misrepresentation

Question 1

what is misrepresentation

Answer 1

when A misrepresents something to C then A causes C to make a mistake. here the plaintiff is in control. misrepresentation requires it to be made by the defendant to the plaintiff

Question 2

what are the requirements for misrepresentation under s35(1) CCLA

Answer 2

• misrepresentation
  (not puff, not statement of opinion, not statement of intention, not statement about the future, not misstatement of the law, not silence

Question 3

what are the exceptions for misrepresentation

Answer 3

• half truths
• subsequent discovery
• supervening falsehood
• seller giving a guarantee is under an obligation to disclose unusual aspects of the guarantee
• fiduciary relationship
• contract uberrimae fidei

Question 4

how do we define misrepresentation

Answer 4

false representation - as deduced from the word - no definition in the CCLA.

a representation is a statement of fact made before the formation of the contract. a statement of fact is a statement of existing or past fact.

Question 5

what is a statement of fact not for misrepresentation

Answer 5

• puff: a statement in glowing terms made by a trader in praise of his wares
• statements of opinion
• statement of intention
• statement about the future - forecasts are not representations of facts
• statement of law - a misstatement of law is not misrepresentation
• silence - caveat emptor let the buyer beware

Question 6

why is puff excluded from being a statement of fact

Answer 6

simplex commendatio non obligat - a simple commendation of itself does not give rise to any obligation. purchasers should expect traders to describe their wares in glowing terms - this is marketing and the consumer knows that. we can distinguish between representations of facts and puffs from the viewpoint of a reasonable person

Question 7

why is a statement of opinion excluded from being a statement of fact

Answer 7

if a person relies on an opinion without checking its accuracy, that person does so at his own risk. no one should be held to an opinion unless he warrants its truth - we use the reasonable person test.

exceptions (the following statements amount to misrepresentation):

• the representor never held the opinion in the first place (he lies)
• although the
  representor hold the opinion, no reasonable person would
• the representor implies that he knows facts justifying the opinion, such as in Esso v Mardon
• the representor should know the facts or is in a far stronger position to ascertain the facts as in Brown v Raphael

Question 8

why is a statement of intention not included as a statement of fact

Answer 8

there is no misrepresentation but the exception is misrepresentation of fact if, at the time the statement is made, the representor either does not really intend or does not have the ability to put that intention into effect

Question 9

why is a statement about the future not a statement of fact

Answer 9

forecasts are not representations of facts. the exception is if a statement about the future implies a statement of present fact, it may be a representation as to the present - Ware v Johnson.

It is possible that a forecast contains an implied representation that it was prepared with reasonable skill and care - Esso v Mardon

Question 10

what happened in Esso v Mardon

Answer 10

In the sale of the gas station, an Esso representative told the purchaser that the average Esso gas station had a certain turnover. Even though he was expressing an opinion (I believe) the message sent was that he knew the facts as he represented Esso. Even though it was expressed as an opinion, the courts said it can depend on the person expressing that opinion - it gave an impression he knew what he was talking about

Question 11

why is a statement of law not a statement of fact

Answer 11

A misstatement of the law is not a misrepresentation. It is as much the business of the plaintiff as of the defendant to know what the law is - Beattie v Lord Ebury.

The exception is a misrepresentation of fact if the representee could reasonably be expected to rely on the statement of law and was dissuaded from making inquiry of his own.

or:

• wilful misrepresentations of the law
• statements of mixed law and fact
• representations as to the nature or effect of private rights (as opposed to common law or statutory rights)
• where the representor knows or should know that the representee will rely on the representor’s superior knowledge of the law

Question 12

why is silence not misrepresentation

Answer 12

silence is not misrepresentation - caveat emptor (let the buyer beware). the seller is under no duty to disclose defects. the failure to disclose defects is not misrepresentation.

Question 13

what are the 6 exceptions to misrepresentation by silence

Answer 13

1 - half truths - when things left unsaid distort what has been said

2 - subsequent discovery that the statement was false (different from caveat emptor, which allows a party to remain silent about facts that matter to the other party. anyone who makes a statement that he believes to be true that is discovered to be false is under a positive duty to correct that erroneous statement.

