MISREPRESENTATION Flashcards
what is a vitiating factor? (1)
something that makes a contract void or voidable.
what is meant by void? (1)
a void contract is one that is declared to be nullity, in other words, it has never had legal effect. A void contract is said to be ab initio.
what does ab initio mean? (1)
from the beginning
what is meant by voidable? (1)
a voidable contract can be made void in certain circumstances. if the right to make it void is not exercised then the contract remains valid.
where does misrepresentation occur? (1)
a misrepresentation only occurs during the formation of an contract.
what are representations? (1)
representations are statements that influence a decision on whether or not to make a contract, and are misrepresentations when false.
what is the effect of misrepresentation? (1)
the effect of misrepresentation is to make the contract voidable, this means that the contact is valid unless a party who has suffered misrepresentation takes action to seek to end the contract.
what is misrepresentation? (1)
a false statement of material fact made by a party to the contract that induces the other party to enter the contract.
What are the elements of misrepresentation? (4)
-a false statement
-of material fact
-made by a party to the contract
-that induces the other party to enter the contract
What is meant by a false statement? (1)
To be a misrepresentation the statement made must be false, meaning it is not true or accurate.
What cannot be a misrepresentation? (1)
Because there must be a statement to be a misrepresentation, silence cannot be misrepresentation.
What case covers a false statement, in terms of misrepresentation? (1)
Spice girls ltd v Aprilia world service BV (2000)
What occurred in the case of spice girls ltd v Aprilia world services BV and when was it?(3)
The band spice girls recently disbanded (removal of one member) and failed to tell an advertisement crew this, they created many promotional items before they were informed. The court decided that by all of the group attending they did not make it seem that one of them was leaving and was therefore misrepresentation.(2000)
What case covers silence, in terms of misrepresentation? (1)
Fletcher v Krell (1873)
What occurred in the case of fletcher v krell and when was it? (3)
A woman applied for a job which looked down on divorced women, she did not state his but the court decided that this was not misrepresentation as it was not a formal requirement for her to do as such as therefore was not needed in making the decision. (1873)
What qualifications cover misrepresentation?(3)
-change of circumstances
-the making of a half-truth
-confidential relationships
What is meant by a change of circumstances, in terms of misrepresentation? (1)
Once a statement has been made, even if it is true when made, can become misrepresentation if it becomes a false once the contract is made. A person must correct information where the situation has changed between making the representation and the acceptance of the offer.
What case covers changing of circumstances in terms of misrepresentation? (1)
With v o’ Flanagan (1936)
What occurred in the case of with v o’flanagan and when was it? (3)
A doctor estimated the profits of his practice with a view of inducement, between the statement and the offer the doctor fell ill and patients left the practice This made he original statement inaccurate, court decided he must tell the purchaser all information. (1936)
What is meant by a half-truth in term of misrepresentation? (1)
Silence can be a misrepresentation if a statement made is a half-truth, what is not said is a non-disclosure and may be a misrepresentation as the maker of the statement has the duty to reveal the whole truth of the situation.
What case covers the presence of a half-truth in terms of misrepresentation?(1)
Dimmock v Halley (1866)
What occurred in the case of Dimmock v Hallett and when was it?(3)
A seller of the land said there were 3 tenants on the land, he did not reveal that these tenants would be leaving shortly after. Court decided that this part-truth was a misrepresentation. (1866)
What is meant by confidential relationships in terms of misrepresentation?(1)
Where a relationship between the parties is based on trust then silence may be misrepresentation. Where a contract is made of ‘utmost good faith’ (uberrimae fidei) then all material facts must be disclosed whether asked about or not.
What cases cover confidential relationships in terms of misrepresentation? (2)
Tate v Williams (1866)
Lambert v co-operative insurance society (1975)
What occurred in the case of Tate v Williams and when was it? (3)
A financial advisor advised his client to sell of his house at a low price to pay off his debts quickly, he did not advise that he would be buying his house at this lower price. This was a breach of trust and therefore misrepresentation.(1866)
What occurred in the case of Lambert v Co-operative insurance society and when was it? (3)
A women renewed her insurance policy and did not disclose er husband had been convicted of stealing, this would have effected decision of insurance company, her silence was seen as misrepresentation, they were entitled to refuse to pay her claim. (1975)
What is meant by material fact in terms of misrepresentation? (1)
The misrepresentation must be of material fact, this means that it would have led a person to make the contract and did in fact influence the mind of the person making the contract.
What can be seen as a fact in relation to material factors misrepresentation?(1)
A statement of future intention can be seen as a fact if at the time of making the statement it is what the person intends to do.
What is not seen as a fact in relation to material facts of misrepresentation? (1)
If he or she misrepresents his or her state of mind which is a fact.
What are statements of opinion? (1)
In general, a statement of opinion which is honestly believed by the maker of the statement is not a statement of fact and therefore, if the opinion is false it will not support a claim for misrepresentation.
