Misrepresentation

Question 1

What is a representation?

Answer 1

A statement asserting the truth of a given state of facts

Question 2

What is misrepresentation?

Answer 2

An unambiguous false statement of fact made to the claimant and which induces the claimant to enter into the contract with the statement maker

Question 3

What does unambiguous mean?

Answer 3

Representation must be clear

Question 4

What is a statement of fact?

Answer 4

Statement asserting a given state of affairs
Statement of fact is normally in words but can also be made via conduct
Statement of law can give rise to a statement of fact as misrepresentation

Question 5

What does not qualify as a statement of fact?

Answer 5

Mere advertising puff will not qualify
Statement of opinion
Statement of future intention
Silence

Question 6

What must be proven/ asked to see if the statement has induced the claimant to enter into the contract?

Answer 6

‘Real and substantial’ part

1. Objective test: did statement relate to issue that would have influenced reasonable person?
   (If yes: burden shifts to D to rebut this)
   (If no: C needs to prove they were subjectively induced)

Question 7

What happens if there is more factors than just the misrepresentation that induced C to enter into the contract?

Answer 7

Can still prove misrepresentation - misrepresentation need not be the only factor

Question 8

What happens if the representee chooses to test the validity of the representor’s statement by making its own investigations?

Answer 8

No action in misrepresentation as the C has not relied on the misrepresentation but have relied on their own investigations

Question 9

If a representee doesn’t check the validity of a statement where court considers it reasonable or carries out a negligent investigation - what is the effect of this?

Answer 9

There could be a defence of contributory negligence (but this cannot be used as a defence when the misrepresentation was fraudulent)

Question 10

What is a material representation?

Answer 10

A statement that relates to an issue that would have influenced a reasonable person

Question 11

If a person makes a statement of opinion who has superior knowledge or experience - can this be held as misrepresentation?

Answer 11

Yes it can, because their statement of opinion involves a statement of fact that there are reasonable grounds for their opinion.

Question 12

What is a limited statement fact?

Answer 12

This is when someone says something they intend to do something, stating they have the intention to do something (if they actually don’t then this is a misrepresentation)

Question 13

If a statement is made which is true and then prior to entering the contract then becomes false - does the representor have to tell the C?

Answer 13

Yes they do they have an obligation to correct the representation
If they fail to do so then they are liable for misrepresentation

Question 14

What are the 3 exceptions to the general rule on silence not being a misrepresentation?

Answer 14

1. Half truths
2. Continuing representations
3. Utmost good faith (when one party has a particularly strong position to know the material facts which form the basis of the contract they have a duty to disclose)

Question 15

What is a half truth?

Answer 15

A statement that is technically true but misleading

Question 16

What are the 3 types of misrepresentation?

Answer 16

1. Fraudulent misrepresentation (tort of deceit)
2. Negligent
3. Innocent

Question 17

How is a fraudulent misrepresentation made?

Answer 17

(A) knowingly, or (b) without belief in its truth, or (c) recklessly, careless whether it is true or false

Question 18

Who has the burden of proving a misrepresentation was fraudulent?

Answer 18

The C and it is a heavy burden to discharge

Question 19

What does the D need to prove to show it was not negligent misrepresentation?

Answer 19

That they had reasonable grounds to believe, and did believe ho to the time of the contract was made that the statement was true

Question 20

What needs to be proved to show that a misrepresentation was innocent?

Answer 20

Reasonable grounds for belief in truth of their statement and
Proved they believed up to the time of the contract what they were saying was true

Question 21

What potential remedies are available for innocent misrepresentation? (What is not allowed?)

Answer 21

Rescission, damages in lieu of recession and indemnity

Not allowed: damages

Question 22

What type of misrepresentation can you use the defence of contributory negligence?

Answer 22

Negligence misrepresentation

Question 23

Is it possible for a representor to exclude or restrict their liability for misrepresentation?

Answer 23

Yes, as long as the clause satisfies the requirement of reasonableness

• any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or
• any remedy available to another party to the contract by reason of such a misrepresentation

Question 24

If a representation is false and is incorporated into a contract as a term what is the potential claim which can arise?

Answer 24

Breach of contract and misrepresentation

Question 25

What is a negligent misstatement (tort of negligence) (an alternative claim to misrepresentation)?

Answer 25

It arises when there is a relationship of sufficient proximity between two parties, then the court may find that one party owes the other a duty of care to take reasonable care that statements made are accurate.