3 - supervening falsehood: the statement has been correct at the time it was made then becomes untrue before the contract is executed as a result of subsequent circumstances, the representor must take positive steps to correct that erroneous statement

4 - seller giving a guarantee is under an obligation to disclose unusual aspects of the guarantee, breach of the obligation amounts to a misrepresentation

5 - fiduciary relationship - where one party reposes trust and confidence in the other in consequence of which the other is legally bound to act for the benefit of the former e.g. business partners, trustee & beneficiary, agent & principal

6 - contract uberrimae fidei - parties are obliged to disclose all material facts known to them, whether are asked about them or not

Question 14

what happened in King v Wilinson

Answer 14

sale of land, on which there was a fence surrounding it. The purchaser assumed the fence line was indicative of the boundary of the land. In truth, the land was smaller than that. The purchaser sued for misrepresentation. Defence of the defendant was that they didn’t say the fence line indicates the boundary of the land, they were silent about that. Court said a reasonable purchaser would assume the fence indicates the boundary of the plot of land - by being silent, that distorted the truth - the vendor is under no obligation to disclose defects, but they must not lie when specifically asked - caveat emptor

Question 15

what happened in Ware v Johnson

Answer 15

failed to mention he treated kiwifruit plants with pesticides - implied a statement of a present fact - that the kiwifruit plants were healthy which they weren’t, affecting the profitability of the crop - although the statement was about the future of the crops next year, his statement implied they are healthy now - health state of the kiwifruit plants is a present fact

Question 16

what happened in With v O’Flanagan

Answer 16

W bought a medical clinic from O’Flanagan, a GP. The purchasing price was determined by the profitability of the clinic. Between the negotiations and when they actually transferred the property, the GP fell ill and the medical clinic lost almost all of its patients. Vendor was under a legal obligation to reveal that fact and was not protected by caveat emptor because during the negotiation profitability was a point of negotiation and that had changed during that 6 month period

Question 17

what happened in Lowther v Lord Lowther

Answer 17

a principal owned a valuable painting but didn’t know it was so valuable. The agent said instead of finding you a purchaser I will just buy it myself - he realised the true value. If A was a third party instead, they simply made a good bargain

Question 18

what does a person have a duty to mention for insurance

Answer 18

insured person has to reveal all relevant facts, if not you could lose insurance protection under the policy

Question 19

are the intentions of a misrepresentor relevant for s35

Answer 19

no - it doesn’t matter if he is a good guy or a bad guy, innocent misrepresentations are treated the same as fraudulent ones

Question 20

what are the s35 requirements for misrepresentation

Answer 20

• made by or on behalf of another party - by the defendant to the plaintiff (an agent is not a party but may personally be liable in tort. s35(1)(b) rules out tort liability for the other party. a principal is liable for the representation of his agent (King v Wilkinson))
• to the plaintiff - a representation made to an agent of an undisclosed principal is effective as a representation made to the principal, provided it is passed on to the principal and in fact acts as an inducement (Ware v Johnson)
• induced = misled

Question 21

what happened in Ware v Johnson

Answer 21

failed to mention he treated kiwifruit plants with pesticides - implied a statement of a present fact - that the kiwifruit plants were healthy which they weren’t, affecting the profitability of the crop - although the statement was about the future of the crops next year, his statement implied they are healthy now - health state of the kiwifruit plants is a present fact

Question 22

what is the subjective vs objective approach towards inducement for misrepresentation

Answer 22

if it is a reasonable person, there is no difference between the two.

if they were a silly person, objective approach would deny a claim but a subjective view would protect the unreasonable plaintiff. only discuss this if they are unreasonable.

Question 23

does being a significant influencing factor suffice for inducement for misrepresentation

Answer 23

yes, the misrepresentation need not be the sole inducement (Edington v Fitzmaurice, NZ Motor Bodies v Emslie, Gloken v The CDE)

Question 24

there is no inducement for misrepresentation where?

