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18BSA026 - Principles of Law > L6 - Contract Law - Misrepresentation > Flashcards

L6 - Contract Law - Misrepresentation Flashcards

1
Q

What is the definition of Misrepresentation?

A

An actionable misrepresentation is an UNTRUE STATEMENT OF FACT which INDUCES a person to enter a contract.

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2
Q

What are claims of misrepresentation governed by?

A
  • A false pre-contractual representation will not automatically lead to an action for misrepresentation as there are a number of requirements which must be satisfied.
  • Claims for misrepresentation are governed by both the common law and the Misrepresentation Act 1967 (MA 1967).
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3
Q

What is a Key Concept of Mispresentation?

A
  • A party may be able to have a contract set aside and/or claim compensation if there has been misrepresentation and the innocent party has entered into the contract on reliance of an untrue statement made by the other party to the contract
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4
Q

What must a misrepresentation be?

A 
For misrepresentation there must be
An untrue statement of fact and NOT
- Opinion
- Forecasts/statements of intention
- Trading Puffery
- Statements of Law
- Silence or Non-disclosure
which induces a person to enter a contract.
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5
Q

Why is an untrue opinion is not a misrepresentation as an untrue statement of fact?

A
  • An opinion which is genuinely believed by the party making it- cannot be misrepresented even if that opinion is incorrect.
  • It has to be an uninformed opinion. (Bisset v Wilkinson 1927)
  • The statement must not contradict other facts known by the party giving the opinion. (Smith v Land & House Property Corp (1884)
  • It is more likely to be an opinion if the giver is not better informed than the receiver. (Esso Petroleum Ltd v Mardon (1976)
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6
Q

What were the 3 Cases of which an untrue opinion is not a misrepresentation as an untrue statement of fact?

A
  • Bissett v Wilkinson (1927)
  • Smith v Land & House Property Corp (1884)
  • Esso Petroleum Ltd v Mardon (1976)
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7
Q

What was the Case of Bissett v Wilkinson (1927)?

A
  • Wilkinson entered into a binding contract to sell to Bisset farmland for ₤13,260.
  • During negotiations Wilkinson told Bissett that “with a good six horse team, his idea was that the farm would carry 2,000 sheep”.
  • The land had never been used as a sheep farm before.
  • After 2 years of unsuccessful farming, Bissett concluded that the land could not support 2,000 sheep, and he brought an action for misrepresentation to cancel the contract and get his money back.
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8
Q

What was the Issue of Bissett v Wilkinson (1927)?

A

Issue:

Fact or opinion

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9
Q

What was the Ruling of Bissett v Wilkinson (1927)?

A

Ruling:
- The seller’s statement was a matter of opinion. At the time of the deal, both parties understood that Wilkinson had not used the land for sheep farming, and thus any statement as to the farmland’s capacity would only be an estimate.

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10
Q

What was the Case of Smith v Land & House Property Corp (1884)?

A
  • Mr. Smith had advertised his hotel for sale.
  • They stated that it was let to Mr. Fleck, “a most desirable tenant”.
  • Fleck owed rent and had been threatened with court action.
  • Smith claimed his statement was a matter of opinion
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11
Q

What was the Issue of Smith v Land & House Property Corp (1884)?

A

Issue:

Fact or opinion – equal knowledge?

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12
Q

What was the Ruling of Smith v Land & House Property Corp (1884)?

A

Ruling:

  • Held there was a misrepresentation relied on by LHP.
  • It implied that Smith knew of no reason to claim Fleck was anything other than a desirable tenant.
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13
Q

What was the Case of Esso Petroleum Ltd v Mardon (1976)?

A
  • Mr Mardon was buying a petrol station franchised by Esso Petroleum Co Ltd.
  • Esso told him they had estimated that the station would sell 200,000 gallons a year.
  • Mardon signed a three year tenancy.
  • Sales were less than half.
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14
Q

What was the Issue of Esso Petroleum Ltd v Mardon (1976)?

