Misrepresentation Flashcards
What is a misrepresentation?
An untrue statement of fact made by one party to another inducing the other party to enter into the contract.
Orally, Writing or Conduct
There are 3 categories of pre-contract statements that can be made:
Sales PUFF: Exaggerated sales talk [This is the BEST car in the world]
Contract Term: A statement that becomes part of the contract (It is vital that this produce is organic otherwise I won’t buy the product)
Representation: A statement inducing another to enter into the contract, may be a misrepresentation.
How to determine whether the statement is a contract term or misrepresentation
Common Intention
Skill and Knowledge
Written into contract
Verified
Time Lapse
If an expert makes a statement to a non-expert, it is likely a
Term
If a non-expert makes a statement to an expert, it is likely a
Representation
If a verbal statement is repeated in a written contract, it is likely a
Term
If the recipient makes it clear the statement is vital, it is likely a
Term
If the statement maker invites verification, it is likely a
Representation
The longer the time between the statement and contract formation, the more likely it is a
Representation
When can silence amount to misrepresentation?
- Fiduciary relationship between beneficiaries [solicitor and client]
- Insurance Contracts
- Half Truth
What are the 3 types of misrepresentation?
Fraudulent
Negligent
Innocent
What is Fraudulent Misrepresentation and the remedy? [deliberate]
a DELIBERATE lie or statement made RECKLESSLY without belief in the truth
[Sold a salon promising to stop working at the other salon in the same town but stayed working]
remedy: recission and damages for all consequential losses
What is Negligent Misrepresentation? [careless]
A statement made CARELESSLY without reasonable grounds for belief.
[Capacity was 1800 tonnes when it was actually 1200 and forgot to check]
remedy: recission and damages
What is innocent misrepresentation?
A statement made HONESTLY and with reasonable grounds for belief
remedy: recission only NO damages
What two choices does the misrepresentee have?
Affirm contract
Rescind contract
What is the remedy of recission?
The contract is set aside and both parties restored to pre-contract position.
What are the 4 bars to recission?
- Affirming contract - innocent party chooses to continue the contract
- Undue delay - Innocent party takes too long
- Third Party Rights - Innocent party acquires interest in subject matter
- Impossible to restore both parties to the same position
Does misrepresentation make the contract void or voidable?
VOIDABLE
What 2 types of misrepresentation are damages available for?
Fraudulent and Negligent
When calculating delay when does the time run for fraudulent misrepresentation?
When the misrepresentation was clearly discovered
Damages for misrepresentation
Consequential and Tortious Basis