What cases cover statements of opinion in relation to material facts of misrepresentation?(3)
Bisset v Wilkinson (1927)
Edgington v Fitzmaurice (1885)
Smith v land and house property corporation (1884)
What occurred in the case of Bisset v Wilkinson and when was it? (3)
The seller of farm land made a misrepresentation of opinion on how many sheep could fit on the land, his opinion was false but it was merely an opinion. (1927)
What occurred in the case of edgington v fitzmaurice and when was it? (3)
An investor was falsely told that the investment would be going to a building but it actually went towards existing debts, representation seen as statement of fact rather than intention as directors did not have the intention to make altercations this was misrepresentation. (1885)
What occurred in the case of smith v land and property corporation and when was it? (3)
The seller of a property misrepresented a tenant but before the purchase could be complete the purchase round out that the tenant owed rent to the owner , the statement made about the tenant was held to be a statement of fact as the seller knew it to be false. (1884)
What is a statement of intention in relation to material facts of misrepresentation? (1)
A statement of intention, a promise to do something in the future is generally not one of fact since fact relates to a past event or something in existence. However a statement of intention will amount to a statement of fact if the maker of the statement has no intention of carrying it out, as he or she is misrepresenting the fact that he or she possesses the intention in question.
What case covers statements of intention in relation to material facts of misrepresentation?(1)
Edgington v Fitzmaurice (1885)
What did Edgington v Fitzmaurice state about statements of intention in relation to matera facts or misrepresentation? (1)
‘The state of a mans mind is as much a fact as the state of his digestion’
What is meant by the statement is made by a party to the contract?(1)
This means that a person is not liable for statements made by others unless they are his or her agent.
What is meant by inducement o the other party in the contract? (1)
This means that the statement must lead the other into making the contract, and must be a critical part of making the decision. The statement must be important to the person making the contract, and he or she must have lied on the statement made rather than his or her own judgement or information he or she obtained elsewhere.
What cases cover inducement of another party into a contract? (3)
Atwood v small (1838)
Redgrave v Hurd (1881)
Museprrime properties ltd v Adhill properties Ltd (1990)
What occurred in the case of Atwood v Small and when as it? (3)
A statement was made about the earnings of a mine, the buyer relied on a surveyors statement who overestimated the earnings, there was no misrepresentation as this statement was not made by the seller. (1838)
What case covers reliance on a statement in elation to inducement of material facts of misrepresentation?(1)
Redgrave v Hurd (1881)
What occurred in the case of Redgrave v Hurd and when was it?(3)
A purchaser read accounts provided by a seller who verbally mislead the purchaser, he relied on this statement and did not look at the accounts, he was entitled to rely on this statement and was therefore a misrepresentation. (1881)
What case decided that reasonableness is irrelevant in relation to inducement of material facts of misrepresentation? (1)
Museprime properties Ltd v adhill properties Ltd (1990)
What occurred in the case of musprime properties Ltd v adhill properties Ltd and when was it? (3)
Purchaser relied on inaccurate statements, the defendant argued no reasonable. Person would have relied on them, court held that he was allowed to rely on said Statements and was therefore misrepresentation. (1990)
What act covers misrepresentation of information included in a contract to supply goods? (2)
The consumer rights act 2015
The consumer protection (amendment) regulations 2014
What section of the consumer rights act 2015 covers misrepresentation of information? (1)
Section 12; the trader has to provide certain information to the consumer before the contract becomes binding, a change to any of that information made before entering the contract or later, is not effective unless expressly agreed between the consumer and the trader.
What does the consumer protection (amendment) regulations act 2015 cover? (1)
A misleading omission is where a trader deliberately misses out key information that the consumer might need to make an informed decision about the purchase of goods or services, all consumer information must be displayed clearly.
What does the consumer protection (amendment) regulations act 2014 classify as misleading? (3)
-omits material information that the average consumer needs, according to the context, to make an informed transactional decision.
-hide or provides material information in an unclear, unintelligible, ambiguous or untimely manner.
-fails to identify the commercial intent of the commercial practice if not already apparent from the context.
What are the different types of misrepresentation? (3)
-innocent
-fraudulent
-negligent
What acct classifies the different types of misrepresentation? (1)
The misrepresentation act 1967
What is the definition of innocent misrepresentation? (1)
Defined by the misrepresentation act 1967, a statement which is genuinely held on reasonable grounds, this is a false statement made honestly- the person making the statement always believed it to be true and there is no element of negligence in that belief.
What are the remedies for innocent representation? (1)
Either recession or damages instead of recession under the courts discretion.
What is negligent misrepresentation? (1)
A false statement made by a person who believed the statement was true, but had no reasonable grounds for believing it to be true.
What case did negligent misrepresentation stem from? (1)
Hadley Byrne v Heller (1964)
What are the two types of negligent misrepresentation? (2)
-under the common law tort of negligence
-under the misrepresentation act 1967
How did the misrepresentation act 1967 form negligent misrepresentation? (1)
Created statutory liability for negligent misrepresentation which does not require there to be a special relationship between the parties, all that is needed is for there to be a misrepresentation which results in a contract and the victim suffers loss.
What happens under the misrepresentation act 1967 in terms of negligent misrepresentation? (1)
Once the victim has proved there was a misrepresentation the burden of proof is then on the person asking the statement that there was reasonable grounds to believe the statement was true.
