Misrepresentation Flashcards
Three ways
What three ways can a representation be made?
It ca be oral, written or by conduct.
Key Elements - Conduct
Spice Girls Ltd v Aprilia [2000] - Ginger leaving
S (promoter) entered into discussion w A to have the girls endorse their products. Before contract signed, girls filmed an ad for A. At the time, S knew ginger intended to leave but didn’t tell A.
Held filming by the girls was a representation to A that the co didn’t know nor could have reasonably known one member intended leaving
This was untrue and the act of filming was deemed a misrep by conduct and by remaining silent.
Key Elements - Conduct - Silence
Gil v McDowell [1903] - Hermaphrodite Cow
Silence usually not actionable unless it is an active misrepresentation:
Farmer brought animal to market where heifers and bulls sold. G bought it on this basis.
Held the seller’s silence as to fact it was a hermaphrodite amount to a misrepresentation in circs.
Key Elements - Representation must be False
Dimmock v Hallett [1866] (i) Tenancy Half-truth
In selling some farm land, H told D all of the farms were under tenancy, which was factually true
H failed to mention that all of the tenants had given notice to vacate their land.
Held this half-truth was sufficient to amount to misrepresentation.
Key Elements - Representation must be False
With v O’Flanagan [1936] (ii) Change in Circumstance - Medical Practice
W bought a medical practice from O. W induced to buy by O’s statement that it made £2k p/a.
True at the time, but O became ill and many patients went elsewhere. Became virtually worthless
Held where a statement is rendered false by a change in circumstances there is a duty to disclose the change. A failure to do so will result in an actionable misrepresentation.
Key Elements - Representation must be a statement of fact, not intention or opinion
Wales v Wadham [1977] Internet to remarry - 13k
Statement of intention can’t be false at time made as it can only be made true/false by a future event:
W separating from H told him she’d no intention of remarrying. Agreement made whereby she would receive £13k from the sale of their home. She later remarried. H argued misrepresentation.
Held no misrepresentation: the statement was honestly made and was true at the time it was made.
Key Elements - Representation must be a statement of fact, not intention or opinion
Esso Petroleum v Mardon [1976] - Expertise - Calculating Sales
Opinions also can’t amount to representation unless representor has a specialist knowledge:
An oil co (M) confirmed a certain petrol station would produce a certain level of sales.
This was taken as statement of fact on basis the representee was entitled to believe the oil co had exercised skill and care in calculating the figure.
The statement of opinion was treated as one of fact and bc untrue, amounted to misrepresentation.
Key Elements - Representation must induce the other party into the contract
Smith v Chadwick [1884] - Inducement - “No bearing”
Misrep claim dismissed when admitted the statement had no bearing on P’s decision to buy shares
Not necessary to show it was the sole reason for entering the contract.
Must show it was a real and substantial reason for entering the contract.
Key Elements - Representation must induce the other party into the contract
Edgington v Fitzmaurice [1885] - Debentures - Prospectus
E bought debentures based partly on a misleading prospectus. As it was a real and substantial reason, held this amounted to misrepresentation
Key Elements - Representation must induce the other party into the contract
Attwood v Small [1838] - Reliance - Mine Survey
If there was no reliance on the false statement, then there is no action:
Purchase of mine mistakenly informed of its excellent potential. But before the sale, purchaser had done own independent survey on the mine. As no reliance, the statement wasn’t actionable.
Key Elements - Representation must induce the other party into the contract
Redgrave v Hurd [1881] - Neg wont cure Misrep
Agreement that H would become partner in R’s solicitors practice and buy R’s house.
R represented to H that the practice made £300-400 a year. R showed H docs that indicated the profits were actually much less, but H never inspected the docs in detail.
Held the misrep stood: misrep not gotten rid of if representee is guilty of negligence.
Special Position of Contracts Uberrimae Fides
Rozanes v Bowen [1928] - Disparity of info in parties to insurance - UF
Held insurance contracts require full disclosure from the party seeking insurance as the underwriter knows nothing and the man asking him to insure knows everything.
Special Position of Contracts Uberrimae Fides
Harmon v Irish Life Assurance [2018]:
Insurance co also has a duty of utmost good faith.
Special Position of Contracts Uberrimae Fides - Materiality
Chariots Inns Ltd v Assicurazioni SPA [1981] - Related co previous fire - UnderW didnt care - Obj Test
Necessary to disclose all material details. Objective Test for materiality:
C sought insurance for premises. Insurance co sought to avoid the contract on basis C hadn’t disclosed that previously premises owned by a related co of C was damaged in a fire.
