Misrepresentation

Question 1

Introduction

Answer 1

A false statement of material fact made by a party to the contract which induces the other party to enter.
- only occurs during formation
- doesn’t automatically end contract

Under Misrepresentation Act 1967 : not terms, if statement is untrue claimant had no right to claim.

Question 2

What is the first step?

Answer 2

FALSE STATEMENT
1. Must be untrue or inaccurate. Dependent on persons knowledge. May be verbal or written but doesn’t have to be. (Gordon v Selico - painting over dry rot). Silence not a misrep. Not obliged to make statement but if they do it has to be truthful
(Fletcher v Krell) : silence cannot be a misrep

2. If there is a change in circumstances information must be corrected if before acceptance
   (With v O’Flannagan)
3. Silence may be a misrep if it is the half-truth
   (Dimmock v Hallet)
4. Relationships of trust, silence may be a misrep
   (Tate v Williamson)
5. Contract made in utmost good faith (insurance)
   (Lambert v Cooperative insurance)
6. Misrep by conduct : anything that would influence others decisions
   (Spice girls v Aprilia)

Question 3

What is the second step?

Answer 3

MATERIAL FACT
- False statement of fact not opinion
- Reasonable person to make contract and influenced C to enter
(Bisset v Wilkinson)
- Statement of future intention is not a fact or misrepresentation, unless there was no intention to do what was said (Edgington v FitzMaurice)
- If the person didnt believe their opinion was honest the court will regard it as a fact rather than opinion

Question 4

What is the third step?

Answer 4

MADE BY A PARTY TO THE CONTRACT
- Only by a party or by agents will be liable for statements made

Question 5

What is the third step?

Answer 5

MADE BY A PARTY TO THE CONTRACT
- Only by a party or by agents will be liable for statements made

Question 6

What is the fourth step?

Answer 6

INDUCES OTHER PARTY TO ENTER CONTRACT
- Lead other party to enter
- Statement must have been relied on by person entering contract.
- Own opinion or information found elsewhere will not suffice
(Attwood v Small)
- Even if C could have discovered truth by taking reasonable steps it will still be a misrep if statement is relied upon (Redgrave v Hurd)

Question 7

What is the first type of misrep?

Answer 7

INNOCENT MISREPRESENTATION
- Where a false statement is made honestly
- Must have reasonable and genuine belief that statement was true
- Remedy is either rescission or damages but not both

Remedy : recission, puts both parties back into their pre-contract position if it is fair to do so.

RESCISSION UNAVAILABLE WHEN
1. Returning the parties to pre-contractual position is impossible (Clarke v Dickinson)
2. Contract is affirmed
3. Delay of 5 years (Leaf v International galleries)
4. Third party gains rights over property (Lewis v Averay)

Question 8

What is the second type of misrepresentation?

Answer 8

NEGLIGENT MISREP
- False statement and has no grounds to believe it to be true
- Negligent if maker of statement has skill or knowledge
- S.2(1) : Once V proves their was a misrep the burden of proof lies with the person who made the statement. Must prove they had reasonable grounds to believe it to be true
(Howard Marine v Ogden & sons)

Question 9

What is the third type of misrepresentation?

Answer 9

FRAUDULENT MISREPRESENTATION
- False statement made knowing it was untrue
(Derry Peek) : “knows to be untrue or is reckless as to whether it is true or not”
- Incorrect answer, statement or an overly rose tinted view

REMEDIES : Rescission, damages.
- C can claim for both
- Court aims to put C back in pre-contract position
(East v Maurer) : court allowed the calculation of damages to include profit that should have been made)