A
  • Issue: Fact or opinion – expert knowledge?
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15
Q

What was the Ruling of Esso Petroleum Ltd v Mardon (1976)?

A

Ruling:

  • Held there was a misrepresentation relied on by Mardon.
  • Esso professed to have a special knowledge or skill inducing Mardon to enter the contract.
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16
Q

Why is an untrue forecast/statements of intention are not a misrepresentation as an untrue statement of fact?

A
  • A statement of future intention is not generally a statement of fact.
  • Unless the person has no such intention to perform the action in the future.
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17
Q

What was the Case of which an untrue forecast/statements of intention are not a misrepresentation as an untrue statement of fact?

A
  • Edgington v Fitzmaurice (1885)
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18
Q

What was the Case of Edgington v Fitzmaurice (1885)?

A
  • Edgington lent money to a company on the basis that it would be used for expanding the business.
  • The directors intended to use the money to pay off some debts.
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19
Q

What was the Issue of Edgington v Fitzmaurice (1885)?

A

Issue: Misrepresentation: forecasts / statements of intention?

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20
Q

What was the Ruling of Edgington v Fitzmaurice (1885)?

A

Ruling:

  • The directors were liable.
  • Their statement of intention was in fact a statement of fact.
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21
Q

What were the 2 Cases of which untrue trading puffery is not a misrepresentation as an untrue statement of fact?

A
  • Dimmock v Hallett (1866)

- Fordy v Harwood (1999)

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22
Q

What was the Case of Dimmock v Hallett (1866)?

A
  • Some land was being auctioned off.
  • The advertisement for the auction described the land as having “fertile and improvable land.
  • It was a poor-quality piece of land.
  • Dimmock sued on the grounds of misrepresentation.
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23
Q

What was the Issue of Dimmock v Hallett (1866)?

A

Issue: Misrepresentation: trading puffery

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24
Q

What was the Ruling of Dimmock v Hallett (1866)?

A
  • Ruling:
  • The Court of Appeal held that the statement about the land being “fertile and improvable” was merely a “flourishing description” and did not entitle the buyer to rescind.
  • See also ‘Half-truths’
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25
Q

What was the Case of Fordy v Harwood (1999)?

A
  • Harwood described a car kit as ‘absolutely mint. All the right bits and does it go’.
  • The car was roadworthy but the wheels were not aligned.
  • Original court said it was puffery.
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26
Q

What was the Issue of Fordy v Harwood (1999)?

A

Issue: Misrepresentation: trading puffery

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27
Q

What was the Ruling Case of Fordy v Harwood (1999)?

A

Ruling:
The Court of Appeal overturned the ruling, stating that ‘absolute mint’ was a representation that included the mechanics of the car.
As these were defective, there was misrepresentation

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28
Q

Why is an untrue statement of Law is not a misrepresentation as an untrue statement of fact?

A
  • In theory no-one can be misled as to what the law is because everyone is presumed to know the law.
  • However, if the law is misrepresented (incorrectly) it is actionable.
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29
Q

What was the Case in which is an untrue statement of Law is not a misrepresentation as an untrue statement of fact?

A
  • Pankhania v Hackney London Borough Council (2002)
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30
Q

What was the Case of Pankhania v Hackney London Borough Council (2002)?

A
  • The claimants bought a property, part of which was used as a car park.
  • The council stated that the tenants had 3-months notice.
  • This was incorrect, as the occupier was a protected business tenant under the Landlord and Tenant Act 1954.
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31
Q

What was the Issue of Pankhania v Hackney London Borough Council (2002)?

A

Issue: Misrepresentation: statements of law

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32
Q

Why is silence or non-disclosure not a misrepresentation as an untrue statement of fact?

A
  • The general rule is that there is no legal obligation to disclose a material fact known to them, to the other party.
  • ‘Caveat Emptor’ – let the buyer beware.
  • There are exceptions to the rule
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33
Q

What was the Case of which silence or non-disclosure is not a misrepresentation as an untrue statement of fact?

