Misrepresentation Flashcards
What is a representation?
A representation is a statement asserting the truth of a given state of facts
What is misrepresentation?
An unambiguous false statement of fact made to the claimant and which induces the claimant to enter into the contract with the statement maker
What is the structure for analysing a claim in misrepresentation?
- Identify the potential representation
- Apply the test for actionability
- Categorise the representation
- Identify the remedies
Misrepresentation: what is meant by unambiguous?
Representation must be clear and will only form the basis of a claim in misrepresentation if it unambiguously has the meaning put forward by the representee.
Will not be liable if the representee has placed its unreasonable construction on the representation.
What are the elements of an actionable misrepresentation?
- Unambiguous
- False
- Statement of fact
- Addressed to the claimant
- Which induces the claimant to enter into the contract
Misrepresentation: what is meant by false?
Must be false - it will not be false if it is substantially correct.
Substantially correct: the difference between what is actually correct and what is represented would have been likely to induce a reasonable person in the position of the claimants to enter into the contracts.
Misrepresentation: what is meant by a statement of fact?
A statement asserting a given state of affairs.
- distinguished from advertising ‘puff’ i.e. a description of land as ‘fertile and improvable’ did not amount to a representation
Statements can also be made by conduct i.e. intentional concealment of dry rot was deemed to be a misrepresentation
Does not include: statements of opinion, statements of future intention and instances of silence (although some exceptions)
Misrepresentation: what is meant by induces the claimant to enter into the contract?
The representation must have caused the representee to enter into the contract in order to be an actionable misrepresentation.
1) Test for whether the representation was material: did the statement relate to an issue that would have influenced a reasonable person?
- If yes, burden shifts to the defendant to show the claimant was not induced
- If no, burden shifts to claimant to show they were induced
But no actionable misrepresentation where:
- the statement was not actually communicated to the representee; or
- the statement did not affect the representee’s decision to enter the contract; or
- the statement was known to be untrue by the representee
Need not be the only reason they entered into the contract.
If the representee chooses to test the validity of the representor’s statement by making its own investigations - will usually find that they did not rely on the representation but on its own investigations. POINT: making own enquiries shows the vendor’s points were not relied upon
Can a misrepresentor claim contributory negligence?
If a representee does not check where the court considers it reasonable for them to have done so or carries out a negligent investigation this would open up the possibility of a defence of contributory negligence being mounted against the representee
Can a statement of opinion be a statement of fact?
Generally no. i.e. a statement “i think the land would carry two thousand sheep” when the claimant knew the land had never been used for sheep farming was held to be an opinion the defendant honestly held.
Unless:
- opinion not actually held
- statement of opinions which lack reasonable grounds from people with superior knowledge/experience
Exception: where an expressed opinion implies facts which justify their opinion i.e. property we are selling is let to a most desirable tenant - when the seller knew facts to the contrary.
Where a representor is in a position of superior knowledge or experience, a statement of opinion by them may be held to involve a statement of fact that there are reasonable grounds to hold their opinion.
i.e. where esso said they thought a petol station would reach a certain amount of gallons but it didnt and the court held that it was a statement of opinion as there had never been a petrol station on that sign - court of appeal held that that esso should have substantial skill and expertise in this area and the assessment had not been carried out carefully
Can a statement of future intention be a misrepresentation?
Generally no - especially where you say you are not going to do something and then change your mind (i.e. woman who negotiated divorce settlement on the basis she wouldn’t get remarried but then did)
Unless: statement of intention by people with no such intention
Would if someone says they are going to do something and they are not planning to do it, or they change their mind but continue to say they are going to do it.
e.g. directors inviting people to purchase debentures in the company saying the money would be used to improve premises when they were never planning to do that.
Can silence ever be a misrepresentation?
Generally no.
Exceptions:
- half-truths
- continuing representations
- contracts uberrimae fidei
Exception to silence: half-truth
An exception to the rule that silence does not amount to a misrepresentation occurs where there is a half-truth.
It is a misrepresentation to make statements which are technically true but misleading. e.g. saying a premises is fully let when you know a tenant has just served notice.
Exception to silence: continuing representations
If a true statement is made that later becomes false, the representor is under an obligation to correct the representation, if they do not they are liable for misrepresentation.
Principle of continuing representations.
Exception to silence: uberrimae fidei (utmost good faith)
Duty to disclose material facts in some types of contracts where one party is in a particularly strong position to know the material facts which form the basis of the contract. E.g. contracts for insurance where disclosure of all material facts must be made to the insurer.
Similar for fiduciary relationship e.g. company and its directors, trsutee and beneficiaries of a trust
