Misrepresentation

Question 1

What is misrepresentation?

Answer 1

• Occurs during rhe formation of a contract which deems the contract null
• A false statement of material fact from a party to the contract that induces the other party into the contract

Question 2

What are the elements of misrepresentation?

Answer 2

1. A false statement
2. Of Material fact
3. Made by a party to the contract
4. That induces the other party to enter the contract

Question 3

What is a false statement?

Answer 3

• The statement is usually written, verbal or conduct
• The statement must be false and the extent of the knowledge will determine the type of misrepresentation
• Silence is not a misrepresentation

Question 4

What are the three exceptions to silence?

Answer 4

1. Change of circumstances
2. Half-Truth
3. Confidential Relationships

Question 5

What is a change of circumstances?

Question 6

What is a half-truth?

Answer 6

• If a statement is a half truth and the rest is kept silent, this can be a misrepresentation
• What is kept silent is a non-disclosure and there is a duty to reveal the whole truth
• Seen in Dimmock v Hallett

Question 7

What is a confidential relationship?

Answer 7

• If the relationship is based on trust, silence may be a representation
• Tate v Williamson

Question 8

What is a material fact?

Answer 8

• This must be a statement of fact, not opinion and led the person to make the contract and influence the mind of the person making the decision
• It can be a statement of future intention, but if they do not have intention, it will be misrepresentation

Question 9

What is a statement of opinion? And what key case established this?

Answer 9

• The maker of the statement may genuinely believe the opinion they are stating and therefore will not be misrepresentation
• If the opinion was not honestly held, it will be a material fact and not opinion
• A material fact must be a statement of fact and not opinion
• This was established in Bisset v Wilkinson

Question 10

What is a statement of intention?

Answer 10

• A promise to do something in the future is not a statement of fact as it must rely on past events or something in existence
• However, if the maker has no intention of carrying out his intention, it will be a material fact and therefire can be misrepresentation

Question 11

What does it mean when it is made by a party to the contract?

Answer 11

• A person cannot be liable for a statement made by others (Unless they are the agent)
• This means that their cannot be any third party

Question 12

What does it mean to induce the other party to enter the contract? What are key cases for this?

Answer 12

• It must lead the other person to enter and be a critical part of their decision
• They must have relied on the statement rather than their own judgement or other information obtained somewhere else
• It does not matter whether the victim could have discovered the truth by taking reasonable steps or whether it was unreasonable to rely
• Reliance is enough to make it a misrepresentation
• Attwood v Small established that they did not rely on the statement of the seller
• Redgrave v Hurd established that they had relied on it and did not need to take reasonable steps

Question 13

What is stated in S12 of the Consumer Rights Act 2015?

Answer 13

• A trader must provide certain information before it becomes legally binding
• A misrepresentation means that they miss out key information which the consumer may use to make an informed decision
• All consumer information must be displayed clearly
• They must not exclude information necessary, unclear material or not identify the commercial intent

Question 14

What are three types of misrepresentation?

Answer 14

1. Innocent Misrepresentation
2. Negligent Misrepresentation
3. Fraudulent Misrepresentation

Question 15

What is innocent misrepresentation?

Answer 15

• It is defined in the ‘Misrepresentation Act 1967’
• A false statement that is made honestly and they always believed the statement to be true, this means that there is no negligence in the belief
• It is under the courts discretion to either use damages or recission

Question 16

What is negligent misrepresentation?

Answer 16

• This is a statement made by a person who believed it to be true but had no reasonable grounds to believe this
• Negligence in the Misrepresentation Act 1967 means that there does not need to be a special relationship between the parties
• S2 (1) created the statute liability that there must be a misrepresentation which results in a contract and the victim suffers a loss
• The burden of proof is on the defendant to prove that they had reasonable groups to believe it

Question 17

What is fraudulent misrepresentation?

Answer 17

• This is when someone is decietful and attempts to trick someone
• Defined in ‘Derry v Peek’ a statement made without belief in the truth
• This means that the person knows it to be untrue or is reckless as to whether it is not true

Question 18

What is the remedy for innocent misrepresentation?

Answer 18

1. Recission = This is to put the party back to the position before the contract occured
   - The misrepresentation induced the contract and had they have known the truth, they would not have entered
   - However, recission will not be available in certain circumstances. This means that damages can be awarded in these circumstances under discretion
2. Impossibility = Restitution may not be possible in certain circumstances (Seen in Clarke v Dickson)
3. Contract is affirmed = The innocent party may decide to continue despite being aware of the misrepresentation (Seen in Long v Lloyd)
4. Delay = If there is a delay in bringing in a claim, the courts can assume that no issues have arisen in a short period of time meaning nothing can be majorly wrong (Seen in Leaf v International Galleries)
5. Third party has gained rights = Someone else had an interest in the goods so therefore it would be unfair on the innocent party (Seen in Lewis v Averay)

Question 19

What is the remedy for negligent misrepresentation?

Answer 19

• Remedies are rescission and/or damages, damages are calculated on a tort measure so damages can be deducted
• This can occur if contributory negligence applies
• Recission is available in the same circumstances as innocent misrepresentation

Question 20

What is the remedy for fraudulent misrepresentation?

Answer 20

• Remedies are rescission and damages in the tort of deciet.
• Damages aim to put the victim in the position they were in before the misrepresentation occured
• However, people will also be awarded compensatory damages for loss of profit
• The aim of contract is to put them in the position if the contract had performed