Underwriter admitted if he knew this it wouldn’t have affected him.
SC held the test for materiality is objective: not relevant what the insured or underwriter thought.
Test: It’s a matter or circumstance that would reasonably influence the judgment of a prudent insurer in deciding whether he would take the risk and if so in determining the premium.
Held the insurance co was entitled to repudiate the contract on this basis.
Special Position of Contracts Uberrimae Fides - Materiality
Pan Atlantic Insurance Co v Pine Top Insurance [1994] - Even if unnafected
Test modified: Information a reasonable prudent insurer would like to know even if it ultimately did not affect his decision to take the risk.
Special Position of Contracts Uberrimae Fides - Materiality
Aro Road & Land Vehicles v Insurance Corp of Ireland Ltd [1986 - Reasonable Proposer - Petty conviction
IRISH TEST: ‘Reasonable Proposer’
MD and main shareholder of co failed to disclose he’d a conviction for stolen goods 20 years ago
While upholding reasonable insurer test, court felt this case was justified as an exception.
McCarthy J said a proposal form normally has a number of Qs to be answered, but he was never given one in this case: thus no reason to think he would’ve recounted a 20 y/o petty conviction
Held if no questions are asked, in the absence of fraud, insurer can’t repudiate contract on grounds of misrepresentation. For over-counter insurance (simply filling in names), insurer is accepting something less than the usual standard in terms of disclosure.
Special Position of Contracts Uberrimae Fides - Materiality
Kelleher v Irish Life Assurance Co Ltd [1993] - Reasonable man - No spec req
Test of materiality should focus on ‘reasonable man reading the insurance form and what he’d think would be material info even if not specifically requested.
Special Position of Contracts Uberrimae Fides - Materiality
Keating v New Ireland Assurance [1990] - Not omniscience - Gastric distress
While the test appears stringent, the insured is not inspected to be omniscient:
At the time of the form, K disclosed he was suffering from minor gastric complaint. He didn’t realise he had angina. He died and N sought to avoid the contract on non-d of material info
Held ‘full disclosure’ related to actual knowledge: honest is all that is required.
Special Position of Contracts Uberrimae Fides - The “Basis of the Contract” Clause
Keenan v Shield Insurance Co [1987] - £34 claim
Clauses included by insurance companies: it means the insured warrants all the answers provided are true and complete and it imposes a strict liability on the insured if answer defective even if honest.
- K stated in house insurance form that he’d made no previous claims. He had made a claim for £35 but forgotten. BC clause upheld.
Special Position of Contracts Uberrimae Fides - The “Basis of the Contract” Clause
Keating v New Ireland Assurance [1990] - Contra Proferentem & Known
Due to their harshness, they are interpreted strictly and contra-proferentem:
Court interpreted the BC clause as requiring him to disclose all answers known to him.
Special Position of Contracts Uberrimae Fides - Section 46 SGSS 1980: The Exemption Clause
Walker v Boyle [1982]
An exemption clause to avoid liability re false statements must be fair and reasonable.
Land seller made statements misrepresenting whether there was disputes re the land ownership. Sought to rely on clause saying ‘no error, misstatement or omission re the prop shall annul the sale’. Held this was not fair and reasonable in the circs.
Special Position of Contracts Uberrimae Fides - Reform
What did the LRC Consultation Paper on Insurance Contracts 2011 recommend?
Duty of disclosure should be restricted to facts the insured has actual knowledge of.
Insurer should be required to show non-disclosure of a material fact played a part in their decision to enter the contract.
Insurer should be under statutory duty to explain to proposer both the nature of the duty of disclosure and the consequences of non-disclosure.
Categories of Misrepresentation - Fraudulent
Derry v Peek [1889] - Rail service
This is an action in the tort of deceit Where a person makes a false statement they know to be false or is reckless as to whether it is true or false i.e. they must have an honest belief it is true:
Promoters of a co issued a prospectus stating the co had a right to run train service.
They believed this to be true, but it wasn’t. Believed obtaining the consents was a formality only
Held there was no fraudulent misrepresentation as they honestly believed it was true.
Categories of Misrepresentation - Negligent
Hedley Byrne v Heller [1964]
Action in tort requires a duty of care to exist.
