Misrepresentation

Question 1

What is a representation?

Answer 1

A statement of fact which induces the other party to enter the contract or act to their detriment

Question 2

Which case illustrates the difference between a promise and a representation?

Answer 2

Kleinwort Benson v Malaysia Mining Corp

Question 3

What is a misrepresentation?

Answer 3

An unambiguous, false statement of fact or law which is addressed to the party misled and which induces the contract.

Question 4

Can a misrep of law create a cause of action?

Answer 4

Yes- Kleinwort Benson v Lincoln Borough Council

Question 5

What is the effect of a misrep of law?

Answer 5

The contract can be set aside for the mistake (Brennan v Bolt Burden) or find a cause of action (Pankhania v London Borough of Hackney)

Question 6

What are the categories of statements that do not constitute existing facts and cannot amount to actionable misrep?

Answer 6

Mere puff
Statement of opinion or belief which is proven to be unfounded

Question 7

What is the leading case for mere puff?

Answer 7

Carlill Carbolic; Dimmock v Hallett

Question 8

What happened in Dimmock v Hallet?

Answer 8

Statement that land was ‘fertile and improveable’ could not be considered as misrepresentation

Question 9

What is the requirement for statements?

Answer 9

Must be one of existing facts

Question 10

When might mere puff be treated as a representation?

Answer 10

The more specific the statement is

Question 11

What happened in Bisset v Wilkinson

Answer 11

A farmer who made a statement that the farm could hold 2000 sheep (when it could not) was not a misrep as it was a statement of opinion the farmer honestly held

Question 12

What is the exception to the rule in Bisset?

Answer 12

Where the representor has special knowledge and skill as to make representations with reasonable care and skill (Esso Petroleum v Mardon)

Question 13

Why did Esso fail in their claim, that they had made a statement of opinion?

Answer 13

Because they possessed the skill and special knowledge in the forecasting of the thoroughput of petrol. In bisset, the land had never been used as a sheep farm and both parties were equally able to form an opinion”

Question 14

Which case espoused a similar opinion to that in Esso?

Answer 14

Smith v Land and House Property Corp

Question 15

What was held in Smith v Land and House Property corp?

Answer 15

Those who know facts which justify his opinion are bound to a duty to take reasonable care in the preparation of forecasts and opinions

Question 16

Can intention be misrepresented?

Answer 16

If the representor makes a misrepresentation as to his present intentions- Edgington v Fitzmaurice

Question 17

Which two ways can a representation be addressed to the misled party?

Answer 17

1. Direct communication between representor and representee
2. Addressed by representor to a third party with the intention that it will be passed on to the claimant (Commercial Banking Co of Sydney & RH Brown)

Question 18

What effect must the representation have to = actionable misrepresentation?

Answer 18

It must induce entry into the contract and be a material representation

Question 19

What is a material representation?

Answer 19

The misrep must have been such as would affect the judgment of a reasonable man in deciding whether or not to enter into the contract on these terms. (Museprime Properties Ltd v Adhill Properties)

Question 20

Who is the onus of proof placed upon to prove that the misrep induced the contract?

Answer 20

Representee

Question 21

Who bears the onus of proof for fraudulent misrep?

Answer 21

Representee

Question 22

What is the test the claimant must employ to establish inducement?

Answer 22

But for test- but for the representation, they would not have entered into the contract on the terms on which he did (Raiffeisen v Royal Bank of Scotland)

Question 23

In which situations will C be unable to show that the representation induced the contract?

Answer 23

1. Where the C was unaware of the existence of the representation (Horsfall v Thomas)
2. C knew the representation was untrue
3. C did not allow a representation to affect his judgement (Smith v Chadwick)

Question 24

What must the representor show to disprove that the reprsentation induced the contract?

Answer 24

That C discovered the misrepresentation

Question 25

How was fraudulent misrep established in Derry v Peek?

Answer 25

1. Proof of fraud, nothing short of it is sufficient.
2. Fraud is proven when it is shown that a false rep has been made knowingly or, without belief in its truth or recklessly
3. If fraud if proved, the motive of the guilty is immaterial

Question 26

What are the 4 types of misrepresentation?

Answer 26

Fraudulent, Negligent and Section 2(1) of the Misrepresentation Act 1967, Innocent misrep

Question 27

What is the effect of the Misrepresentation act?

Answer 27

The representing party will be liable in damages for any misrepresentation made,

Question 28

What are the advantages of the Misrepresentation act as opposed to relying on common law negligence ?

Answer 28

1. Does not require establishing a Hedley Byrne relationship.
2. Onus of proof on representor to prove they believed in the representation
3. Measures of damages under the act recoverable is the measure of damages in the tort of deceit

Question 29

What are the limits of rescission?

Answer 29

1. Where C affirms the contract after discovering the truth.
2. 3rd party intervention of innocent 3rd party rights
3. Lapse of time
4. Where it is impossible to restore parties to their pre-contractual position

Question 30

Are damages available for misrep?

Answer 30

No- unless the misrepresentation has been incorporated as a term, in which case damages can be claimed for breach.
Damages are recoverable in tort

Question 31

What is the recovery under a claim under s2(1) of the misrep act

Answer 31

Recovery protects C’s reliance interest- seeking to put C in the position he would have been in had the representation not been made