Misrepresentation Flashcards
What are the categories of pre-contract statements?
Sales puff
A contract term
A representation (which may be actionable as a misrepresentation.)
What is the primary test to decide between the different categories of preliminary statements?
The common intention of the parties when they entered the contract.
If the common intention of the parties is not clear, what are the guidelines for the test to decide between the different categories of preliminary statements?
If an expert makes a false preliminary statement to a non- expert the statement may
well be deemed to be a term of the contract; conversely, if a non- expert makes a false
preliminary statement to an expert the statement is more likely to be deemed a simple
representation
If a statement made verbally was repeated in a written contract before it was agreed then it will be a term.
If the recipient of the statement was made clear that it was of vital importance then it will be a term.
If the statement maker invited the other party to verify the statement it would be a representation. Whereas if the statement maker had
told the other party not to bother checking it, the statement is more likely to be a term.
The longer the time lapse between the statement and the contract being formed, the more likely that it will be held to be a representation.
What is the definition of misrepresentation?
An untrue statement of fact,
Made by one party to a contract,
By words or conduct,
To the other contracting party,
Which induced the other to enter into the contract.
When can silence amount to misrepresentation?
Where there is a fiduciary relationship between the parties.
Where the contract is one of the utmost good faith.
Where there has been a half-truth.
Where a statement of fact is true when made but a change of circumstances occurs before the contract is formed that makes the statement untrue, and the change is not disclosed.
Are statements about a party’s intention or an opinion for which there are no facts on which it can be reasonably based, statements of fact?
These can be statements of facts and can be misrepresentations if the party lies about their state of mind or lies that they have facts on which their opinion can be reasonably formulated.
Must a statement be the only inducement for the party to enter into the contract?
the statement need not be the only inducement to enter the contract. It is enough that it was at least a reason for doing so.
When is misrepresentation fraudulent?
When it is made:
With the knowledge that it is false; or
Without belief in its truth; or
Recklessly, not caring whether it is true or false.
What damages are available for fraudulent misrepresentation?
Damages in the tort of deceit are available and include how much the misrepresentee is ‘out-of-pocket’ as a result
of the misrepresentation, and all consequential losses.
Remoteness of loss is not assessed.
What is negligent misrepresentation?
Statements that were made carelessly, where the belief in the truth of the statement was honestly held but it was not held on reasonable grounds.
What is the burden of proof for negligent misrepresentation?
The misrepresentor is required to prove that they made the statement on reasonable grounds.
What damages are available for negligent misrepresentation?
All consequential losses are recoverable and the aim is to put the innocent party in the position they would have been in if the misrepresentation had not
been made.
What is innocent misrepresentation?
Where the misrepresentor can establish that they had reasonable grounds to believe their statement was true.
What damages are available for innocent misrepresentation?
Damages are not available but the misrepresenteee may still be able to rescind the contract.
When is rescission available for misrepresentation?
Rescission is available for all types of misrepresentation and may be awarded in addition to damages.
