Misrepresentation Flashcards
Elements of an actionable misrepresentation
The representation made must:
1- unambiguous
2- false (or substantially wrong)
3- statement of fact
4- addressed to the claimant
5- inducement
Can silence amount to misrepresentation?
NO
When is a statement made not considered false?
Substantially correct
if the statement is ‘substantially correct’
and
what is actually fully correct wouln’t induce the claimant
What does statement of fact not include? (4)
- statements of opinion
-statements of intention - silence
- mere puff
Can statement of fact be established by conduct?
YES
Can a statement of fact be established by intended concealment?
YES
When do statements of opinion amount to statements of fact?
1- The opinion is not one which the representation held by the statement-maker.
2- Statements of opinion which lack reasonable grounds from people with superior knowledge or experience. (eg. a professional) There are 2 elements to this:
1) representor has greater knowledge than the representee; and
2) there were reasonable grounds for the representor’s opinion
Definition of 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.
When does silence amount to misrepresentation? 3 situations
1- half-truths
(technically true but misleading)
2- continuing statements
(statement true at the time made but becomes untrue at a later stage before contracting, the representation to correct the representation)
3- contracts uberrimae fidei [at utmost good faith]
(one party is in a particularly strong position to know the material facts - eg. insurance, disclosure of all material facts must be made to the insurer)
statement of fact is (…)
a statement asserting a given state of affairs
Can a statement of law constitute an actionable misrepresentation?
YES.
If a statement of fact was knowingly made by the representator but claimant did not enter into contract for the statement. Is there an actionable misrepresentation?
NO bcs the claimant is not induced.
What does an inducement to enter into the contract mean?
The representation must have caused the representee to enter into the contract in order to be an actionable misrepresentation.
D’s representation must play a ‘real and substantial part’ in inducing the claimants to act.
Inducement requires representation to be material.
Test for materiality for the representation to induce the claimant?
must play a ‘real and substantial’ part in inducing - test is objective.
Materiality: did the statement relate to an issue that would have influenced a reasonable person?
Does statements of future intention constitute misrepresentation?
NO
- EXCEPT: Representator did not have actual intention at the time of making the statement.
What if statement of fact not found to be material?
Inducement will not be inferred so C must prove that they were SUBJECTIVELY induced.
Can contributory negligence be relied upon as a defence for fraudulent misrepresentation?
NO
- ONLY available for negligent misrepresentation.
When can a fraudulent misrepresentation be established?
False representation made:
1- knowingly; or
2- without belief in its truth; or
3- recklessly as to its truthfulness
Motive is irrelevant.
D fails to prove that they had reasonable grounds to believe, and/or not believing true up until the contract.
Negligent misrepresentation
Other than fraudulent, D fails to prove that they had reasonable grounds to believe, and/or not believing true up until the contract.
Easier for a claimant to establish.
D bears the burden of proof.
Innocent misrepresentation
where representator has shown reasonable grounds to believe and actual belief up until the contract was made. Burden is on the D to show they believed/had reasonable grounds to believe.
Representor must prove
- that they had reasonable grounds for belief in the truth of their statement; and
- that they believed up to the time of the contract that what they were saying was true
Remedies for misrepresentation
- rescission ( to set aside the contract -for all misrepresentations - equitable remedy, rendering the contract VOIDABLE)
- indemnity (mostly for innocent misrepresentation)
- damages (only available for fraudulent & negligent misrepresentation - in lieu of rescission)
Bars to rescission
- Affirmation
- Lapse of time: action must be brought promptly
- Impossibility
- Third party rights accrue: where a TP has validly gained title to goods under the contract
Damages for misrepresentation
Available in lieu of rescission (for negligent and innocent misrep)
Only available in fraudulent and negligent misrepresentation.
For negligent misrep damages are available in lieu of rescission.
For innocent representation, can be given in lieu of rescission.
Remedy for fraudulent misrep
Damages as of right, covers also consequential economic loss.
Exemption clauses for misrepresentation
Must satisfy reasonableness proviso under UCTA.