What case covers negligent misrepresentation? (1)
Howard marine v Ogden and sons (1978)
What occurred in the case of Howard marin v Ogden and sons and when was it? (3)
Howard assured the information present on a register for his boat capacity was true but it was in fact much lower, therefore the wok carried out by Ogden took longer. Howard argued he had reasonable grounds to believe it was true, the court held that he did not as if he would have looked at his own documentation he would know it was not. (1978)
What is fraudulent misrepresentation? (1)
When there is a statement made without belief in the truth. This includes where the person making the statement believes it to be untrue or is reckless as to whether or not it is true.
What case covers fraudulent misrepresentation? (1)
Derry v Peek (1889)
Green ridge Luton one Ltd v kempton investments Ltd (2016)
What occurred in the case of Derry v peek and when was it? (3)
The tram company made misrepresentations on motor trams which it did not have the permits for yet, it had reasonable grounds to assume they would be granted them but were not. There was no fraudulent misrepresentation as they had the grounds for it to believe it was true. (1889)
What occurred in the case of green ridge Luton one Ltd v kempton investments Ltd and when was it? (3)
An overly optimistic view on a commercial property, the buyer was entitled to its deposit and damages. (2016)
What is the remedy of rescission? (1)
Rescission is an equitable remedy,all equitable remedies are discretionary the idea of recession means that both parties are returned to the positions they were in before the contract was made.
In what situations will the remedy of rescission not be available? (4)
-restitution to the original pre-contract position is impossible
-the contract is afffirmed
-delay
-a third party has gained rights over the property
What case covers restitution to the original pre-contract position is impossible? (1)
Clarke v Dickson (1858)
What occurred in the case of Clarke v Dickson and when was it? (3)
Claimant was misled into becoming a partner,he could not return the partnership as the firm had become a limited company.(1858)
What is meant by the contract is affirmed in relation to the remedy of rescission? (1)
Affirmation is where the innocent party decides to carry on with he contract despite being aware of the misrepresentation, the right to rescind the contract is then lost.
What case covers affirmation in relation to the remedy of rescission? (1)
Long v Lloyd (1958)
What occurred in the case of long v Lloyd and when was it? (3)
Claimant bought what he was told to be a new lorry, it broke down and the seller offered to pay for half of the repairs, nice it broke down again the claimant aimed to rescind, court refused to grant as he had indicated his willingness to continue with the contract. (1958)
What is meant by delay in relation to the remedy of rescission? (1)
Onc a contract has been completed, any complaints are likely to arise within a short time and after that you can assume there are no major problems.
What case covers delay in relation to the remedy of rescission? (1)
Leaf v international galleries (1950)
What occurred in the case of leaf v international galleries and when was it? (3)
Claimant purchased a picture and found out 5 years later that the picture was not painted by the actual artist, even though he had no means of finding it the truth rescission was not allowed because of the delay in his claim. (1950)
What is meant by a third party gaining rights over the property in relation to the remedy of rescission? (1)
Where someone has gained an interest in the goods then rescission will not be granted as this would be unfair on the innocent party. The third party must be innocent,without notice and he must have acquired it before victim communicated the intention to rescind.
What class cover a third party gaining rights over the property in relation to the remedy of rescission? (2)
Car and universal Finance v Caldwell (1965)
Lewis v averay (1972)
What occurred in the case of car and universal finance v Caldwell and when was it? (2)
The defendant told the police and AA of the fraud before the car was sold on to the innocent purchaser (1965)
What occurred in the case of Lewis v averay and when was it? (3)
Claimant sold his car for a cheque which was worthless because the defendant presented as someone else, he then sold the car to an innocent third party, rescission was refused as it would be unfair to return the car bought in good faith. (1972)
Under what act can courts award damages for innocent misrepresentation? (1)
S2 (2) of the misrepresentation act 1967; meant that a party who had lost the right to rescind due to delay could claim damages under this section.
What case did s2 (2) of the misrepresentation act 1967 originate from? (1)
Government of Zanzibar v British aerospace (Lancaster house) Ltd (2000)
What are the remedies fo negligent misrepresentation? (1)
Rescission and/or damages.
How do damages differ if the Hedey Byrne principle is applied? (1)
Damages are calculated according to tort it also means that the principle of contributory negligence under the law of reform (contributory negligence) act 1943 will apply so damages are calculated accordingly. If a claim fits under the misrepresentation act 1967 as well then s2 (1) of this act states that it will be the same as in fraud.
What case did s2 (1) of the misrepresentation act1967 stem from? (1)
Royscot trust Ltd v Rodgerson (1991)
What occurred in the case of Royscot trust Ltd v rogerson and when was it? (3)
Car dear negligently misrepresented amount paid for deposit to a finance company. The court decided that the damages for negligence misrepresentation were the same under the act as for fraud. (1991)
What remedies can be awarded for fraudulent misrepresentation? (1)
The remedies are rescission and damages in the tort of deceit.
What cases shows wingless of the court to award contractual damages? (1)
East v mawrer (1991); the court of appeal state that it was possible in principle to recover damages for loss of profit following fraudulent misrepresentation.
