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Contract > Misrepresentation > Flashcards

Misrepresentation Flashcards

1
Q

Misrepresentation is a _____ factor, which means…

A

Vitiating factor
Defect in contractual negotiations which renders contract voidable.

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2
Q

Void vs voidable

A

Void - or void ab initio: contract is void and is no longer valid.

Voidable - contract can be affirmed, or rescinded.

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3
Q

Is there a general duty of disclosure? Case?

A

No
Fletcher v Krell (1852)

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4
Q

Fletcher v Krell (1852) establishes…

A

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.

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5
Q

Shaftesbury House Ltd v Lee (2010) establishes…

A

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?

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6
Q

What are the 3 requirements of an actionable misrepresentation?

A

1) Unambiguous false statement of fact

2) Addressed to the party misled

3) Inducing the misrepresentee to enter the contract.

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7
Q

Avon Insurance v Swire (2000) establishes…

A

The statement made must be false.

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8
Q

With v O’Flanagan (1936) establishes…

A

Falsity is judged at the time the contract is made.

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9
Q

Smith v Chadwick (1884) establishes…

A

Statement made must be unambiguous.

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10
Q

Is conduct sufficient to constitute a misrepresentation? Case?

A

Yes
Curtis v Chemical Cleaning and Dyeing (1951).

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11
Q

Curtis v Chemical Cleaning and Dyeing (1951) establishes…

A

‘Any behaviour by words or conduct is sufficient for misrepresentation.’

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12
Q

Spice Girls v Aprilia World Services (2000) establishes…

A

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.

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13
Q

Maddison v Alderson (1883) establishes…

A

General rule: misrepresentation only applies to statements of fact, not promises ‘de futuro’.

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14
Q

Edgington v Fitzmaurice (1885) establishes…

A

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).

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15
Q

Do statements of opinion constitute misrepresentations? Case?

A

General rule: no
Bissett v Wilkinson (1927)

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16
Q

Bissett v Wilkinson (1927) establishes…

A

General rule: statements of opinion are not generally statements of fact.

However, can be rebutted where statement maker is an expert.

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17
Q

Esso Petroleum v Mardon (1976) establishes….

A

Expert opinions can be false statements of fact constituting an actionable misrepresentation.

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18
Q

Smith v Land House Property Corporation (1885) establishes…

A

Where facts are NOT equally known to both parties, the statement maker impliedly states he knows facts that justify his opinion.

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19
Q

Nottingham Patent Brick v Butler (1886) establishes…

A

Creating a false impression despite statement being strictly true is sufficient for a ‘half-truth’, which can constitute an actionable misrepresentation.

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20
Q

With v O’Flanagan (1936) establishes…

A

Where circumstances change, rendering a statement made subsequently false, the seller has a duty to inform the buyer of the new circumstances.

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21
Q

Falsity is judged…

A

At the time the contract is made.

22
Q

Can 3rd parties creating a false impression / misleading C create an actionable misrepresentation?
Case?

A

Yes
Yianni v Edwin Evans (1981)

23
Q

Yianni v Edwin Evans (1981) establishes…

A

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.’

24
Q

3rd requirement of an actionable misrepresentation…

A

Causing / inducing the misrepresentee to enter the contract.

25
Q

Smith v Chadwick (1884) establishes…

A

Whether C has been induced into entering the contract is assessed
OBJECTIVELY:
Would a reasonable person have relied on it?

26
Q

JEB Fasteners v Marks, Bloom & Co (1983) establishes…

A

False statement must be a ‘real and substantial’ reason C entered the contract, but need not be the sole reason.

27
Q

Edgington v Fitzmaurice (1885) establishes…

A

Misstatement made need not be the sole reason C entered the contract.

28
Q

Name 3 circumstances / cases where C will fail to prove reliance.

A

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.

29
Q

Where a statement maker gives the opportunity to check the truth of the statement made, is there an obligation on C to do so?

A

No
‘The representation once made relieves the party from an investigation, even if the opportunity is afforded.’

30
Q

Attwood v Small (1838) establishes…

A

Small (C) relied on his own independent survey, not D’s representation.

Held: no actionable misrep as no reliance.

31
Q

Fraudulent misrepresentation leads to a claim in the…? Case?

A

Tort of deciet
Derry v Peek (1889)

32
Q

To establish a fraudulent misrep, who has the burden of proof?

A

Burden of Proof is on the misrepresentee (C).

33
Q

What are the 2 routes to claiming negligent misrepresentation?

A

Negligent misstatement (tort) - Hedley Byrne v Heller (1964).

Negligent misrepresentation - s.2(1) Misrepresentation Act 1967

34
Q

When would 2 contractual parties rely on the tort of negligent misstatement rather than s.2(1)?

2 reasons…

A

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.

35
Q

Name the 2 advantages of a claim under s.2(1) Misrepresentation Act 1967 as opposed to proving fraud?

A

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).

36
Q

Primary remedy for misrepresentation

A

Rescission

37
Q

Remedies available for fraudulent misrepresentation

A

Rescission
Damages - foreseeable AND unforeseeable loss.

38
Q

Remedies available for negligent misstatement (Hedley Byrne v Heller)

A

Rescission
Damages - foreseeable losses only.

39
Q

Remedies available for negligent misrepresentation (s.2(1) MA 1967)

A

Rescission
Damages - foreseeable AND unforeseeable loss.

40
Q

Rescission has _____ effect…

A

Retrospective effect
Places party in position they would have been if they never contracted.

41
Q

Termination has _____ effect…

A

Prospective effect
Contract comes to an end / no longer exists for the future.

42
Q

Remedies available for innocent misrepresentation?

A

Rescission
NO right to damages…
s.2(2) court has discretion to award damages ‘in lieu’ of rescission.

43
Q

Name the 4 bars to rescission

A

1) Restitutio in integrum = impossible

2) Affirmation of contract by misrepresentee

3) Lapse of time

4) 3rd party has acquired rights

44
Q

Salt v Stratstone Specialist Ltd (2015) establishes…

A

Courts do not insist on ‘precise rescission’: where ‘substantial rescission’ is possible, rescission may be allowed.

45
Q

Case establishing that the right to rescission will be lost where C affirms the contract?

A

Long v Lloyd (1958)

46
Q

Case establishing that the right to rescission will be lost where a lapse of time has occurred?

A

Leaf International Galleries (1950)

47
Q

Case establishing that the right to rescission will be lost where a third party has gained rights?

A

Crystal Palace v Dowie (2007)

48
Q

According to Smith New Court Securities v Scrimgeour Vickers (1997), what is the aim of damages in cases of fraudulent misrepresentation?

A

Deterrence and punishing deceitful statement makers.

49
Q

s.2(2) Misrepresentation Act 1967

A

Gives the court discretion to award damages in lieu of rescission

50
Q

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)?

A

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.

51
Q

Pankhania v Hackney LBC (2002) establishes…

A

s.2(2) does not provide a remedy where there was none.

52
Q

Zans

A

Contract (4 decks)

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