Misrepresentation Flashcards
What is a vitiating factor?
-Makes contract voidable.
-Contract = no legal standing
-Court may treat as if never existed
-Diff from repudiation
What are the two vitiating factors to know?
-Misrepresentation
-Economic duress
What is a representation?
-statements made during negotiations to persuade the other party to enter a contract. Eg the views are very nice
How does a representation turn into a misrepresentation?
-If representations are false then this is a misrepresentation
What can be done if a misrepresentation occurs?
The claimant can ask for the contract to be made void
When does a misrepresentation occur in a contract?
-Before the contract, it is not a term
What are the 4 requirements to prove that there has been a misrepresentation?
-A false statement
-Of material fact
-Made by a party to the contract
-That induces the other party to enter the contract
False statement and name of case
-Statement that isn’t true (doesn’t matter if person did/did not know it was not true)
-Doesn’t have to be written or verbal, can be a misleading picture
-Spice Girls v Aprilia
Spice girls v Aprilia
-Signed sponsorship agreement with Aprilia, while agreement negotiated Geri Halliwell gave notice to leave. Not known to Aprilia. Promotional films with all the girls, when one left made the films worthless.
-Court decide that is was misrepresentation as all attended so showed that none intended to leave
General rule about false statement and case name
-Silence cannot be a false statement
-Fletcher v Krell
Fletcher v Krell
-Woman applied for job of governess and not asked and didn’t say that she was divorced, in Victorian times meant that she wouldn’t get a job
-No misrepresentation as she was not under duty to disclose marital status as hadn’t been asked
What are the exceptions to the silence rule
-Circumstances change
-A half-truth
-Where the relationship between the parties is based on trust
-In uberrimae fidei contracts (utmost good faith) eg insurance
Where circumstances change and case name
-If true statement made but becomes untrue before contract agreed and doesn’t declare then D’s silence here seen as false statement
-With v O’Flanagan
With v O’Flanagan
-Doctor accurately stated profits of medical practice with view of inducing purchases to buy it. After this and before contract, many patients left due to him being ill. Original statement inaccurate
-he had to tell purchaser of the situation
A half truth and case name
-Making statement that isn’t wholly true (car had one careful driver)
-Dimmock v Hallat
Dimmock v Hallat
-A seller of land told purchaser truthfully there were tenants on land, what purchaser wanted, didn’t complete statement and tell him they were all leaving.
-Misrep
Relationship of trust and case name
-Eg solicitor client, financial adviser
-Tate v Williamson
Tate v Williamson
-Financial adviser advised client to sell some land for less than half value so he could clear his debts, advisor purchased the land himself but did not tell client
-Breach of trust - misrep
Uberrimae Fidei contracts and case name
-Business, contracts of upmost good faith like insurance.
-Lambert v Co-operative Insurance
Lambert v Co-operative insurance
-Woman renewed her jewellery insurance and didn’t’t tell company that her husband had been convicted of conspiracy to steal
-Imporant and would have impacted on their decision to renew so silence seen as misrepresentation
-police void and refused to pay
Act for when consumers only have to disclose information when asked to do so
-Consumer insurance (disclosure and representations) act 2012
-insurance can’t refuse to pay out on policy just bc the consumer didn’t realise that they should have disclosed relevant info. Only if they carelessly or deliberately withheld
-insurance co can reduce the payout by the proportion that the price would have increased by if they knew
When does the consumer insurance (disclosure and representations act) not apply?
-If the person taking out the insurance policy is not a consumer and is a business
-old law on upmost good faith applies. Silence misrep if business fail to disclose any relevant info
-insurance will be void and insurance can refuse to payout
Statement of material fact and case name
-not just opinion
-Bisset v Wilkinson
Bisset v Wilkinson
-Seller of farmland that never had sheep on was asked by buyer how many sheep would fit on, not sheep farmer said he thought that 2000 would fit. False. Opinion not material fact
-genuinely believed his opinion to be accurate so not misrepresentation
-if ought to know what they are talking about but give opinion which isn’t right then treat as statement of material fact.
Case to contrast material fact and Bisset v Wilkinson
-Edinburgh v Fitzmaurice: D’s knew statement about how C’s money would be spent was false, not honest, statement of material fact so misrep.
- Must be made by someone who is party to the contract
-Misrepresentation must be given by someone party to the contract and not a 3rd party
- Must have induced the other party to enter the contract, case name
Atwood v Small
Attwood v Small
-Seller made false statement to purchaser about earnings from mine. The buyer instructed a surveyor to confirm statement, did incorrectly, purchaser bought mine and then discovered statement not true
-no misrep as purchaser relied on survey report and not the sellers statement
When can the point about inducing the party to enter a contract still be used? Name of case
-Even if C could reasonably have checked to see if the statement was true
-Redgrave v Hurd
Redgrave v Hurd
-Purchaser of solicitor’s practice was given a set of accounts to look at. Seller verbally misled as to the true earnings.
