MISREPRESENTATION

Question 1

representation or misrepresentation

Answer 1

rep= statement which is made before the contract is entered into
misrep= a false representation
mis
Misrepresentation may make a contract voidable
- vitiate a contract= even though the formation of a contract are present the contract will not be enforceable, due to VF

Question 2

Void and voidable

Answer 2

void- contract is treated as never been valid
voidable- means that teh contract is valid ybless and until the the innocent party takes stpes to end it

Question 3

misrep and contract terms

Answer 3

statement made in the period leading up to teh contract, teh court decides if it is a contract term or misrepresentation, based on intention of parties
if it is a breach of contract they will receive better remedies
not all categories of misrepresentation give
a right to damages, and even when they do, the amount of the damages may not be as much as for breach of contract

Question 4

term or misrepresentation

Answer 4

Would a reasonable observer have thought
that the parties intended the statement to be a contract term or
not? The court decides this by by looking at various factors:
- Importance
- Timing
- Relative skill and knowledge
- If a written contract, was the statement included?
Couchman v Hill (1947)
- not misrep as description was critical to contract

Question 5

misrepresentation

Answer 5

in order to be an actionable misrepresentation? the statement must be a false statement of fact or law, made by (or on behalf of) one contracting party to the other, which induces the other party to enter into the contract

fact or law- generally not a statement of opinon
- mere puff would not be misrep
-Dimmock v Hallett (1866)- not to be actionable

Question 6

Statement of belief

Answer 6

statement of belief or opinionis generally not misrepresentation
Bisset v wilkinson(1927)
- said that the farm woul carry 2k sheep but not been used before for sheep and buyer knew
held: only a statement of opinion and therefore not a misrepresentation

Question 7

3 exceptions

Answer 7

an expert’s statement of opinion may be a misrepresentation
Esso Petoleum v Mardon (1976)
- 40 years experience said that the petrol station would sell 200K of petrol every year
held: negligent misstatement as the Essi manager had special knwledge or skill

Statement of opinion may also be misrep if it is contradicted by facts best knwon to D
Smith v Land and House property corp (1884) - landlord described tenant as most desirable knowing that they were behind on rent

Statement of opinion which is not genuinely held can be treated as a false statement of fact in relation to the persons state of mind
Edgington v Fitzmaurice (1881-5)
- used the money to pay off debt

Question 8

Silence as mis rep?

Answer 8

half truth-
Dimmock v Hallett (!866)
- said the farms were fully let but did not mention that tenants had given notice to leave

change of circumstances
With v O’flannagan (1936)
- this significant change in circumstances meant silence amounted to misrepresentatio

Misrepresentation by conduct
Spic Girls v Aprilia (2000)
- instructed the badn that she was leaving before the contract was made

4) contracts whcih are uberrimae fidei (utmost good faith)- must disclose all relevant facts- business insurance contracts
5) contracts involving a fiduciary relation

Question 9

Inducement

Answer 9

• the statement must induce c to enter the contract
  Does not need to be the only reason but atleast part the reason
  Edgington v Fitzmaurice(1885)

there may be inducement if the claimant was in fact induced even if a reasonable person would not have been induced
Musprime Properties v Adhill Properties (1990)

Id the statement does induce C to enter into the contract then it is no defence for D that if C had made their own chcekcs they would have found out that the statement was falase
Redgrave v Hurd (1881)

HOWEVER
C does make their own checks and then relies complete;y n those checks and not at all on the misrep then there can be no claim, as the misrep has not acted as an inducement: attwood v Small (1838)

Question 10

Fraudulent misrep

Answer 10

false misrep made
1. knowlingly
2.without belief in its truth
3. recklessly,careless whether it be true of false
Derry v Peek (1889)
must show that his recklessness in making a false representation was such as as to amount to a disregard of the truth to the extent that he should be regarded as fradulent: Witter v TBP (1996)

Question 11

remedies

Answer 11

recission- with all 3 categories C has the remedy of recission
- to rescind the contract means to undo or unwind it, so that it is as if the contract had never existed

• with recission of a contract, the aim is, as far as possible, to put both C aand D back in the position they were in before the contract was made
• the property and price paid must be returned to each party and both parties are free from any future obligations

Question 12

other types of misrep

Answer 12

fraudulent is difficult to prove, so even where C thinks the false stateemnt may heave been made knowingly its usually advisable to claim for negligent misrep

negligent misrep- false statement made without reasonable grounds to believe it was true
innocent misrep: false statement made honestly and with reasonable grounds to believe it was true

Question 13

when is th eright to rescind lost

Answer 13

the right to recission will be lost if :
- c has affirmed the contract
Long v Lloyd (1958)

• restitution is impossible if the good have been altered/consumed
  court may take a flexible approach of practical justice
  erlanger v New sombrero Phosphate co (1878)
• a third party has obtained rights over the property
  Lewis v Averay(1972)
  lost the rights to rescind the contract as he didnt take action before third party bought car
• lapse of time= too much time has passed
  Leaf v International Galleries (1950)

Question 14

Damages

Answer 14

compensation for losses
- c might seek this instead of recission if they want to carry on with the contract, or as well as recission, if they dont and have lost money as a result of the misrep

Question 15

fradulent misrep damages

Answer 15

c can claim damages for all losses directly from the misrep even if they were not reasonably foreseeable
Doyle v Olby (1969)
but is hard to prove

-c cannot claim loss of the profits which would have been made under the contract if the statement has been true
East v Maurer (1991) comes close

Question 16

claiming damages for negligent misrep

Answer 16

1) common law claim for negligent misstatement
- hedey byrne v heller (1964)
- does not need to be a contract between c and d
- a cliam dan be based on a statement of opinion
but will only apply if theyre is a special relationship between c and d
- c will have to prove that D was negligent
- damages will cover reasonably foreseeable losses only

2) claim for negligent misrep under statute
misrep act 1967 s2(1)- will only apply if C has entered into a contract with D after the misrep
- but otherwise it has great advantages for C over the common law claim

a) there is no need for special relationship
b) C does not need to prove D was negligent, instead D has to prove that they were not negligent in making the misrep
Howard marine Dredging co ltdv a ogden and sons (1978)
c) damages will cover even losses which were not reasonably foreseeable
royscott trust ltdv rogerson (1991)
* does not have the right to claim for innocent misrep
- under s2(2) court may decide to award damages instead of granting recission