misrep - case law

Question 1

Fletcher v Krell 1872

Answer 1

• governess required, employer preferred applicants to be single, applicant failed to disclose that she had been married and divorced
• held: no general duty to provide information, contract was binding on both parties, misrep arises when active statements are false/misleading
• silence is not an actionable misrep generally

Question 2

Shaftsbury House (Developments) Ltd v Lee 2012

Answer 2

• confirms that the test is objective
• advertising = active statements
• distinguish between misleading statements and advertising

Question 3

Avon Insurance v Swire 2000

Answer 3

• an unambiguous false statement of fact
• statement MUST be false

Question 4

With v O’Flanagan 1936

Answer 4

• an unambiguous false statement of fact
• falsity judged at the time contract made
• Sale of a medical practice
• January 1934: statement that the practice makes £2000/year
• May 1934: contract signed, doctor has been seriously ill and takings have fallen
• “If a statement which has been made is true at the time, but which during the course of negotiations becomes untrue, then the person who knows that it has become untrue under an obligation to disclose to the other change of circumstances”
• The continuing nature of representations

Question 5

Smith v Chadwich 1884, Grimstead v McGarrigan 1999

Answer 5

• an unambiguous false statement of fact
• the statement must not be ambigous

Question 6

Curtis v Chemical Cleaning and Dyeing Co 1951

Answer 6

• Any behavior, by words or conduct, is sufficient to be a misrepresentation if it is such as to mislead the other…if it conveys a false impression, that is enough
• misleading conduct suffices as a statement

Question 7

Spice Girls v Aprillia World Service BV 2002

Answer 7

• photoshoot was misrep by conduct
• representation that no reasonable grounds to believe one of them would leave
• they all knew that one of the members would leave, but still turned up to photoshoots with all five of them
• Aprillia was under the impression that they would sign the contract without Ginger Spice
• they had no reason to believe otherwise

Question 8

Maddison v Alderson 1883

Answer 8

• Claimant works as housekeeper for defendant
• C claims D promised to leave her the house when he died → promise about D’s future intentions
• Held: no, this cannot form the basis for a claim of misrepresentation as the law of misrepresentation only applies to “representations as to some state of facts alleged to be at the time actually in existence, and not to promises de futuro”
• General rule that statements of future intention are not statements of fact for the purposes of misrepresentation

Question 9

Edgington v Fitzmaurice 1885

Answer 9

• Company invited people to buy shares and said it would be used to expand the company
• Actual intention was to use money to pay off outstanding debts
• Claimant invested in the company and then lost his money when the company went insolvent
• there must be a misstatement of an existing fact –> false statement of current intention treated as a false statement of fact

Question 10

Bisset v Wilkinson 1927

Answer 10

• Sale of farm in New Zealand
• Seller had no experience of sheep farming but says to the buyer that he thinks the land is capable of holding 2000 sheep
• The statement of opinion is not capable of creating an actionable misrepresentation
• “In these circumstances … the defendants were not justified in regarding anything said by the plaintiff as to the carrying capacity as being anything more than an expression of his opinion on the subject”
• General rule that statements of opinion cannot form the basis of misrepresentations but there are exceptions

Question 11

Esso Petroleum v Mardon 1976

Answer 11

• Representative of Esso forecasts how much petrol the station will sell (200,000 gallons/year)
• Forecast is designed to be relied on by the future tenant
• Access route to the station changes but the representative does not revise his forecast
• In 15 months, only 78,000 gallons sold
• Denning J: person who has special knowledge or skill makes a representation = under duty of reasonable care to see that the rep is correct.

Question 12

Smith v Land and House Property Corp 1885

Answer 12

• Advertisement for the sale of a hotel which was let to F “a most desirable tenant” at £400 a year
• F was not a desirable tenant - he was not doing enough business to pay rent to the hotel owners
• F went bankrupt before the contract was concluded
• Buyer tried to pull out of the sale on the basis of misrepresentation
• Express: seller says F is a desirable tenant
• Implied: seller represents that he knows facts which make F a desirable tenant

Question 13

Nottingham Patent Brick and Tile Co v Butler 1885-1886

Answer 13

• Withholding information → if you were to reveal the substance of the information, the substance of the answer changes
• Sale of land subject to restrictive covenants (seriously effect value of land)
• Buyer’s solicitor asks whether there are any restrictive covenants
• Seller’s solicitor replies “none of which I am aware” = strictly true but gives the impression that solicitor has searched the land records
• Misrepresentation?
• Technically correct

