Lecture 13-Misrepresentation

Question 1

Misrepresentation

Answer 1

Vitiating factor – if proved allows the party to potentially rescind the contract

Question 2

Requirements

Answer 2

1. A false statement of existing or past fact.
2. Made by one party to the other.
3. That induces a contract.

Question 3

A False Statement

Answer 3

The misrepresentation must be a false statement and not an opinion.

Would a reasonable person have supposed the representor was stating a fact or an opinion?

Question 4

Fact: Three Elements

Answer 4

the absence of general duties to disclose relevant facts,

an objective approach to construing ambiguous statements,

and a distinction between statements of fact and statements of opinion.

Question 5

Silence

Answer 5

Silence is not misrepresentation, and an action is not maintainable simply because a party failed to disclose a relevant fact.

Fletcher v Krell

there is no general duty to disclose relevant facts, and parties are free to conceal facts as long as they do not lie

Question 6

Exceptions

Answer 6

1.Contracts of uberrimae fidei, good faith
2.Relationships of good faith
3.Where half truth offered
4.Duty to disclose a change in facts

Question 7

Change in facts

Answer 7

With v O’Flanagan

A representation once made is likely to have continuing effect. So if made for the purpose of an intended transaction it will continue until the transaction is completed or abandoned or the representation ceases to be operative on the mind of the representee.

Question 8

Objectively

Answer 8

It does not matter that the person making the statement had no intention to deceive, and genuinely believed it to be true. The court is concerned with the objective truth of the statement, not the representor’s subjective belief.

Question 9

Fact or Opinion?

Answer 9

1.The distinction is contextual rather than literal. The representor’s words are looked at not in the abstract but in the context in which they were said. Words that would appear to be a statement of fact in one context may be a statement of opinion in another context.

2.Any statement of opinion must be of an opinion that was honestly held. If you express an opinion you do not actually hold, then your statement is a misrepresentation.

3.Statements of opinion can sometimes contain an implicit assertion of fact. If that implicit assertion is false, the statement will be a misrepresentation

Question 10

Opinion Case Authority

Answer 10

BISSET V WILKINSON [1927]
OPINION (LACK OF CONCRETE EVIDENCE) + HONESTLY HELD

If a reasonable man with the appellant’s knowledge could not have come to the conclusion he stated, the description of that conclusion as an opinion would not necessarily protect him against rescission for misrepresentation.

Question 11

‘Sales Talk’

Answer 11

Sales talk, exaggerated and flippant comments will generally not be regarded as a statement of fact.

Regarded to be ‘mere puffs’.

Much depends upon whether the court feels the ‘puff’ was intended to be taken seriously (Carbolic Smoke Ball).

Fordy v Harwood [1999]
Description of car as ‘absolutely mint’ was held by CA not to be sales puffery but rather a misrepresentation (statement linked to condition of vehicle when defects present).

Question 12

Conduct

Answer 12

SPICE GIRLS LTD V APRILIA WORLD SERVICE [2002]

Conduct may represent facts

Question 13

Made by a party to the other

Answer 13

Objectively assessed to determine what the appearance of one person’s conduct will convey to another.

Question 14

Third Parties

Answer 14

Where third parties are concerned a duty may also arise separately under the tort of negligent misstatement under the Hedley Byrne principle.

Question 15

Induces the Contract

Answer 15

It must be demonstrated that the statement made has induced the contract.

If a person seeks to check the truth of a statement, then they have not relied upon it.

Language of reliance is generally preferred – did the representee rely on the misrepresentation?

Question 16

Case Authority

Answer 16

EDGINGTON V FITZMAURICE [1885] MISREPRESENTATION CAN BE A CONTRIBUTING FACTOR LEADING TO LIABILITY

Question 17

Reliance

Answer 17

JEB FASTENERS V MARKS BLOOM & CO [1983]
IT MUST BE A FACTOR WHICH INDUCES THE CONTRACT- NOT MISREP IF TREATED AS IRRELEVANT.

The mere fact that an untrue representation was made is insufficient. If the representee treated it as irrelevant, the misrepresentation will not be actionable.

Question 18

Reasonable Steps

Answer 18

Redgrave v Hurd

If a man is induced to enter into a contract by a false representation it is not a sufficient answer to him to say, ‘If you had used due diligence you would have found out that the statement was untrue. You had the means afforded you of discovering its falsity, and did not choose to avail yourself of them.’