A
  • Fletcher v Krell (1873)
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34
Q

What was the Case of Fletcher v Krell (1873)?

A
  • An applicant for a job as a governess failed to disclose the fact that she had previously been married and remained silent on the point.
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35
Q

What was the Issue of Fletcher v Krell (1873)?

A
  • Issue: Misrepresentation: not silence or non-disclosure
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36
Q

What was the Ruling of Fletcher v Krell (1873)?

A

Ruling:

It was held that there was no misrepresentation.

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37
Q

When is there an exception to the rule that silence, or non-disclosure is not a misrepresentation as an untrue statement of fact?

A

There are exceptions to the rule:
• Representations by conduct
• Deliberately concealing defects in goods
• Half Truths

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38
Q

What are the 4 Cases of which there is an exception to the rule that silence, or non-disclosure is not a misrepresentation as an untrue statement of fact?

A
  • R v Barnard (1837)
  • Schneider v Heath (1813)
  • Gordon v Selico (1986)
  • Dimmock v Hallett (1866)
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39
Q

What was the Case of R v Barnard (1837)?

A

The defendant wore an Oxford Undergrad gown to an Oxford shop so he could qualify for their scheme of getting credit.

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40
Q

What was the Issue of R v Barnard (1837)?

A

Issue: Misrepresentation:

i - Representations by conduct

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41
Q

What was the Ruling of R v Barnard (1837)?

A

Ruling:

There was misrepresentation.

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42
Q

What was the Case of Schneider v Heath (1813)?

A
  • A ship was sold “to be taken with all faults”. In fact the vendor knew that she was unseaworthy.
  • The particulars of sale stated that her hull was “nearly as good as when launched”.
  • In fact the hull was rotten and the captain took her to a place where he kept her constantly afloat.
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43
Q

What was the Issue of Schneider v Heath (1813)?

A

Issue: Misrepresentation:

ii- Deliberately concealing defects in goods

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44
Q

What was the Ruling of Schneider v Heath (1813)?

A

Ruling:
Held - The knowledge of the captain should be imputed to the owner of the ship, and that the contract should be set aside for misrepresentation.

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45
Q

What was the Case of Gordon v Selico (1986)?

A
  • Mr Gordon to purchase a 99-year lease of a flat owned by the defendant, Selico Ltd.
  • The flat was in poor condition, as was the block that contained it, with some evidence of dry rot.
  • Prior to the first inspection by the claimants, the defendants had instructed some painters to conceal patches of dry rot from view, by painting them.
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46
Q

What was the Issue of Gordon v Selico (1986)?

A

Issue: Misrepresentation:

ii- Deliberately concealing defects in goods

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47
Q

What was the Ruling of Gordon v Selico (1986)?

A

Ruling:

It was held by the Court of Appeal that the painting of dry rot to conceal it amounted to a misrepresentation

48
Q

What was the Case of Dimmock v Hallett (1866)?

A
  • The farm land for sale was described as having a tenant.

- This was true but the tenant had given notice to quit

49
Q

What was the Issue of Dimmock v Hallett (1866)?

A

Issue: Misrepresentation:

iii- half truths

50
Q

What was the Ruling of Dimmock v Hallett (1866)?

A

Ruling:
The statement was misleading as it was assumed from the statement that they wouldn’t be leaving. It amounted to a misrepresentation
See also Trading Puffery

51
Q

What is inducement?

A
  • The statement of fact must induce the party to enter the contract.
  • If there are misrepresentations that do not induce the party, then they are irrelevant.
52
Q

What are the 2 Case of Inducement as a cause of misrepresentation?

A
  • Bannerman v White (1861)

- Smith v Chadwick (1884)

53
Q

What was the Case of Bannerman v White (1861)?

