Misrepresentation 1 Flashcards
Misrepresentation
False statement of fact which induced the other party to enter into a contract.
Legal source of misrepresentation:
Misrepresentation Act 1967
What does it mean when a contract is rendered voidable?
Can be set aside by one party using rescission. Once set aside it is treated like it never existed.
What does it mean when a contract is rendered void?
Automatically of no effect from the very beginning.
Silence does not amount to misrepresentation:
No general duty in pre-contractual negotiations to state facts not known to the other party
Keates v Cadogan
Exceptions to the rule that silence does not amount to misrepresentation:
Half truth
Change of circumstances
What is a Half Truth?
True statement that fails to represent entire picture.
Dimmock v Hallet
Change of circumstance:
Statement was true at first, but becomes false due to a change of circumstance.
WIth v O’flanagan
What do not count as statements of fact?
- Statements of belief or opinion
- Statements of future conduct/ intention
- Abstract statements of the law
An opinion is not a statement of fact:
Not deemed a factual statement when both parties know that the statement maker has no basis in fact.
Bisset v Wilkinson
Exceptions to the rule that an opinion is not a statement of fact:
Statement maker is in a stronger position to know the truth.
Smith v Land and House Property Corporation
Statement of future conduct is not a statement of fact:
A false statement made regarding future intentions is not misrepresentation.
HOWEVER
If they lied about it (evidence required) then it is misrepresentation.
Edgington v Fitzmaurice
Abstract statements of law are not statements of fact:
Cannot be statement of fact.
HOWEVER
Statements of law applied to a set of facts will be construed as statements of fact.
Pankhania v Hackney London Borough Council
Inducement
Coercing/ persuading another party into entering a contract.
Inducement must be material:
Important enough to influence reasonable person,
Downs v Chappel
If a claimant makes his/ her own investigations:
Then they are not induced by misrepresentation.
Attwood v Small
HOWEVER
Attwood v Small only has application where parties rely solely on their own investigations.
With v O’Flanagan
Where a statement is rendered false by a change of circumstance, there is a duty to disclose the change.
Dimmock v Hallett
Defendant selling some land, tells buyer that all farms were under tenancy. Defendant failed to disclose that tenants had given their notice.
It was held that telling half truths about the tenants constitutes grounds for unwinding the contracts.
Edgington v Fitzmaurice
Company was selling shares under the guise of expanding the company, when they were really being used to settle debts.
It was held, that although it was a statement of future intent, it was an actionable misrep as the defendant has no intention of expanding the company.
Smith v Land and House Property Corporation
Claimant bought a hotel which seller described as ‘most desirable’. The seller knew that the tenant was
nearly bankrupt and neglected to inform the buyer
It was held that the statement was one of fact rather than opinion as the seller was in a strong position to know the truth..
