for personal injury, damage to property and also loss of profit.

Question 20

If the false preliminary statement is a mis-description of goods, it may amount to breach of the statutory implied condition that goods sold by description should match that description (Sale of Goods Act 1979, s 13; Supply of Goods and Services Act 1982, s 3; Consumer Rights Act 2015, s 11), in which case you would need to consider…

Answer 20

…damages.

Question 21

A misrepresentation may be defined as a…..*** statement of fact made by one party to a contract to the other party before the contract was made and which was one of the factors which….

Answer 21

• ** false

* ** induced the other party to enter into the contract.

Question 22

The general rule is that silence will…

Answer 22

…not amount to misrep.

Question 23

What are the four exceptions to the rule that silence does not amount to misrep?

Answer 23

(a) where there is a fiduciary relationship between the parties, eg solicitor and client or trustee and beneficiary;
(b) where the contract is one of the utmost good faith, eg an insurance contract;
(c) where there has been a half truth (Curtis v Chemical Cleaning and Dyeing);
(d) where a statement of fact is true when made but a change of circumstances occurs before the contract is formed which makes the statement untrue. Failure to disclose the change in circumstances may amount to a misrepresentation (With v O’Flanagan).

Question 24

To amount to a misrepresentation, the statement must be one of *** and not **.

Answer 24

• **fact

* **opinion

Question 25

In Smith v Land and House Corporation, it was found that a statement that might look like an opinion may well be likely to be branded by the court as a statement of fact if the statement maker…

Answer 25

…is taken to be warranting they know facts that justify their opinion.

Question 26

A statement of intention will not amount to a misrepresentation unless it can be shown that the intention….

Answer 26

…was never held. Edgington v Fitzmaurice

Question 27

The statement does not have to be the only reason why a party enters into a contract provided it ..

Answer 27

..did encourage that party to do so.

Question 28

There is not misrep if the buyer had relied solely on his own expert’s report and not..

Answer 28

…on the seller’s statement. This principle was decided in the case of Attwood v Small.

Question 29

If the buyer relies partly on an expert’s report and partly on a false statement of fact made by the seller, the buyer can claim…

Answer 29

…that the seller has made a misrepresentation. The seller’s statement will have been an inducement to enter into the contract even though it was not the only inducement.

Question 30

A person does not lose the right to claim that a misrepresentation has been made just because he is given the opportunity to discover the truth but..

Answer 30

…fails to do so. Redgrave v Hurd.

Question 31

You can’t claim misrep if the true position was set out in the contract and you..

Answer 31

…didn’t read it.

Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [

Question 32

Recission is available whether the misrepresentation is..

Answer 32

…fraudulent or non fraudulent.

Question 33

The effect of any misrepresentation is to make the contract..

Answer 33

…voidable. ie the contract is valid until the innocent party rescinds it.

Question 34

In order to rescind the contract, the innocent party must..

Answer 34

..notify the other party so that he is aware that this is what the innocent party has decided to do. (Car and Universal Finance Co Ltd v Caldwell).

Question 35

The aim of rescission is to….

Answer 35

…restore both parties as far as possible to their precontract positions. So if a contract is rescinded, each party should return to the other money or property transferred under the contract, and neither party need perform any future obligations.

Question 36

What are the bars to rescission?

Answer 36

▪ where an innocent purchaser acquired an interest in the subject matter of the contract before purported recission of the contract
▪ affirmation
▪ undue delay
▪ where it is impossible substantially to restore goods or property.

Question 37

If the innocent party can prove that the misrepresentation was made fraudulently then he can sue for damages in the tort of…

Answer 37

…deceit.

Question 38

In the tort of deceit, it is all consequential losses so there are no issues with…

Answer 38

…remoteness.

Question 39

Once the claimant establishes that a misrepresentation has been made which has caused him a loss, the defendant will be liable to pay damages under s 2(1) of the Misrepresentation Act 1967 unless he proves…

Answer 39

…unless he proves that he had reasonable grounds to believe, and did believe, up to the time the contract was made, that the facts represented were true.

The burden of proof is on the party making the misrepresentation.

Question 40

All the claimant has to do is prove a misrep which has caused him loss; then, if the defendant cannot prove that he has honestly and reasonably believed what he said to be true, he will be liable to pay…

Answer 40

…damages.

Question 41

It may be possible for a person to sue for damages in the tort of negligence if there has been a negligent..

Answer 41

..mis-statement.

Generally, pure economic loss is not recoverable in tort. However, in the case of Hedley Byrne & Co v Heller [1964]AC 465, the House of Lords recognised an exception to this rule in the case of a negligent misstatement which caused economic loss.

Question 42

In Hedley Byrne, the House of Lords said, obiter, that a duty of care can extend to careless statements where a..

Answer 42

…‘special relationship’ exists between the parties.

Briefly, it means the statement was relied on, the maker knew it was being relied on, and it was reasonable to rely on it.