A
  • Bannerman formed a contract with White, regarding the purchase of hops.
  • He specifically enquired as to whether the hops had received a sulphur treatment.
  • Bannerman expressly stated that he would be unwilling to buy the hops if they had been treated.
  • White assured Bannerman that the hops were untreated.
54
Q

What was the Issue of Bannerman v White (1861)?

A

Issue:

Misrepresentation - Inducement

55
Q

What was the Ruling of Bannerman v White (1861)?

A

Ruling:

This assurance WAS a condition of contract as the buyer would not have contracted without it.

56
Q

What was the Case of Smith v Chadwick (1884)?

A
  • The prospectus of a company enclosed the following statement: ‘the present value of the turnover or output of the entire works is over £1,000,000 sterling per annum.’
  • The plaintiff was not asked his understanding of the phrase throughout proceedings.
  • The claimant brought an action for deceit on the basis that the company had made a fraudulent misrepresentation that had induced him to purchase shares.
57
Q

What was the Issue of Smith v Chadwick (1884)?

A

Issue: Inducement

58
Q

What are the Challenges of proving Inducement?

A

Challenges with proving inducement.
A - Where the representee has the opportunity to discover the truth but fails to take it.
- B - Where the representee tests the accuracy but fails to discover truth.
- C - Where the representee asks a third party to test accuracy of statement but fails to discover the truth.
- D - Where there is more than one inducement

59
Q

What is the Case where there is a challenge with proving inducement due to the fact that the representee has the opportunity to discover the truth but fails to take it?

A
  • Redgrave v Hurd (1881)
60
Q

What was the Case of Redgrave v Hurd (1881)?

A
  • An elderly partner wanted to sell part of his business.
  • He gave the prospective purchaser details of the income (£300) and said the figures could be checked from a bundle of documents.
  • Redgrave didn’t do this.
  • Income was £200.
61
Q

What was the Issue of Redgrave v Hurd (1881)?

A

Issue: Where the representee has the opportunity to discover the truth but fails to take it

62
Q

What was the Ruling of Redgrave v Hurd (1881)?

A

Ruling:
- The contract was rescinded on grounds of innocent misrepresentation. It was held that relying on the representation was enough and there was no duty to inspect the papers.

63
Q

Why when the representee tests the accuracy but fails to discover truth is it a challenge when proving inducement?

A
  • If the misrepresentation is fraudulent it will be actionable (as a matter of policy).
  • If it is not fraudulent then it is not actionable because the representee will be relying on his own inspection, and will be induced by that
64
Q

What is the Case about the representee tests the accuracy but fails to discover truth?

A

Attwood v Small (1838)

65
Q

What is the Case of Attwood v Small (1838)?

A
  • The seller of a mine exaggerated claims about the potential.
  • The purchaser’s appointed their own experts who agreed with the seller.
  • The accounts had greatly exaggerated the income generated by the estate.
  • The claimant sought to rescind the contract based on the misrepresentations contained in the reports and accounts.
66
Q

What is the Issue of Attwood v Small (1838)?

A

Issue: Where the representee asks a third party to test accuracy of statement but fails to discover the truth

67
Q

What is the Ruling of Attwood v Small (1838)?

A

Ruling:
The claimant was unsuccessful. By getting his own experts to check out the reports he had not relied on the accounts but his own judgment.

68
Q

Why when there is more than one inducement it a challenge when proving inducement?

A
  • if the misrepresentation is one of several statements which induced the contract it is still actionable.
  • Only one false one is needed if you have relied on the untrue statement to some extent.
69
Q

What are the Remedies for Misrepresentation?

A
  • Remedy of Rescission –> Sets the contract aside and puts the parties back to where they were.
  • Damages–> Financial payment to compensate the injured party.
  • Choice of remedy depends on category of misrepresentation - fraudulent, negligent (or negligent misstatements) and innocent
  • The effect of rescission is one of restitution (i.e. each party gives back the benefit which they have received under the contract).
  • It is not always possible to rescind the contract.
70
Q

What is the case of Rescission as a Remedy for Misrepresentation?

