Misrepresentation Flashcards
What is representation?
Statement of fact that induced on party to enter the contract
When does it occur?
During the formation of a contract , usually during the offer /negotiation stage
Elements for misrepresentation
A false statement
Of material fact
Made by the party to the contract
That induces the other party to enter the contract
What’s a false statement ?
The statement is usually written or verbal, but it could be anything that could influence the other persons decision e.g conduct
The statement must be false
The extent of the knowledge on the statement will define what type of misrepresentation it will be
The false statement cannot be silence - silence is not a misrepresentation
Fletcher v Krell
A women applied for a job of governess. She did not disclose that she was divorced and was not asked if she was. In Victorian times , she wouldn’t have gotten the job if she was divorced . Held : not to be a misrepresentation because she was under no duty to disclose this and was not asked about it.
Case authority for false statement
Spice girls v aprilia world service Bv:
Spice girls signed a sponsorship with Aprilia. While the agreement was being negotiated, Geri Halliwell had given notice to leave the group. Aprilia were unaware of this . When they filmed promotional videos, all girls were present but when Geri left it made all the films worthless. Held : the court said all of them showing up in the videos, they represented that none of them intended to leave. This was a misrepresentation
What are silence exception?
Change of circumstance
The making of a half truth
Confidential relationships
What is meant by change of circumstance?
The statement may be true when it is made, but it can become misrepresentation if it becomes false before the contract is made.
With v o’flanagan
A doctor accurately stated the profits of his medical practice with a view to inducing the purchasers to buy the practice. Between the statement and the contract being made , the doctor fell ill and many. Of the patients left the practice. This made the original statement false . Court held that it was a misrepresentation as he had to tell the purchaser of the change of circumstance.
Half truth
If a statement is made is half truth and the rest is kept silent this can be misrepresentation
What is Kept silent is a non disclosure and there is a duty to reveal the whole truth of the situation
Dimmock v Hallett 1866
A seller of land told the purchaser truthfully that there were tenants on the land this is what the purchaser wanted. However, he did not complete the statement by telling the purchaser that all tenants were leaving. Held this is half truth and is misrepresentation
Confidential relationships
If the relationship is based on trust, then silence may be misrepresentation
E.g doctor and patient, solicitor and client
Tate v Williamson 1866
Financial advisor advised his client to sell some land for less than half the value. The advisor then purchased the land himself but didn’t tell his client. Held the advisor failure to disclose that he was intending to buy the land was personally a breach of trust and therefore a misrepresentation.
This is the same if the contract. Is one of utmost faith then all details must be disclosed whether they asked for or not. Mostly seen in insurance
Material fact
This means that it would led the persons to make the contract and did in fact influence the mind of the person making the decision.
Must be statement of fact not opinions
Could be a statement of future intention, if they do not intend to act out their intention then will be misrepresentation
Statements of opinion
If the maker of the statement genuinely believes the opinion they are stating then it will not be misrepresentation
If the opinion was not honestly held it will be regarded as material fact and not an opinion.
Bisset v Wilkinson
the seller of farmland that had never had sheep on it was asked by the buyer how many sheep it could take. although not a sheep farmer he stated that he thought it would be around 2000. This was false. However he genuinely believed his opinion to be true so it was not misrepresentation.
statement of intention
a promise to do something in the future is not one a fact since a fact must relate to a past event or something in existence. it will however be held as a material fact if the maker has no intention of carrying out his intention
made by a party to the contract
a person is not liable for a statement made by other unless that person is his agent. for example a newspaper review of an item cannot be misrepresentation.
induces the other person to enter the contract
it must lead the other person into entering the contract and be a critical part of making the decision. The person must of relied on the statement made rather than on their own judgement / information they had obtained elsewhere. it doesn’t matter if the victim could have discovered the truth by taking reasonable steps or if it was unreasonable to rely on the statement. just the fact that it was relied upon is enough to make is a misrepresentation
Attwood v Small 1838
the seller of a mine made a false statement to the purchaser about the earring from a mine. The buyer instructed a surveyor to confirm this statement which he did incorrectly. The purchaser bought the mine and then discovered the statement to be untrue. There was no misrepresentation as the purchaser relied on the surveyor report and not he seller’s statement.
Redgrave v Hurd 1881
purchaser of a solicitors practice was given a set of accounts to look at. The seller verbally misled the purchaser as to the true earnings. he relied on the statement and didn’t look at the accounts. if he had he wouldn’t seen that the sellers statement was false. But it was seen as a misrepresentation as he did rely upon it.
s12 of the consumer rights act 2015
contain that a trader has to provide certain information to the consumer before it comes legally binding. a misleading omission the equivalent of a misrepresentation in this context means that a trader deliberately misses out key information that the consumer may need to make an informed decision about the product.
the trader must not :
omit material information that the average consumer would need hides or provide material information that unclear
fails to identify the commercial intent of the commercial practice if not already apparent form the context
what are the types of misrepresentation?
innocent misrepresentation
negligent misrepresentation
fraudulant misrepresentation
what is innocent misrepresentation ?