-purchaser relied on the statement, didn’t look at the accounts, if had then would’ve seen it wasn’t true
-entitled to rely on the sellers statement and bc it wasn’t true then it was a misrepresentation
What is the act for misrepresentations for consumers, another statute?
-Consumer Protection (Amendment) Regulations 2014
When will information given to a consumer be treated as misleading (misrep my silence or omission) in Consumer Protection Amendment Regulations 2014?
-If trader omits material info that avg consumer needs to make informed decision
-If they hide or provides material in unclear unintelligible, ambiguous or untimely way
-Fails to identify commercial intent of the commercial practice if this is not already clear
What are the 3 types of misrepresentation?
-Fraudulent
-Negligent (inc under Misrep act 1967)
-Innocent
What is innocent misrep? And what act is it defined under?
-Misrepresentation Act 1967
-Representation which is genuinely held on reasonable grounds. False statement made honestly.
-person making the statement always believed it to be true and no negligence
-still misrep even tho honest
If a claim for innocent misrepresentation is won, what remedies are received?
-Recission (go back to pre contract position)
OR
-Damages instead of rescission
*If lose recission then lose damages too. Won’t get recission if barred
What type of remedy is rescission and what does this mean?
-Equitable, discretionary
-Courts only award if fair to do so
What are the 4 situations where the court can use discretion and not grant rescission? (Also wouldn’t get damages) Barrs to rescision
-Restitution to the original pre-contract position is impossible
-The contract is affirmed
-Delay
-A third party has gained rights over the property
Restitution to pre-contract state is impossible
+case name
-Rescission not allowed is parties can’t be restored to their pre-contractual position
-Clarke v Dickinson
Clarke v Dickinson
-C misled into becoming partner into a business.
-Changed to a ltd company before C wanted to rescind
-Rescission not available as become a ltd company, couldn’t return partnership
- The C has affirmed the contract and case name
-Innocent party decides to carry on with the contract despite being aware of the misrep, right to rescind then lost
-Long v Lloyd
Long v Lloyd
-C told by seller that lorry excellent condition
-Broke down after sale, noticed faults
-contacted dft who offered to pay half repairs
-agreed
-broke down again, wanted to rescind
-preserved w lorry after 1st breakdown so indicated willingness to continue
- Delay and case name
Delay defeats equity. Rescission not available as remedy if delay in coming to court
-Leaf v International Galleries
Leaf v International Galleries
-1994 C purchase painting thought by constable but only found out it wasn’t by him when tried to sell it 5 yrs later.
-Rescission not allowed because of the delay
- 3rd party gained rights over the property and case name
-Where someone else has gained interest in the subject matter of contract, recission not granted, unfair to 3rd party
-Lewis v Avery
Lewis v Avery
-Sold car. Buyer took away and gave cheque. Cheque was worthless. Accepted it as persuaded by fraudster that he was actor. Buyer sold to innocent 3rd party.
-original sellers only remedy was to claim rescission and ask for car to return, failed as unfair to deprive 3rd party.
Negligent misrepresentation meaning and case
-False statement made by a person who believed the statement to be true but had no reasonable grounds to believe it was true
-Howard Marine v Ogden: had registration doc of dredger which stated correct capacity. Not discharged burden if proof, didn’t show reasonable grounds for believing it to be true. Not innocent misrep.
What are the remedies for negligent misrepresentation?
-Rescission AND/OR
-damages
-could get both or if rescission barred just get damages
-calculated as in fraud
*bars to recission same as innocent, use same cases
What is fraudulent misrepresentation and the case for it
-When the person making the statement knows it is untrue or is reckless as to whether or not it is
-Greenridge v Kempton: HC said buyer of property entitled to refund of deposit bc untrue rep that there was no service charge. Fraudulent misrep and buyer entitled to damages for deceit.
What are the remedies for fraudulent misrepresentation?
-Rescission AND/OR
-damages
-calculated by aiming to put the victim in the position as before misrep but certain circumstances damages may be appropriate.
Case example for damages for fraudulent misrep
-East v Maurer: c bought hairdressing salon from D continued to trade from another he owned even tho told C that he wouldn’t be. C lost business to D and suffered a loss due to misrep.
-Possible to recover the damages for loss of profit for fraudulent misrep