A

Car & Universal Finance v Caldwell (1964)

71
Q

What is the Case of Car & Universal Finance v Caldwell (1964)?

A
  • Mr Caldwell owned a Jaguar. A rogue called Mr Norris convinced him to sell it for a £965 cheque and a £10 deposit.
  • When he tried to cash the cheque it was dishonoured. Mr Caldwell told the police and the Automobile Association straight away.
  • Mr Norris sold the car to some dealers, who sold it on, and it was sold on again and again to Car and Universal Finance Ltd.
    Had Caldwell validly rescinded before the car was acquired by a bona fide purchaser for value without notice?
72
Q

What is the Issue of Car & Universal Finance v Caldwell (1964)?

A

Issue: Rescission

73
Q

What is the Ruling of Car & Universal Finance v Caldwell (1964)?

A

Ruling:
Mr Caldwell had rescinded the contract as he had taken all the steps he could to demonstrate he didn’t want to be bound by the contract.
Davies LJ noted the old maxim lex non cogit ad impossibilia (the law does not compel the impossible).

74
Q

What are some Circumstances when the right to rescind may be lost?

A
  • Where innocent party affirms the contract by indicating that they wish to continue and not rescind. If you want to rescind you must STOP using the goods/services.
  • Where restitution is impossible – e.g. goods could have been consumed, such as eating a cake.
  • Lapse of time
75
Q

What are the 3 Case of Bars to Recission?

A
  • Long v Lloyd (1958)
  • Erlanger v. New Sombrero Phosphate Co (1878)
  • Leaf v. International Galleries (1950)
76
Q

What is Case of Long v Lloyd (1958)?

A
  • Lloyd advertised a lorry as being in ‘exceptional condition’. Mr Long went to Mr Lloyd’s premises to see it. Mr Lloyd then said it could do 40mph.
  • On a trial run from Hampton Court to Sevenoaks, he said it did 11 miles to the gallon. Mr Long bought it for £750.
  • Two days later, driving to Rochester and back it did only five miles to the gallon as there were many mechanical issues.
  • Mr Lloyd then said he would repair for half the price. Mr Long accepted.
  • On another journey, it broke down again. Mr Long sued to rescind.
77
Q

What is Issue of Long v Lloyd (1958)?

A

Issue: Rescission: Where innocent party affirms the contract by indicating that they wish to continue and not rescind

78
Q

What is Ruling of Long v Lloyd (1958)?

A

Ruling:
Held that the contract had been affirmed when it was taken back after having been fixed. He emphasised that Mr Long ‘chose’ not to have an expert examine the lorry.

79
Q

What was the Case of Erlanger v. New Sombrero Phosphate Co (1878)?

A
  • Erlinger (E) set up a syndicate, which bought an island for £55,000. This island was said to have phosphate mines, E set up a company to take over the island and its mines from the syndicate.
  • 5 people were named as directors and subscribers (had first shares): 2 abroad, 2 entirely under Mr E’s control, the fifth member (Mr D) was uninformed. The syndicate sells the island to the company for £110,000; the transaction was accepted by the 3 directors who weren’t abroad, on behalf of the company, without any enquiries
  • A prospectus for shares in the company was issued which was very favourable regarding the scheme (but the true circumstance was not disclosed i.e. Mr E’s secret profit).
  • Members of the public buy shares in the company, which subsequently struggles, and the shareholders discover the true circumstances.
  • The shareholders remove the old directors and replace them.
  • The new directors apply to the court to have the original sale rescinded.
  • A lot of the phosphate had already been mined and couldn’t be put back.
80
Q

What was the Issue of Erlanger v. New Sombrero Phosphate Co (1878)?

A

Issue: Rescission: Where restitution is impossible.

81
Q

What was the Ruling of Erlanger v. New Sombrero Phosphate Co (1878)?

A

Ruling:
The court ordered the rescission and said that the promoters should have appointed independent directors and should have made a full disclosure of the circumstances.

