Misrepresentation Flashcards
What is a representation?
A statement of fact which induces the other party to enter the contract or act to their detriment
Which case illustrates the difference between a promise and a representation?
Kleinwort Benson v Malaysia Mining Corp
What is a misrepresentation?
An unambiguous, false statement of fact or law which is addressed to the party misled and which induces the contract.
Can a misrep of law create a cause of action?
Yes- Kleinwort Benson v Lincoln Borough Council
What is the effect of a misrep of law?
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)
What are the categories of statements that do not constitute existing facts and cannot amount to actionable misrep?
Mere puff
Statement of opinion or belief which is proven to be unfounded
What is the leading case for mere puff?
Carlill Carbolic; Dimmock v Hallett
What happened in Dimmock v Hallet?
Statement that land was ‘fertile and improveable’ could not be considered as misrepresentation
What is the requirement for statements?
Must be one of existing facts
When might mere puff be treated as a representation?
The more specific the statement is
What happened in Bisset v Wilkinson
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
What is the exception to the rule in Bisset?
Where the representor has special knowledge and skill as to make representations with reasonable care and skill (Esso Petroleum v Mardon)
Why did Esso fail in their claim, that they had made a statement of opinion?
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”
Which case espoused a similar opinion to that in Esso?
Smith v Land and House Property Corp
What was held in Smith v Land and House Property corp?
Those who know facts which justify his opinion are bound to a duty to take reasonable care in the preparation of forecasts and opinions
Can intention be misrepresented?
If the representor makes a misrepresentation as to his present intentions- Edgington v Fitzmaurice
Which two ways can a representation be addressed to the misled party?
- Direct communication between representor and representee
- 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)
What effect must the representation have to = actionable misrepresentation?
It must induce entry into the contract and be a material representation
What is a material representation?
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)
Who is the onus of proof placed upon to prove that the misrep induced the contract?
Representee
Who bears the onus of proof for fraudulent misrep?
Representee
What is the test the claimant must employ to establish inducement?
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)
In which situations will C be unable to show that the representation induced the contract?
- Where the C was unaware of the existence of the representation (Horsfall v Thomas)
- C knew the representation was untrue
- C did not allow a representation to affect his judgement (Smith v Chadwick)
What must the representor show to disprove that the reprsentation induced the contract?
That C discovered the misrepresentation
How was fraudulent misrep established in Derry v Peek?
- Proof of fraud, nothing short of it is sufficient.
- Fraud is proven when it is shown that a false rep has been made knowingly or, without belief in its truth or recklessly
- If fraud if proved, the motive of the guilty is immaterial
What are the 4 types of misrepresentation?
Fraudulent, Negligent and Section 2(1) of the Misrepresentation Act 1967, Innocent misrep
What is the effect of the Misrepresentation act?
The representing party will be liable in damages for any misrepresentation made,
What are the advantages of the Misrepresentation act as opposed to relying on common law negligence ?
- Does not require establishing a Hedley Byrne relationship.
- Onus of proof on representor to prove they believed in the representation
- Measures of damages under the act recoverable is the measure of damages in the tort of deceit
What are the limits of rescission?
- Where C affirms the contract after discovering the truth.
- 3rd party intervention of innocent 3rd party rights
- Lapse of time
- Where it is impossible to restore parties to their pre-contractual position
Are damages available for misrep?
No- unless the misrepresentation has been incorporated as a term, in which case damages can be claimed for breach.
Damages are recoverable in tort
What is the recovery under a claim under s2(1) of the misrep act
Recovery protects C’s reliance interest- seeking to put C in the position he would have been in had the representation not been made
