Misrepresentation Flashcards
What is a representation?
A statement asserting the truth of a given state of facts.
What is an actionable misrepresentation?
An unambiguous false statement of fact made to the C and which induces the C to enter into the contract with the statement maker.
What are the five elements to an actionable misrepresentation?
- Unambiguous - the representation must be clear, the representor will not be liable if the representee has placed its own unreasonable construction on the representation.
- False - the statement will not be false if it is substantially correct. If the difference what is represented and what is actually correct is likely to have induced a reasonable person to enter into the contract, the statement will be false.
- Statement of fact - mere advertising puff will not qualify as a representation. A salesperson is allowed a good deal of latitude in their choice of language.
- Addressed to the C - must be addressed by the representor to the C.
- Induces the C to enter into the contract with the statement maker - was the representation material?
Can statements of fact be made by conduct, refer to Gordon v Selico (1986)?
Yes, in this case the intentional concealment of dry rot was deemed to be a misrepresentation.
When considering the issue of inducement, what is the test for whether the representation was material?
Did the statement relate to an issue that would have influenced a reasonable person?
If yes, the inducement will generally be inferred as a matter of fact and the burden then shifts to the D to rebut this.
If no, the inducement cannot be inferred as a matter of fact and the C must prove that they were subjectively induced.
Does the misrepresentation need to be the only reason the C entered into the contract?
No, it need not be the only reason just a real and substantial part.
Can a party bring a claim in misrepresentation when it has not replied on the misrepresentation, but on its own individual investigations?
No, it cannot. The more commercial the representee is, the more likely it is that the Court will consider it reasonable for the representee to have investigated the representor’s statement.
Can a statement of opinion usually form the basis of a claim in misrepresentation?
No, unless the representor is in a position of superior knowledge/experience whereby a statement of opinion can then be held to involve a statement of fact if there are no reasonable grounds for their opinion.
An expression of opinion will be a misrepresentation if the opinion expressed is not one which the representor held.
Can a statement of future intention form the basis of a claim in misrepresentation?
No, it is not a misrepresentation if the representor makes a promise regarding a future intention, but is prevented from following that course of conduct or if circumstances alter so they change their intentions.
However, if the representor states they intend to do something but has no such intention this will amount to a misrepresentation.
Can silence given rise to an action for misrepresentation?
In most cases, mere silence will not give rise to an action for misrepresentation.
The general rule is that there is no duty to disclose facts which, if known, might affect the other party’s decision to enter the contract.
What are the exceptions to the general rule that there is no duty to disclose facts?
a) Half-truths. It is a misrepresentation to make statements which are technically true but misleading e.g. a property for sale is fully let without disclosing the tenants have given notice to quit
b) Continuing representations. The representor is under an obligation to correct a representation which was originally true at the beginning of negotiations but prior to entering into the contract becomes false. Failure to do so will result in liability for misrepresentation.
c) Utmost good faith (contracts uberrimae fidei). There is a duty to disclose material facts in contracts such as a contract of insurance.
What are the three categories of misrepresentation available today?
- Fraudulent (tort of deceit)
- Negligent
- Innocent
Define fraudulent misrepresentation and what is the test in terms of knowledge of the representor?
A fraudulent misrepresentation is one that has been made knowingly or without belief in its truth, or recklessly, careless whether it be true or false.
Recklessness can be defined as a ‘flagrant disregard for the truth’.
The burden of proof is on the C-they must prove that the representor made the statement knowing it was untrue/without belief in its truth or was reckless as to the truth.
Define negligent misrepresentation and what is the test in terms of knowledge of the representor?
S2(1) MA 1967-a D will be liable for negligent misrepresentation unless they can prove that they had reasonable grounds to believe, and did believe up to the time the contract was made, that the statement was true.
This is an an easier claim to establish as the normal burden of proof is reversed and the representor bears the burden of proving they had reasonable grounds for believing their statement and that they believed it at the time the contract was made.
Define innocent misrepresentation and what is the test in terms of knowledge of the representor?
S2(1) MA 1967-an innocent misrepresentation is one which is not made fraudulently or negligently. It is a statement made where the representor:
a) proves they had reasonable grounds for belief in the truth of their statement
b) proves that they believed up to the time of the contract that what they were saying was true
Burden of proof is on the representor to show they had reasonable grounds to believe and actual belief up until the contract was made.