82
Q

What was the Case of Leaf v. International Galleries (1950)?

A
  • Leaf thought he was buying Salisbury Cathedral by John Constable on 8 March 1944 from International Galleries.
  • International Galleries said it was a Constable. Leaf paid £85.
  • Five years later when he tried to auction it, Leaf was told that it was not a Constable.
  • He claimed rescission of the contract against International Galleries, to get back his money.
83
Q

What was the Issue of Leaf v. International Galleries (1950)?

A

Issue: Rescission: Lapse of time

84
Q

What was the Rulingof Leaf v. International Galleries (1950)?

A

Ruling:
- The claim based on misrepresentation was successful however, since it was an innocent misrepresentation, the claimant had lost the right to rescind the contract through lapse of time.
= The claim based on mistake was unsuccessful as the mistake related to the quality and did not render the subject matter something essentially different from that which it was believed to be. He believed he was buying a painting and he got a painting.

85
Q

What are the different Categories of Misrepresentation?

A
  • Fraudulent misrepresentations
  • Common Law Negligent mis-statements
  • Negligent misrepresentations under Misrepresentation Act 1967
  • Wholly innocent misrepresentations
86
Q

What is Fraudulent Misrepresentation?

A

Fraudulent Misrepresentation - Recovery of all direct loss from relying on the fraudulent misrepresentation regardless of foreseeability .

  • The claim for damages is in the tort of deceit.
  • The claimant can recover all direct loss from relying on the fraudulent misrepresentation regardless of foreseeability.
  • The remedy is rescission and/or damages.
  • Not used that often now as burden of proof lies with the claimant, it is expensive and there are other remedies.
87
Q

What are the 2 Cases of Fraudulent Misrepresentation?

A
  • Doyle v Olby (1969)

- Smith New Court Securities v Scrimgeur Vicars (1996)

88
Q

What is the Case of Doyle v Olby (1969)?

A
  • Mr Herbert Doyle bought a business from Olby (Ironmongers) Ltd.
  • He was told the business was ‘all over the counter’. In reality, half the shop’s business came via their travelling sales representative, and Mr Doyle sustained heavy losses.
  • The judge awarded £1500 in deceit, based on two and a half times the cost of employing a part-time rep at £600 p.a., as equivalent to the cost of making good the representation or the reduction in the value of the goodwill.
    Mr Doyle appealed.
89
Q

What is the Issue of Doyle v Olby (1969)?

A

Issue: Damages for Fraudulent Misrepresentation

90
Q

What is the Ruling of Doyle v Olby (1969)?

A

Ruling:
Lord Denning MR increased the damages to £5500. He said Mr Doyle could claim for all damage flowing directly from the deceit, whether or not the defendants could have foreseen such consequential loss.

91
Q

What was the Case of Smith New Court Securities v Scrimgeur Vicars (1996)?

A
  • An employee of Scrimgeour, Mr Roberts, fraudulently told Smith New Court that there were close rival bids for buying shares in Ferranti IS Inc.
  • Smith bought £23.1m worth of shares. £1.2m above the current share price.
    Ferranti then revealed it was a victim of a massive fraud and the share price fell considerably.
  • Smith sold the shares for £11.8m, a loss of £11.3m Smith then brought an action for deceit.
92
Q

What was the Issue of Smith New Court Securities v Scrimgeur Vicars (1996)?

A

Issue: Damages for Fraudulent Misrepresentation

93
Q

What was the Ruling of Smith New Court Securities v Scrimgeur Vicars (1996)?

A

Ruling:

  • The Court of Appeal awarded £1.2m in damages to reflect the difference between what was paid and the market value at the date of purchase.
  • HoL - Held that Smith New Court was entitled to the full loss of £11.3m.
94
Q

What is Common Law Negligent Mis-Statement?