Answer 24

• the representee is not aware of the representation - nobody can be induced to contract by a representation of which he never became aware
• the representee does not rely on the representation bu on his own independent investigations
• the representee actually knows the representation to be false
• if the representee has the means of discovering the falsity but does not take the opportunity to do so, an action may still succeed if there is actual reliance on the representation
• the representor makes an erroneous statement but corrects it before the contract is concluded

Question 25

when is inducement denied for misrepresentation

Answer 25

• the plaintiff was not aware of the representation, e.g. the false information was never passed on by the agent to the principal and therefore didn’t influence the decision making ability of the contracting party
• when the plaintiff knows information provided is false
• defendant corrected wrong statement prior to the conclusion of the contract

Question 26

how do remedies work for damages under s35(1)(a) CCLA

Answer 26

• you are treated as if the misrepresentation was true (you get more out of this)

misrepresentation = breach of contract, treated ‘in the same manner and to the same extent as if the representation were a term of the contract that has been breached’ = damages

= sum required to put the aggrieved party in the position she would have been in it the representation had been true

= difference between the value of the contract if the statement was true and what it is in fact worth

• sometimes there is a choice between loss of value and the cost of curing the breach - the loss must’ve been caused by the misrepresentation (Crump v Wala)

Question 27

what monetary amount/difference does damages for misrepresentation amount to

Answer 27

the difference between the price paid and the true valye

Question 28

is it possible to sue another party to the contract in tort for misrepresentation under s35(1)(b) CCLA

Answer 28

there is an action in tort possible against the agent for misrepresentation made by an agent who is not a party to the contract

Question 29

when does s9 Fair Trading Act apply and how does it work

Answer 29

It is better to argue s35 CCLA because you would get more but this is a claim in tort and the plaintiff is treated as if the tort had not been committed. case law says every misrepresentation is misleading conduct under this act as misrepresentation is a sub-category of misleading conduct so if you found it under s35 CCLA this also applies.

Question 30

what are the requirements for a s9 Fair Trading Act Claim

Answer 30

the defendant has to be in trade (FTA does not apply to private sales) - trade = any business (s2(1)) and business = any undertaking that is carried on whether for gain or reward or not; or in the course of which goods or services are acquired or supplies or any interest in land is acquired or disposed of whether free of charge or not.

it also must be misleading under the FTA’s objective standard - the conduct of the defendant must be capable of being misleading. that someone has been misled is not conclusive. using the objective assessment: whether a reasonable person in the plaintiff’s situation would likely have been misled/deceived

the plaintiff’s loss must have been caused by the conduct of the defendant under s43(1) FTA also but it is not necessary that the conduct of the defendant was the sole cause of the loss (Red Eagle v Ellis)

Question 31

how does relied occur for s9 FTA misleading conduct

Answer 31

relief is at the discretion of the court, they may give damages under s43(2), (3)(f)

Question 32

what are the requirements for s9 FTA

Answer 32

has to be misleading conduct (case law confirms every misrepresentation is misleading conduct), the defendant/misrepresentor (only) has to be in trade and the misleading conduct must have caused loss to the plaintiff (as inferred from ‘by’ in s43)

Question 33

what are 3 differences between damages under the CCLA and the FTA for misrepresentation

Answer 33

entitled to damages as of right (CCLA) vs discretionary damages (FTA)

contractual damages put the plaintiff in the position he would have been in had the contract been performed (CCLA) vs damages return plaintiff to position before the commission of the tort - only actual damages from the commission of the tort (FTA)

6 year period starting from the misrepresentation (CCLA) vs 3 year period but starting from the date on which the loss or damage was discovered, potentially allowing a claim that would be time-barred under the CCLA (FTA)

Question 34

what is the provision to determine if a disclaimer is legally valid?

Answer 34

s50 CCLA - can be a contract or any other document containing a disclaimer

Question 35

what is a conduit and what’s a case for it under the CCLA s 35

Answer 35

a person who just passes information on - Mainland Products v BIL Holdings

Question 36

what is a conduit and what’s a case for it under s 9 FTA

Answer 36

a person who just passes information on and doesn’t endorse it - Newport v Coburn

Question 37

where there is a misrepresentation, what does Ware v Johnson say you should also look for?

Answer 37

whether there is also a mistake