Misrepresentation Flashcards
Misrepresentation is a _____ factor, which means…
Vitiating factor
Defect in contractual negotiations which renders contract voidable.
Void vs voidable
Void - or void ab initio: contract is void and is no longer valid.
Voidable - contract can be affirmed, or rescinded.
Is there a general duty of disclosure? Case?
No
Fletcher v Krell (1852)
Fletcher v Krell (1852) establishes…
No general duty of disclosure.
However, where active statements are made there is a duty on the representor to ensure they are truthful and accurate.
Shaftesbury House Ltd v Lee (2010) establishes…
Whether a statement is a representation or mere puff is assessed OBJECTIVELY: is it reasonable for the person hearing the statement to take it seriously?
What are the 3 requirements of an actionable misrepresentation?
1) Unambiguous false statement of fact
2) Addressed to the party misled
3) Inducing the misrepresentee to enter the contract.
Avon Insurance v Swire (2000) establishes…
The statement made must be false.
With v O’Flanagan (1936) establishes…
Falsity is judged at the time the contract is made.
Smith v Chadwick (1884) establishes…
Statement made must be unambiguous.
Is conduct sufficient to constitute a misrepresentation? Case?
Yes
Curtis v Chemical Cleaning and Dyeing (1951).
Curtis v Chemical Cleaning and Dyeing (1951) establishes…
‘Any behaviour by words or conduct is sufficient for misrepresentation.’
Spice Girls v Aprilia World Services (2000) establishes…
Example of (mis)representation by conduct.
Photoshoot was a representation by conduct that there were no reasonable grounds to believe any of its members would leave.
Maddison v Alderson (1883) establishes…
General rule: misrepresentation only applies to statements of fact, not promises ‘de futuro’.
Edgington v Fitzmaurice (1885) establishes…
D can misrperesent their state of mind: misstatement of a man’s state of mind if it can be ascertained is as much a fact as anything else (Bowen LJ).
Do statements of opinion constitute misrepresentations? Case?
General rule: no
Bissett v Wilkinson (1927)
Bissett v Wilkinson (1927) establishes…
General rule: statements of opinion are not generally statements of fact.
However, can be rebutted where statement maker is an expert.
Esso Petroleum v Mardon (1976) establishes….
Expert opinions can be false statements of fact constituting an actionable misrepresentation.
Smith v Land House Property Corporation (1885) establishes…
Where facts are NOT equally known to both parties, the statement maker impliedly states he knows facts that justify his opinion.
Nottingham Patent Brick v Butler (1886) establishes…
Creating a false impression despite statement being strictly true is sufficient for a ‘half-truth’, which can constitute an actionable misrepresentation.
With v O’Flanagan (1936) establishes…
Where circumstances change, rendering a statement made subsequently false, the seller has a duty to inform the buyer of the new circumstances.
Falsity is judged…
At the time the contract is made.
Can 3rd parties creating a false impression / misleading C create an actionable misrepresentation?
Case?
Yes
Yianni v Edwin Evans (1981)
Yianni v Edwin Evans (1981) establishes…
Where there is a:
‘sufficient relationship of proximity such that in the reasonable conteplation of D’s, carelessness on their part might be likely to cause damage to plaintiffs.’
3rd requirement of an actionable misrepresentation…
Causing / inducing the misrepresentee to enter the contract.
Smith v Chadwick (1884) establishes…
Whether C has been induced into entering the contract is assessed
OBJECTIVELY:
Would a reasonable person have relied on it?
JEB Fasteners v Marks, Bloom & Co (1983) establishes…
False statement must be a ‘real and substantial’ reason C entered the contract, but need not be the sole reason.
Edgington v Fitzmaurice (1885) establishes…
Misstatement made need not be the sole reason C entered the contract.
Name 3 circumstances / cases where C will fail to prove reliance.
1) Horsfall v Thomas (1862) - C did not know about the misrepresentation.
2) Dyer v Hargrove (1809) - C knows representation is untrue (burden of proof is on the representor to prove this).
3) Attwood v Small (1838) - C does not rely on the misrepresentation.
Where a statement maker gives the opportunity to check the truth of the statement made, is there an obligation on C to do so?
No
‘The representation once made relieves the party from an investigation, even if the opportunity is afforded.’
Attwood v Small (1838) establishes…
Small (C) relied on his own independent survey, not D’s representation.
Held: no actionable misrep as no reliance.
Fraudulent misrepresentation leads to a claim in the…? Case?
Tort of deciet
Derry v Peek (1889)
To establish a fraudulent misrep, who has the burden of proof?
Burden of Proof is on the misrepresentee (C).
What are the 2 routes to claiming negligent misrepresentation?
Negligent misstatement (tort) - Hedley Byrne v Heller (1964).
Negligent misrepresentation - s.2(1) Misrepresentation Act 1967
When would 2 contractual parties rely on the tort of negligent misstatement rather than s.2(1)?
2 reasons…
1) C enters contract with D due to a representation made by a third party (X).
OR
2) C suffers loss because of D’s statement made during negotiations, but no contract is ever concluded.
Name the 2 advantages of a claim under s.2(1) Misrepresentation Act 1967 as opposed to proving fraud?
1) Reverses burden of proof - D must prove he had reasonable grounds to believe in the truth of his statement.
2) D will be ‘so liable’ for damages (both foreseeable and unforeseeable loss) as if the representation was made fraudulently.
Royscot v Rogerson (1991).
Primary remedy for misrepresentation
Rescission
Remedies available for fraudulent misrepresentation
Rescission
Damages - foreseeable AND unforeseeable loss.
Remedies available for negligent misstatement (Hedley Byrne v Heller)
Rescission
Damages - foreseeable losses only.
Remedies available for negligent misrepresentation (s.2(1) MA 1967)
Rescission
Damages - foreseeable AND unforeseeable loss.
Rescission has _____ effect…
Retrospective effect
Places party in position they would have been if they never contracted.
Termination has _____ effect…
Prospective effect
Contract comes to an end / no longer exists for the future.
Remedies available for innocent misrepresentation?
Rescission
NO right to damages…
s.2(2) court has discretion to award damages ‘in lieu’ of rescission.
Name the 4 bars to rescission
1) Restitutio in integrum = impossible
2) Affirmation of contract by misrepresentee
3) Lapse of time
4) 3rd party has acquired rights
Salt v Stratstone Specialist Ltd (2015) establishes…
Courts do not insist on ‘precise rescission’: where ‘substantial rescission’ is possible, rescission may be allowed.
Case establishing that the right to rescission will be lost where C affirms the contract?
Long v Lloyd (1958)
Case establishing that the right to rescission will be lost where a lapse of time has occurred?
Leaf International Galleries (1950)
Case establishing that the right to rescission will be lost where a third party has gained rights?
Crystal Palace v Dowie (2007)
According to Smith New Court Securities v Scrimgeour Vickers (1997), what is the aim of damages in cases of fraudulent misrepresentation?
Deterrence and punishing deceitful statement makers.
s.2(2) Misrepresentation Act 1967
Gives the court discretion to award damages in lieu of rescission
What are the 3 considerations of the court when assessing whether to award damages in lieu of rescission (for innocent misrep) under s.2(2)?
1) Nature of the misrep
2) Loss caused to the misrepresentee if the contract remains in force
3) Loss caused to the misrepresentor if rescission were to be granted.
Pankhania v Hackney LBC (2002) establishes…
s.2(2) does not provide a remedy where there was none.
Zans
