Misrep Flashcards
What are the steps of misrep?
1) A False
2) Statement of fact
3) Made by one party to the contract to the other
4) With a view of inducing the other to enter it
What are the ‘False’ cases?
A false statement:
Dimmock v Hallett (1866)
With v O’Flanagan (1936)
Spice Girls Ltd v Aprilia World Service BV (2002)
What are half-truths?
Half-truths: partial disclosure, not total silence e.g. what is said is literally true but misleading because other facts have been omitted.
Dimmock v Hallett (1866)
A seller of land told a prospective buyer that the farms on the land were let to a tenant at £290 per year. Did not mention that the tenants were about to leave. Decision: Statement was misleading – a misrepresentation
With v O’Flanagan (1936)
Dr. wished to sell practice – correctly stated it was worth £2000 a year. By time he actually sold practice it was worth less because Dr. had been ill, but Dr. did not tell buyer – misrepresentation
If a statement is true when it is made but before the contract is completed, it becomes false, the party who made the statement must disclose the new position, otherwise liable for misrepresentation – change of circumstances
Spice Girls Ltd v Aprilia World Service BV (2002)
AWS entered negotiations with SG Ltd (5 members). Before agreement signed Geri told group intended to leave in 6 months. Participated in photo shoot. Contract signed. 3 weeks later Geri left. Decision: The group taking part in the promotion amounted to a misrepresentation by conduct. AWS entitled to recover all losses under sponsorship contract.
Statement of fact cases
It must be a statement of fact.
Bissett v Wilkinson (1927)
Smith v Land & House Property Corp (1884)
Esso Petroleum v Mardon (1976)
Bissett v Wilkinson (1927)
The statement must be fact (must be more than a mere opinion of one of the parties)
Seller of land stated that he ‘estimated the land would support 2000 sheep’.
Land had never been used for sheep and seller knew this.
Decision: Statement of opinion. Not a misrepresentation.
Smith v Land & House Property Corp (1884)
A statement made by a party who should know the situation may be treated as a statement of fact, not opinion.
Seller of Hotel described its tenant, Fleck, as a ‘most desirable tenant’ knowing that the tenant was in arrears with rent = statement was misrepresentation.
Esso Petroleum v Mardon (1976)
If s
Esso’s Sales Representative advised M that the new garage development would be able to sell about 200,000 gallons of petrol a year.
M signed a 3 year tenancy agreement.
Petrol sales were less than half the Sales Representative’s estimate
His statement was a misrepresentation
3) Made by one party to induce the contract to the other - Cases?
The statement must have induced the other party to enter into the contract
Horsfall v Thomas (1862)
Redgrave v Hurd (1881)
Horsfall v Thomas (1862)
Is example of misrep.
H made and sold gun to T.
H concealed a fault using a metal plug
T did not examine gun.
Gun later blew up.
T claimed he was mislead by plug into buying the gun.
Decision - T could not have been mislead as he had not examined gun at time of purchase.
Redgrave v Hurd (1881)
The mere opportunity to discover the truth does not prevent it being a misrepresentation
An elderly solicitor selling his share of the practice, gave the partner information about income and told him the figures could be checked. Partner relied on that – did not check the documents.
Statement was a misrepresentation.
What are the types of misrepresentation? (3)
- Fraudulent:
- Negligent:
- Innocent
Explain fraudulent misrep
Fraudulent: Know it is false or
make the statement recklessly
not caring if true or false.
Derry v Peek (1889) – innocent party has to prove that the false statement was made (i) knowingly or (ii) without belief in its truth or (iii) recklessly as to whether it is true or false.
Difficult to prove that someone is being reckless or dishonest as opposed to negligent.
Explain negligent misrep
Negligent: Believe it is true but has no reasonable grounds for the belief.
Explain innocent misrep
Innocent: Believe it to be true and has reasonable grounds for that belief but in fact it is false.
Derry v Peek (1889)
Misrepresentation Act 1967
If you enter into a contract after a misrepresentation has been made it is up to the party who made the representation to prove that he had reasonable grounds for believing the statement was true (Howard Marine and Dredging Co Ltd v A Ogden and Sons Ltd (1978))
[Common Law: The claimant must prove - the defendant had no reasonable grounds for believing his statement was true].
What are the remedies for the different types of misrepresentation?
Fraudulent: Rescission AND
Damages (all losses that directly resulted as a consequence of entering into the contract)
Negligent: Rescission AND
Damages
Innocent:Rescission OR Damages (not both)
What are recessions?
Rescission means: sets the contract aside and puts the parties back into the same position they would have been in if the contract had never been entered into.
What are damages?
Damages means: financial payment to compensate the innocent party.
