Misrepresentation Flashcards

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1
Q

What is a vitiating factor?

A

Something that makes a contract void or voidable- it affects the validity of a contract.

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2
Q

What is a voidable contract?

A

The contract is valid but the innocent party can declare the contract invalid and not legally binding. Misrepresentation is an example of this.

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3
Q

What is misrepresentation?

A

A false statement of fact made by a party in the contract that induces the other party to enter the contract.

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4
Q

What are the key elements of misrepresentation?

A

-Makes a false/untrue statement
-Statement is of fact
-Made by a party to the contract to the other party
-The statement induced the other party to enter into the contract

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5
Q

What is a false or misleading statement?

A

Spice Girls v Aprilia World Service- making a statement should be interpreted broadly to include written and verbal statements, pictures, advertising, packaging and even conduct.

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6
Q

What is the general rule for silence or non disclosure?

A

Fletcher v Krell- usually, silence or non disclosure is not a false statement.

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7
Q

What are the exceptions to the general rule for silence or non disclosure?

A

-Confidential relationship
-Making a Half true statement
-Circumstances changing after the statement was made
-Consumer rights

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8
Q

What is the rule of confidential relationships?

A

If a contract that involves high level of honesty between 2 parties, non-disclosure of info will be a misrepresentation

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9
Q

What is the rule about silence or non disclosure for making a half true statement?

A

Dimmock v Hallett- making statements that are technically true but fail to reveal the full situation can be misrepresentations.

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10
Q

What is the rule about silence or non disclosure for circumstances changing after a statement was made?

A

With v O’Flanaghan- there is a legal obligation to tell the buyer of the change in circumstances if the new situation makes the previous statement false.

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11
Q

What is the rule about silence or non disclosure for consumer rights?

A

If a business leaves out or hides any important information that helps a consumer make an informed choice, this can be a misrepresentation.

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12
Q

In which situations will the statement not be of fact?

A

-Statements of opinion
-Statements of future intention or conduct
-Puff or mere sales talk

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13
Q

What is the general rule for statements of opinion?

A

Bisset v Wilkinson- statements of opinion will not amount to statements of fact and therefore they are not actionable.

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14
Q

When can statements of opinion be a misrepresentation?

A

Smith v Land and House Property Corp- if the opinion is given by a person with special knowledge or skill, this can amount to a misrepresentation.

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15
Q

What is the general rule for statements of future intention or conduct?

A

A statement that expresses future intention is speculation rather than fact.

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16
Q

When can statements of future intention or conduct be a misrepresentation?

A

Edgington v Fitzmaurice- if the person making the statement definitely did not have that intention at the time, this can amount to a statement of fact.

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17
Q

What is puff or mere sales talk?

A

These are empty boats rather than factual statements. The test is whether the statement would make a reasonable person enter a contract.

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18
Q

In which case was the statement mere sales talk?

A

Dimmock v Hallett- the statement was too vague to make a reasonable man enter a contract.

19
Q

In which case was the statement more than mere sales talk?

A

Carlill v Carbolic Smoke Ball Co- D had made it quite clear they were serious about the rewards, making this more than just sales talk as they would make a reasonable person think the statement was believable.

20
Q

What does it mean that the false statement must be made by a party to the contract?

A

If the statement is made by a third party to the contract, this will not be a misrepresentation e.g. a misleading Amazon review.

21
Q

What does it mean that the statement must induce the other party to enter into the contract?

A

The claimant must have relied upon the statement when deciding the enter into the contract. It must have been a critical part of their decision to do this.

22
Q

What factors are considered to see if the statement induced the other party to enter into the contract?

A

-The claimant must have known about the existence of the false statement

-The false statement must have materially affected the claimant’s decision to enter into the contract

23
Q

In which case did the claimant not know of the existence of the false statement?

A

Horsfall v Thomas

24
Q

What happens if the buyer did not rely on the false statement?