defined by the misrepresentation act 1967
a false statement made honestly
the person always believed that the statement made to be true and there is no negligence in that belief
he remedy available will either be damages or recission, not both
its under the courts discretion they will decide which to award
what is negligent misrepresentation
this type was developed in 196 through the case of Hedley bryne v heller
it is a statement that as made by a person who believed the statement to be true but has no reasonable grounds to believe this
types of negligent misrepresentation :
under common law tort negligence
under misrepresentation act 1967
negligence in the misrepresentation act 1967
s21 created a statutory liability for negligent misrepresentation which doesn’t require there to be a special relationship between the parties.
this statute only requires for there to be as misrepresentation which results in a contract and the victim suffers loss
it is appropriate here the claimant is unable to prove fraud.
burden of proof
the victim must prove that there is a misrepresentation
the the burden of proof is on the person making the statement to prove that there were reasonable grounds to believe the statement was true
usually in civil cases the burden of proof is on the victim
therefore it is preferable for the victim to use the statutory form rather than the hedley byrne principle
influences on negligent misrepresentation
there are other factors that may influence the finding of negligent misrepresentation
Howard Marine v Ogden and sons 1978
Ogden hired two dredgers from Howard marine. Ogden asked Howard for the capacity of the barge. Howard checked Lloyds register which stated the capacity as 850 cubic metres. the entry as actually incorrect and the capacity was much lower. therefore the work carried out by Ogden took much longer and cost alot more. Howard argued that they had reasonable grounds to believe it was true as they had checked Lloyds register. this failed because they had the registration document of the barge which stated the correct capacity
fraudulent misrepresentation
this is to do with deceit trying to trick someone derry v peek define it as when there is a statement made without belief in the truth.
this includes where the person knows it to be untrue, or is reckless as to whether or not it is true.
Derry v Peel `889
Tram company used horses to pull its trams. the directors believes that under a recent act, the boar would consent to the company using motor driven trams but didn’t check. Powered trams would make the company more profitable and so they advertised for investors for the company based on this. The company shares dropped value and the investors sued for their losses. held: no fraudulent misrepresentation because they had applied for permission but reasonably expected it to be granted they were just careless as to whether what they said was true possibly either innocent or negligent misrepresentation.
innocent misrepresentation remedies
recission or damages one or other
recission- equitable remedy. they want to put the party back into position they were in before the contract ever happened
when will recission not be available?
1 restitution to the original precontract position is impossible example clarke v Dickson
2 the contract is affirmed this means that the innocent party decides to carry on the contract despite being aware of the misrepresentation . the right to seek to rescind the contract is hen lost. example long v Lloyd
3 delay if there is a delay in bringing the claim. the contract has been completed and then after a delay the claimant realises there has been misrepresentation and tries to claim for this. this is because the courts can assume that if no issues have arisen in a short period of time following the contract then thee can be nothing majorly wrong with the contract.
4 a third party has gained rights over the property
if someone else has claimed an interest in the goods recission wont be available as this would be unfair on the innocent third party. damages are not usually available for innocent misrepresentation, and are not an ‘as right’ remedy. however if recission is not available because of past scenarios, the court has the discretion to award damages in place of recission due to s22 of misrepresentation act 1967
clarke v Dickson 1858
the claimant was misled into becoming a partner. Recission wasnt available - he couldnt return the partnership as the firm had become a limited company.
Long v Lloyd 1958
Claimant was told that the lorry was in great condition but shortly after the sale it broke down. c contacted the d who offered to pay half the repairs, which c agreed t. Lorry broke down and claimant wanted to rescind. Court refused because by persevering with the lorry after the first break down and agreeing the share of the cost of repairs he had indicated willingness to continue with the contract and so affirmed the contract
leaf v International Galleries 1950
1944 the claimant bought a picture from the defendant. claimant was told that it was by the famous artists constable. Tried to sell it five years later and realised it was fake. Recission was not allowed because of the delay in bringing the claim.
Lewis v Averay 1972
Lewis sold his car and the buyer took the car away in exchange for a cheque. The cheque was worthless because it was a fraudster who had signed it. They then sold it on to an innocent third party. The original seller claimed Recission and wanted his car back but t had already been given to an innocent third party.
what are negligent misrepresentation remedies ?
remedies are recission and or damages
recission is available in the same circumstances as before.
the remedy of damages, if the Hedley byrne principle is applied, are calculated according to the law of tort.
this means contributory negligence also applies so damages may be deducted accordingly.
if the claim is under the misrepresentation act 1967 then damages are also calculated according to a tort measure.
what are fraudulent misrepresentation remedies?
remedies are recission and damages in the tort of deceit
the damages aim to put the victim in the position they were in before the misrepresentation occurred.
However, they will sometimes award compensatory damages in certain circumstances for loss of profit too.
Damages in contract vs tort
the aim in contract is to put the claimant in the position if the contract had been performed.
Damages in tort aim to put them in their pre-incident position. it does not care about a ‘loss of bargain’ like contract does.
