Misrepresentation Flashcards
If a statement is made during contractual negotiations - how do we know if it is a term or a representation?
Terms -> bind and are contractual,
Representations -> do not bind and are usually not contractual.
⇒ Therefore, breaching a representation is not a cause of action for breach of contract. An inWnocent party can only claim misrepresentation.
What is the difference between a representation and a warranty?
Representation -> statement of fact applying to past or present and may give rise to remedies in the form of damages or voiding the contract.
Warranty -> statement of condition for the present or future that may give rights to claim damages.
What are the 6 elements of an actionable misrepresentation?
- Unambiguous
- False
- Statement of fact
- no silence
- addressed to C
- Induces C to enter into the contract with representor
Can there be misrepresentation by conduct?n
yes so long as this is directed to C
Can ‘mere puff/ sales talk be considered a statement of fact?
no
When can a statement of opinion count as a statement of fact?
Where the representor has some special knowledge or skill
Can half-truths be misrepresentations
yes
where statement is misleading/ weak truth (e.g. X asks Y if there are faults in the car -> Y says no just because they haven’t checked)
What if a statement is made which is true at the beginning of negotiations but circumstances change to make it false - is this a continuing misrepresentation?
yes -> statement must be corrected before contract is entered into
What is a contract of utmost good faith, give an example?
Where there is a duty to disclose all material facts.
Where there is a significant asymmetry in knowledge of facts.
e.g. health insurance
A requirement for an actionable misrepresentation is that this must have induced C to enter into the contract. Does it need to be shown that the representation was the only reason for which C entered into the contract?
no -> a reason will suffice
Once it has been established that there has been a misrepresentation, you must determine what category it falls into. What are the 3 categories?
- Fraudulent misrepresentation
- Negligent misrepresentation
- Innocent misrepresentation
What are the 2 requirements of a fraudulent misrepresentation?
- False representation
- made: knowingly, without belief in its truth or recklessly.
Does there need to be motive to establish a fraudulent misrepresentation?
no
Who holds the burden of proof when establishing that there was a fraudulent misrepresentation?
C
What are the 2 main remedies for fraudulent misrepresentation?
- Rescission
- Damages
If C wants to rescind a contract due to fraudulent misrepresentation, what must they do?
Notify D of their intention to rescind, or;
Start proceedings in court
What are 3 ‘bars to rescision?
- C chooses to continue contract despite misrepresentation
- laps of time
- impossible/ not practicable
e.g: goods have perished/ changed in nature, new contracts have been entered into, bona fide third party has rights in the property
If there has been a fraudulent misrepresentation, can C recover losses which flow the from the misrepresentation even if they were not foreseeable?
yes; remoteness not an issue
If there has been a fraudulent misrepresentation, does C still need to take steps to mitigate?
yes
Where there has been a negligent misrepresentation, C has 2 courses of action - what are these?
- Common law - negligent misstatement
- Statute - s(2) Misrepresentation Act 1967
When would a party use MA 1967 instead of common law of negligent misstatement in a case of negligent misrepresentation?
Where there has been a contract between the parties.
What are the 4 requirements for negligent misrepresentation under MA 1967?
- false statement,
- D believes false statement to be true
- D made the statement carelessly/ without reasonable grounds for believing its truth at the time the contract was made.
- C relied on this statement and suffered a loss
What are the 2 main damages available for negligent misrepresentation?
- rescission
- Damages
Is remoteness/ foreseeability applicable to negligent misrepresentation remedies?
no
What is an innocent misrepresentation?
False statement + reliance + loss but misrepresentation was not fraudulent nor negligent.
Representor believed representation to be true and had reasonable grounds for this belief.
What remedy is available for innocent misrepresentation?
rescission
no separate right for damages
