misrepresentation

Question 1

Define a representation.

Answer 1

A representation is a statement asserting the truth of a given state of facts.

Question 2

Define actionable misrepresentation.

Answer 2

“An unambiguous false statement of fact made to the claimant and which
induces the claimant to enter into the contract with the statement maker.”

Question 3

What are the 5 elements of misrepresentation (same as definition)?

Answer 3

1- unambiguous
2- false
3- statement of fact
4- addressed to claimant
5- induces claimant to enter into contract with statement maker

Question 4

What is meant by ‘statement of fact’ in the definition of misrepresentation?

Answer 4

‘a representation is not an undertaking to do, or not to do something.
- It is a statement asserting a given state of affairs’

Question 5

For misrepresentation, representation must have been ‘material’ to induce claimant, what is the test for deciding that a statement is material?

Answer 5

1- did misrepresentation relate to material that contracting party would want to know before deciding to enter into contract?
2- if there was requirement to make disclosure, had that been waived by other party?
3- did misrepresentation actually induce other party to enter into contract?
4- was right to wait affirmation or estoppel still available?

Question 6

What is a material representation and/or its test?

Answer 6

Objective test- A statement that relates to an issue that would have influenced a reasonable person.

Question 7

What does statements of fact include? (3)

Answer 7

• statements of fact
• some conduct
• statements of law

Question 8

What does statements of fact not include? (3)

Answer 8

• statements of opinion
• statements of intention
• silence

Question 9

What is the exception for statements of opinion not being included for misrepresentation claims?

Answer 9

statements of opinion which lack reasonable grounds from people with
superior knowledge / experience
- so these statements are included under statements of fact

Question 10

In what situation will a statement of opinion be elevated to a statement of fact?

Answer 10

Where it is proved that the opinion expressed was not one which the representor believed.

Question 11

What is an exception for statements of intention not being included under statements of fact?

Answer 11

statements of future intention
- it is not a misrepresentation if the representor makes a promise regarding a future intention, but is prevented from following that course of conduct or if circumstances alter so that they change their mind about that intention.

Question 12

What are the 3 exceptions to silence not giving rise to action for misrepresentation?

Answer 12

1. half-truths
2. continuing representations
3. contracts uberrimae fidei (utmost good faith) = duty to disclose material facts in some contracts i.e fiduciary duties

Question 13

What are the 3 categories of misrepresentation?

Answer 13

1. fraudulent misrepresentation
2. negligent misrepresentation
3. innocent misrepresentation

Question 14

What is the definition of fraudulent misrepresentation?

Answer 14

Action for deceit (?)
- knowingly or recklessly false statement
** burden of proof on C

Question 15

What is the leading case for fraudulent misrepresentation and its 3 factors to prove it?

Answer 15

Derry v Peek
a false representation must be proved to have been made:
1. knowingly;
2. without any belief in its truth; or
3. recklessly

Question 16

Define recklessly.

Answer 16

deliberately not investigating the truth.

Question 17

What is negligent misrepresentation?

Answer 17

Where party has no reasonable grounds to believe statement was true
** burden of proof on D

Question 18

Define innocent misrepresentation.

Answer 18

where party making statement proves they believed statement was true and had reasonable grounds for believing in its truth upto time of contract.

Question 19

Between fraudulent and negligent misrepresentation, which is easier to bring a claim under?

Answer 19

negligent misrepresentation because the burden of proof is with defendant (representor)

Question 20

What are the remedies for misrepresentation & its effect?

Answer 20

effect= voidable, NOT VOID!
remedies=
- rescission
- damages
- indemnity

Question 21

Define rescission and how it works for misrepresentation?

Answer 21

contract is still valid and subsisting until the representee decides to set it aside (rescind the contract).
- representee must communicate the intention to do so to the representor.
- available for all types of misrepresentation.

Question 22

What are the ‘bars’ for rescission of misrepresentation that prevent contract being ended & their definitions (4)?

Answer 22

1. affirmation–> intention is affirmed by representee / their conduct
2. lapse of time–> any delays may affect intention
3. restitution is impossible–> right to rescission lost if no longer possible to restore parties to original position
4. third party rights accrue–> because contract isn’t immediately void, during this time title of goods can pass to third party not aware of rescission.

Question 23

What are the damages for fraudulent misrepresentation?

Answer 23

all losses flowing directly from transaction, even if not foreseeable

Question 24

What are the damages for negligent misrepresentation?

Answer 24

• all loses flowing directly from negligent statement
• damages in lieu of rescission at court’s discretion

Question 25

What are the damages for innocent misrepresentation?

Answer 25

only entitled to the remedy of rescission and, if applicable, an indemnity to cover the cost of the legal obligations arising from the contract entered into.
- only entitled to damages in lieu of rescission

Question 26

Is it possible for a representor to exclude or restrict their liability for misrepresentation?

Answer 26

Yes, as long as the clause satisfies the requirement of reasonableness as stated in s. 11(1) of the Unfair Contract Terms Act 1977

Question 27

For which category or categories of misrepresentation is contributory negligence available as a defence?

Answer 27

Negligent misrepresentation only

Question 28

What is an alternative claim to misrepresentation & definition?

Answer 28

negligent misstatement
- Where there is a relationship of sufficient proximity between two parties, the court might find that one party owes a duty of care to the other to take reasonable care that statements made are accurate.