Misrepresentation Flashcards
Misrepresentation
Misrepresentation occurs when a party has been induced to enter a contract on the strength of a false statement. When contracts are entered into because of misrepresentation, they are void.
Colthurst v Colthurst
For a claim of misrepresentation to be successful, the party must show that ‘there was a representation of a fact, the representation was untrue and that the parties were induced to enter into the contract by reason of this misrepresentation. This was recently endorsed in Leopardstown v Temperville 2015.
Misrepresentation must be a statement of fact
Gordon v Selico
the court held that active concealment can amount to misrepresentation.
Wales v Wadham
the wife told husband she had no intention of remarrying and entered into agreement that she would receive money from sale of home. However, she did remarry. Held no misrepresentation as was honestly held at the time the misrepresentation was made.
Bissett v Wilkinson
A statement of fact must be distinguished from a statement of opinion. The defendant stated that in his opinion the land could graze 2000 sheep. This was not held to be misrepresentation as the defendant purported to have no special skill.
Doheny v BOI
The bank provided a customer reference stating that the customer was trustworthy and reliable when he was not, and this amounted to a misrepresentation.
Esso Petroleum v Marsden
A statement of opinion was regarded as a misrepresentation given the level and years of experience of the defendant oil company. The oil company here told a prospective garage operator that in their opinion a particular location would produce a specified level of sales. This was held to amount to a misrepresentation.
Representation was untrue
As Enright states, the key to a misrepresentation claim is dishonesty.
Parties were induced to enter into the contract by reason of this misrepresentation
Smith v Chadwick
Representation need not be the sole reason for entering into the contract but it must be a substantial one.
Edgington v Fitzmaurice
It will be sufficient if the party can prove her decision to enter the contract was partly based on the misstatement.
Spencer v IBRC
The investor was induced to make an investment based on information provided by the defendant.
Attwood v Small
A statement of the potential of a mine was not actionable as the buyer didn’t rely on this statement but conducted his own survey instead.
Silence as misrepresentation
Silence is generally not actionable misrepresentation. The exception to this is where silence can be interpreted as an active misrepresentation.
Gil v McDowell
A farmer brought an animal to a market where heifers and bullocks were sold, and the animal was purchased under such illusion. When it transpired that the animal was a hermaphrodite, the sellers silence amounted to misrepresentation as the purchaser was entitled to believe that the animal was either a heifer or a bullock.
Green Park Properties Ltd
Taking a potential purchaser into the yard of an apartment and discussing the sale of the apartment which did not include the land was held to be an active misrepresentation.
Spice Girls v Aprilia Ltd
The manager of spice girls was guilty of misrepresentation by not informing the defendant that one of the members of the group, ginger spice, was leaving and allowing him to proceed with a promotional photoshoot under the false belief that all members of the band would remain together.
The remedy to the claimant will depend on which category of misrepresentation is at issue
Categories of misrepresentation
- Fraudulent misrepresentation
- Negligent misrepresentation
- Innocent misrepresentation
Fraudulent misrepresentation
This is where the maker knows the statement is false or is reckless as to whether it is or not, as per Harlequin property 2019.
Derry v Peek
The court stated that fraudulent misrepresentation is actionable where a party has made an unambiguous representation that they know or ought to have known is false and the other party relies on the misrepresentation to enter into the contract.
Fenton v Schofield
Fraudulent misrepresentation existed where seller of land replied to buyer that river would yield salmon, statement was false and seller knew this.
Negligent misrepresentation
Where the maker fails to take reasonable care in making the statement
Hedley Byrne v Heller
The defendant bankers gave a positive statement to the plaintiff advertising agents as to the creditworthiness of a potential client, but noted they were giving advise without responsibility and excluded them from liability.
Spencer v IBRC
The plaintiff was successful in an action of misrepresentation where he invested in property on the basis of brochures the bank had given him which turned out to have information that was untrue.
Remedy for misrepresentation
Rescission, under which the courts will rescind a contract, restoring the parties to the position that existed before the contract was entered into.