Question 14

Caveat Entor: Yianni v Edwin Evans 1981

Answer 14

• Claimant is buying a house, defendant is a surveyor
• Defendant conducts survey for use by the bank, paid for by the claimant
• Buyer had option of getting own independent survey but did not
• Defendant was negligent - could the claimant sue in misrepresentation?
• Tort law question: was there a duty of care between buyer and surveyor?
• “I have come to the conclusion that the defendants owed a duty of care to the plaintiffs because … there was a sufficient relationship of proximity such that, in the reasonable contemplation of the defendants, carelessness on their part might be likely to cause damage to the plaintiffs”
• Surveyor owed duty of care to buyer
• Held: buyer able to sue in misrepresentation even though representation is not given to them directly

Question 15

JEB fasteners v Marks, Bloom and Co 1983 - proving reliance

Answer 15

• Statement must be a real and substantial reason the claimant entered contract
• C about to take over a company
• D negligently prepared the company accounts and gave them to C
• C had doubts about the accounts but entered the contract bc it wanted to acquire the services of two company directors
• Takeover failed, C brought an action alleging that D made misrepresentations in the accounts
• Held: action dismissed, misrepresentation had not played a “real and substantial” part in C’s decision as they had simply wanted to acquire the directors’ services

Question 16

Redgrave v Hurd 1881

Answer 16

• Purchase of a solicitor’s practice and adjoining house
• Seller states annual profits are about £300/year
• Buyer views accounts - less than £200/year
• S says he also does private work and that B can check paperwork
• B does not check
• Contract does not expressly mention the business
• B moves into the house and realises that the business is not profitable
• Q: does the buyer’s failure to check the extra papers mean that he can’t establish reliance?
• Held: NO
• “The mere fact that a party has the opportunity of investigating and ascertaining whether a representation is true or false is not sufficient to deprive him of his right to rely on a misrepresentation as a defence to an action for specific performance.”
• The representation once made relieves the party from an investigation, even if the opportunity is afforded.

Question 17

Attwood v Small 1838

Answer 17

• Attwood selling a mine to Small
• Attwood exaggerated the output of the mine
• Small also commissioned his own agent to report on the capacity of the mine, agent’s report is also wrong
• Attwood has made a false statement of fact. Does this cause Small to enter the contract?
• Held: no reliance on misrepresentation, Small had relied on his own report in deciding to enter the contract

Question 18

Ludsin Overseas Ltd v Eco3 Capital Ltd 2013

Answer 18

• The defendant makes a false representation to the claimant
• The defendant knows that the representation is false, alternatively he is reckless as to whether it is true or false, alternatively he is reckless as to whether it is true or false
• The defendant intends that the claimant should act in reliance on it
• The claimant does act in reliance on the representation and in consequence suffers loss
• NOTE: TYPICALLY, THIS WILL NOT BE EASY TO ESTABLISH

Question 19

Hedley Byrne v Heller 1964

Answer 19

• HB = advertising agents who book space for E
• If E fails to advertise, HB are liable
• HB asks Heller (E’s bank) whether E are financially sound; H (carelessly) says yes
• E failed to advertise and HB liable for £17,000
• HB claimed damages from H and argued that they had negligently prepared the reference
• Q: is H liable to HB for negligently prepared reference?
• Held: YES
• A duty to take reasonable care when there is a “special relationship” between the parties
• Special relationship = party providing information knows the purpose for which is is sought AND it is reasonable for the other to rely on it

Question 20

Howard Marine v Ogden 1978

Answer 20

• The difficult of demonstrating reasonable grounds to believe
• Facts: O wanted to hire a barge, HM provided info about capacity of barge
• HM gave information from the Lloyd’s register - info was false
• Accurate info contained in documents in HM’s possession
  O claimed damages under s2(1)
• Q: had discharged the burden of proof in s2(1)?
• Held: NO
• “But the question is whether is evidence is sufficient to show that he had an objectively reasonable ground to disregard the figure in the ship’s documents and to prefer the Lloyd;s register figure. I think it is not” - Bridge LJ
• HM did not have reasonable grounds to believe what he said was true