Misrepresentation Flashcards
Definition
“Misrepresentations are false statements that influence a decision on whether or not to make a contract”
False Statement
a) The untrue statement can made be through words, written or spoken or by conduct (Spice Girls Ltd v Aprilia World Service)
b) Silence cannot be a misrepresentation (Fletcher v Krell)
c) Hiding a fault can be misrepresentation (Gordon v Selico)
d) Part-truths can be false statements (Dimmock v Hallett)
e) If a statement becomes false, before the contract is made - misrep if don’t tell them (With v O’Flanagan)
f) In a fiduciary relationship (a business relationship where one puts a lot of trust in another), silence can be a misrepresentation (Tate v Williamson)
g) When the contract is of utmost good faith, then all material facts must be disclosed (Lambert v Co-op Insurance Society)
Of Material Fact
- The representation must be of material fact (led them to make the contract)
- Must be a statement of fact not opinion (Bisset v Wilkinson)
- Statement of fact
- Specialist knowledge/expert then likely to be
- Creating a false impression
- Does not honestly believe their own opinion (lying)
- A statement of intention - a promise to do something in the future (Edgington v Fitzmaurice)
- Statement of opinion
- If genuinely believe own opinion and it’s false then no misrep
Made by a Party to the Contract
Not liable for contracts made by others unless it is their agents
Induces the other party to enter the contract
The false statement must be a critical part of the other party deciding to make the contract, they must have relied on it (Attwood v Small)
Fraudulent
- Occurs when a person induces the contract by making a statement that they know its untrue or is reckless as to whether or not its true.
- Includes hiding defects (Gordon v Selico)
- Includes creating an overly optimistic view of the position (Greenridge v Kempton)
- Burden of proof on the person making the statement that there was reasonable grounds to believe it was true
- Remedy = recission and damages
Negligent
- S2(1) Misrepresentation Act 1967 = False statement made by a person who believed the statement was true but had no reasonable grounds to believe it
- Under S2(1) Misrepresentation Act 1967 → just needs to be a misrep which starts a contract and then V suffers loss
- Once V proves there was a misrepresentation, the burden of proof reverses and D has to show there was reasonable grounds to believe the statement was true (Howard Marine v Ogden)
- Remedy = recission and damages
Innocent
- Under Misrepresentation Act 1967 innocent misrep = untrue statement made honestly
- D must have always believed the statement to be true and there was no negligence in their belief (had reasonable grounds to believe so)
- Remedy = recission OR damages
What is a Recission?
- S2(1) Misrepresentation Act 1967
- Equitable remedy - parties returned to the position they were in beforehand
- Up to courts to decide, only given if it’s fair in all circumstances
When is a Recission not available?
IADT
1. Restitution to the original pre-contract position is impossible (Clarke v Dickinson)
2. Contract is affirmed (decided to carry on with contract after finding out misrep) (Long v Lloyd)
3. Delay: once contract has been completed any complaints are likely to arise within a short time, if not then you can assume there are no major problems (Leaf v International Galleries)
4. A TP has gained rights over the property: unfair on innocence party (Lewis v Averay)
Damages
No automatic right to damages, given at courts discretion (Zanzibar v British Aerospace)
2 Acts to Remember
- CRA 2013 supply of goods terms
- Consumer Protection (Amendment) Regulations 2014 = when trader omits material information and produces a misleading impression