A
  • This is a false statement made with no reasonable grounds for believing it to be true.
  • Hedley Byrne v. Heller (1964) established liability for negligent mis-statement
  • Provides for recovery of compensation for financial damage through reliance by the claimant on statements made negligently by the defendant
95
Q

What are the 2 Cases of Common Law Negligent Mis-Statement?

A
  • Hedley Byrne v. Heller (1964)

- Esso Petroleum Ltd v Mardon (1976)

96
Q

What is Case of Hedley Byrne v. Heller (1964)?

A
  • Hedley Byrne (HB) had a customer, Easipower Ltd, put in a large order. HB wanted to check their financial position, so asked their bank, National Provincial Bank, to get a report from Easipower’s bank, Heller & Partners Ltd. who replied in a letter that was headed, “without responsibility on the part of this bank”
  • It said that Easipower was, “considered good for its ordinary business engagements”.
  • The letter was sent for free.
  • Easipower went into liquidation, and Hedley Byrne lost £17,000 on contracts. Hedley Byrne sued Heller & Partners for negligence.
97
Q

What is Issue of Hedley Byrne v. Heller (1964)?

A

Issue: Common Law Negligent Mis-statement

98
Q

What is Ruling of Hedley Byrne v. Heller (1964)?

A

Ruling:

  • The HoL found for Heller because of the exclusion clause, but if it hadn’t been there, it would have found that the relationship between the parties was “sufficiently proximate” as to create a duty of care.
  • It was reasonable for them to have known that the info that they had given would likely have been relied upon for entering into a contract of some sort.
99
Q

Who is liable for the remedy under Common Law Negligent Mis-statement?

A
  • The person who made the misrepresentation will be liable to the same remedies (recession and damages) as if he made a fraudulent misrepresentation.
  • There is no need to show the existence of a ‘special relationship’
  • Damages may be more because unlike under the tort of negligence, liability is not limited to reasonably foreseeable loss
  • Principle also applies to mis-statements made during pre-contractual negotiations
  • To apply, there must be a ‘special relationship’ between parties
  • Under the tort of negligence, damages must be reasonably foreseeable and the loss must not be too remote (later lectures)
100
Q

What is the Case of Esso Petroleum Ltd v Mardon (1976)?

A
  • Mr Mardon was buying a petrol station franchised by Esso Petroleum Co Ltd.
  • Esso told him they had estimated that the station would sell 200,000 gallons a year.
  • Mardon signed a three year tenancy.
    Sales were less than half.
101
Q

What is the Issue of Esso Petroleum Ltd v Mardon (1976)?

A

Issue: Negligent Mis-statement

102
Q

What is the Ruling of Esso Petroleum Ltd v Mardon (1976)?

A

Ruling:
Held there was a misrepresentation relied on by Mardon.
Esso professed to have a special knowledge or skill inducing Mardon to enter the contract.

103
Q

What is Special Relationship in the hedley Bryne Case under Common Law Negligent Mis-statement?

A

The term “special relationship” was not fully defined in the Hedley Bryne case

However, scope of special relationship could include:

  • A reliance by the claimant on the defendants specialist skill and judgment;
  • Reasonable expectation of knowledge on the part of the defendant, that the claimant would be relying on that statement;
  • Reasonability for the claimant to rely on the defendant;
  • That there is an assumption, either explicit or implicit, of responsibility on behalf of the defendant.
104
Q

What is the Misrepresentation Act (1967)?

A
  • Introduced negligent misrepresentation
  • Enacts the category of wholly innocent misrepresentation.
  • Supercedes the common law remedy of fraudulent misrepresentation
105
Q

What is Negligent Misrepresentation under the section S2(1) of the Misrepresentation Act 1967?

A
  • The burden of proof is reversed (the defendant must prove that he had reasonable grounds for believing his statement)
  • The remedies are rescission and/or damages. The person who made the representation will be liable to the same remedies as if they were fraudulent.
106
Q

What is the Case of Negligent Misrepresentation?