A

Attwood v Small- the buyer didn’t rely on the statement, instead they relied on the surveyor’s confirmation so the statement didn’t induce him to enter the contract.

25
Q

What happens if the buyer did rely on the false statement?

A

Redgrave v Hurd- even if a reasonable person would double check the information, as long as the buyer did actually rely on the statement, this can be misrepresentation.

26
Q

What are the different types of misrepresentation and why is it important to know the type?

A

-Innocent misrepresentation
-Negligent misrepresentation
-Fraudulent misrepresentation
The remedies are slightly different for the 3 types.

27
Q

What is an innocent misrepresentation?

A

s2(1) Misrepresentation Act 1967- a statement that is false, but which the representor believed to be true and had reasonable grounds to believe the statement to be true. e.g. Leaf v International Galleries.

28
Q

What is a negligent misrepresentation?

A

s2(1) Misrepresentation Act 1967- this is where the representor believes their statement to be true but does not have reasonable grounds for believing this. e.g. Howard Marine v Ogden

29
Q

What is a fraudulent misrepresentation?

A

Where the representor makes a statement they do not believe is true. e.g. there could not be fraudulent misrepresentation in Derry v Peek as the company genuinely believed what they were saying.

30
Q

What are the main remedies for misrepresentation?

A

-Rescission
-Damages

31
Q

What is rescission?

A

It applies to all 3 types of misrepresentation and is where the court will allow a party to cancel the contract and put the parties back into the position they were before the contract was made. It is an equitable remedy so the court will only award it when it appears fair to do so.

32
Q

What are the bars to rescission?

A

-It is impossible to put the parties back into their pre-contractual position
-Delay
-Affirmation of the contract
-Third party has gained rights over the property

33
Q

In which case was it impossible to put the parties back into their pre-contractual position?

A

Vigers v Pike

34
Q

How does the bar of delay work?

A

If the claimant leaves it too long before trying to rescind the contract, the court may not allow him to do so. In Leaf v International Galleries, it was too late to rescind the contract after 5 years.

35
Q

How is the bar of delay different between the different types of misrepresentation?

A

Delay starts from the time of the statement for innocent and negligent misrepresentation, but from the time the misrepresentation is discovered for fraud.

36
Q

What does affirmation of the contract mean?

A

This is where the misled party decides to carry on with the contract even though they are aware of the misrepresentation. The courts will not allow rescission here as the representee has accepted the situation. Long v Lloyd

37
Q

What does it mean if a third party has gained rights over the property?

A

If a third party has, in good faith, gained an interest in the goods, then it would be unfair to rescind the original contract because the innocent third party would lose out. Lewis v Avery.

38
Q

When can damages be awarded for innocent misrepresentation?

A

There is no automatic right to damages for an innocent misrepresentation but s2(2) Misrepresentation Act 1967 says that a court can award damages instead of rescission for innocent misrepresentation if they believe this would be fairer.

39
Q

Which case shows how damages for innocent misrepresentation work?

A

Govt of Zanzibar v British Aerospace- if a party was barred from the remedy of rescission, the claimant couldn’t claim damages as these were a substitute for rescission. If the claimant was not entitled to claim rescission, he was not entitled to claim damages.

40
Q

What damages can be awarded for innocent misrepresentation?

A

They cover current losses up to trial.

41
Q

When can damages be awarded for negligent misrepresentation?

A

Salt v Strastone- the claimant is entitled to claim damages as a substitute to rescission.

42
Q

What damages can be awarded for negligent misrepresentation?

A

If rescission is available, s2(1) Misrepresentation Act 1967 shows damages are the same as fraudulent misrepresentation, confirmed by Royscot v Rogerson.

43
Q

When can damages be awarded for fraudulent misrepresentation?

A

Always, even if rescission is barred and this can also be in addition to rescission.

44
Q

What damages can C get for fraudulent misrepresentation?

A

-All expenses directly arising from the misrepresentation, even if they were not reasonably foreseeable (Doyle v Olby)
-Loss of profit (East v Maurer)