Misrepresentation Flashcards
What effect do actionable misrepresentations have on a contract?
They make the contract voidable but not void.
What are the requirements for a misrepresentation to be actionable?
The misrepresentation must be:
- unambiguous
- false
- statement of fact
- addressed to the claimant
- which induces them to enter into the contract
When is a statement not considered an actionable misrepresentation?
- If it was not communicated to the representee
- If it did not affect the representee’s decision
- If it was known to be untrue by the representee
Can statements of opinion form the basis of a claim in misrepresentation?
No, unless the representor has greater knowledge or does not believe the opinion they express.
Can conduct form the basis of a misrepresentation?
Yes
Is a statement of future intention a misrepresentation?
No, unless the representor knows at that point in time that they cannot do what they state or do not intend to do it.
Is silence generally considered a statement of fact in misrepresentation?
No, except in cases of half-truths, continuing misrepresentations, or contracts made uberrimae fidei
What must a statement do to induce the representee to enter into the contract?
- The statement must be material (according to the reasonable person)
- The representee must be aware of it
- representor must intend the representee to act on the statement
- Representee must act on the statement
What is presumed if the misrepresentation is fraudulent and material?
Causation is presumed.
What are the types of misrepresentation?
- Fraudulent misrepresentation
- Negligent misrepresentation
- Innocent misrepresentation
What is fraudulent misrepresentation?
A misrepresentation made Misrepresentation made knowingly without belief in its truth
What is negligent misrepresentation?
Misrepresentation where the representor is liable unless they can prove they had reasonable grounds to believe and did believe up until they entered into the contract.
What is innocent misrepresentation?
Misrepresentation where the representor had reasonable grounds for belief in the truth of their statement and believed it up to the time of the contract.
What remedies are available for misrepresentation?
- Rescission
- indemnity
- Damages - fraudulent and negligent misrep (no automatic right to damages for innocent misrep)
What are the bars to rescission?
- Affirmation
- Lapse of time
- Restitution impossible
- 3P rights accruing
What does indemnity cover in misrepresentation cases?
Expenses for obligations as a result of the contract.
How are damages calculated for fraudulent misrepresentation?
On a tortious basisand exemption clauses will have no effect.
How are damages calculated for negligent misrepresentation?
On the tort of deceit covering all direct loss that flows from the transaction provided it was reasonably foreseeable
What happens if recission is not possible in innocent misrepresentation cases?
The court can award damages.
What can negligent misstatements lead to in addition to misrepresentation claims?
Tort claims where there is a relationship of sufficient proximity.
What is the effect on inducement if the representee has chosen to test the validity of the statement?
Representor can argue that a representee was not induced
* not if fraudulent
* if offered the opportunity to test and chooses not to, the representee can still make a claim for misrep, but may have reduced damages