A

Royscot v Rogerson (1991)

107
Q

What is the Case of Royscot v Rogerson (1991)?

A
  • Rogerson acquired on hire purchase a used car from Maidenhead Honda Centre Ltd. The car was priced at £7600, Rogerson paying a £1200 deposit. (15%)
  • The balance came from a finance company, Royscot Trust Ltd.
    The dealer filled in the application forms, falsely misrepresenting that the total cost was £8000 and the deposit was £1600 (20% of the total). Royscot approved the loan; but, had accurate figures been stated, they would have refused finance since its policy was not to lend money if the deposit was less than 20%.
  • Rogerson began paying instalments, but in due course had cashflow difficulties and stopped paying and sold the car even though he hadn’t paid for it. A loss to Royscot.
  • Royscot sued the car dealer in damages, alleging that they had relied upon the dealer’s misrepresentation, which induced them into the finance plan. Royscot claimed that had the dealer given the correct figures, they would have refused finance, and that the loss was the dealer’s fault.
108
Q

What is the Issue of Royscot v Rogerson (1991)?

A

Issue: Misrepresentation Act 1967 - Negligent

109
Q

What is the Ruling of Royscot v Rogerson (1991)?

A

Ruling:

  • That for negligent misrepresentation under s.2(1), the correct measure of damages was tortious and the same as that for the tort of deceit.
  • The car dealer was liable for all the consequences of his misrepresentation, and therefore had to pay the losses incurred by Royscot Trust Ltd.
  • Rogerson’s wrongful sale of the car was foreseeable and not a break in the chain of causation.
  • No need to show a special relationship – the burden of proof is on the person making the misrepresentation.
  • The damages can be more than just the loss incurred.
110
Q

What is Negligent Misrepresentation under

Wholly innocent misrepresentation S2 (2) of the Misrepresentation Act (1967)?

A
  • This is a ‘false statement made by a person who at the time had reasonable grounds for believing it to be true’
  • At common law the remedy for innocent misrepresentation was rescission ONLY.
  • Under the Act, recession is still available, BUT court’s now have the discretion to award damages in lieu of rescission
111
Q

What is the Case of Innocent Misrepresentation?

A

William Sindall Plc v Cambridgeshire CC (1994)

112
Q

What is the Case of William Sindall Plc v Cambridgeshire CC (1994)?

A
  • Sindall agreed to buy land from Cambridgeshire CC after they were told the council were aware of no easements.
  • But a private sewer from 20 years before was found after completion.
  • William Sindall plc sued for rescission for misrepresentation and common mistake.
  • For mistake, it was held that the contract allocated risk of unknown sewers to the buyer.
113
Q

What is the Issue of William Sindall Plc v Cambridgeshire CC (1994)?

A

Issue: Innocent Mis-statement

114
Q

What is the Ruling of William Sindall Plc v Cambridgeshire CC (1994)?

A

Ruling:
Held, damages would have been awarded in lieu of rescission under the Misrepresentation Act 1967 s.2(2), had there been misrepresentation, but found not to have been.

115
Q

What is the Exemption/ Limitation Clauses S(3) of the Misrepresentation Act (1967)?

A
  • s.3 of Misrepresentation Act was replaced by s.8 Unfair Contract Terms Act 1977.
  • It states that for the misrepresentor to exclude liability for the mis- statement he must show the clause satisfies the test of reasonableness (mis-representation is averted).
  • This applies for all contracts and not just business contracts.
116
Q

What was the Ruling of Pankhania v Hackney London Borough Council (2002)?

A

Ruling:
The sellers had incorrectly stated the law as it applied to the occupier of the car park.
There was a remedy for misrepresentation.

117
Q

What is the Ruling of Smith v Chadwick (1884)?

A

Ruling:
The court found that the statement in the prospectus was unclear and that it was capable of more than one meaning. However, they found that the burden rested with the claimant to show that he had taken the words in a sense that meant that they were false.

18BSA026 - Principles of Law (13 decks)

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