Misrepresentation

Question 1

Introduce misrepresentation.

Answer 1

• Vitiating factor is pre-contract issue - occurs prior to point of contract being formed.
• Can make contract void (contract declared nullity - never had legal impact, so void from beginning) or voidable (made void in certain circumstances - if right to make void isn’t valid, remains valid).
• Misrepresentation only occurs during formation of contract - untrue statement by D to * C that encourages other party to enter * contract.
• Four elements that must all be established.

Question 2

Explain the first element of misrepresentation, D made statement that was false.

Answer 2

• Must be proved that untrue statement was made by D to C.
• Spice Girls: statement can be written or verbal, but also through conduct.
• Silence alone can’t be misrep.
• Burki v Seventy Thirty: can just be elements of statement that are untrue.
• O’Flaganan: statement that’s true can become misrepresentation if becomes false before contract is made (i.e. if there’s change in circumstances).
• Dimmock v Hallet: silence can be misrepresentation where statement made is half-truth, as what isn’t said is non-disclosure + may be misrep.
• Tate v Williamson: where relationship between parties is based on trust (e.g. solicitor / financial advisor to clients) - silence may be misrep.
• Lambert: contract of ‘utmost good faith’ - all material facts must be disclosed whether asked or not (e.g. insurance policies).

Question 3

Explain the second element of misrepresentation, material fact.

Answer 3

• Must be proved that misrep was of material fact (important).
  Statements Of Opinion: (usually applicable)
• Bisset v Wilkinson: statement of opinion which is honestly believed isn’t statement of fact + therefore isn’t misrep.
• Edginton: if opinion wasn’t honestly held - regarded as statement of fact rather than one of opinion - will be misrep.
  *Statements Of Intention:
• Promise to do something in future is generally not one of fact.
• However, statement of intention will amount to statement of fact if D has no intention of carrying it out.

Question 4

Explain the third element of misrepresentation, must be made by party to contract.

Answer 4

• Person isn’t liable for statements made by others unless they’re their agent (e.g. newspaper review of item can’t be misrep).
• Only be for statements made by parties to contract.

Question 5

Explain the fourth element of misrepresentation, must induce other party to enter contract.

Answer 5

• Statement must lead other into making contract + must be critical part of making decision.
• Attwood v Small: statement must be important to person making contract + they must’ve relied on statement.
• Redgrave v Hurd: doesn’t matter if V could’ve discovered truth by taking reasonable steps - fact untrue statement was relied upon is enough to be misrep.

Question 6

State + explain the types of misrepresentation.

Answer 6

3 possible types of misrep.
Innocent Misrepresentation:
* Misrepresentation Act 1967: clarifies definition of innocent misrep as one which is genuinely held on reasonable grounds.
* False statement made honestly - person making statement believed it to be true + beliefs on reasonable grounds.
Negligent Misrepresentation:
* False statement made by person who believed statement to be true but had no reasonable ground for believing it to be true (could’ve checked)
* S.2 (1) Misrepresentation Act 1967: created statutory liability for negligent misrepresentation - doesn’t require there to be special relationship between parties, as in negligence (under Hedley v Byrne).
Fraudulent Misrepresentation:
* Derry v Peak: fraudulent misrep is when there’s statement made without belief in truth.
* Person making rep knows it to be untrue, or is reckless as to whether or not it’s untrue.

Question 7

Explain the remedies for innocent misrepresentation.

Answer 7

Recession:
* End contract - put parties back in pre-contractual position.
* All equitable remedies are discretionary - court only always if fair to do so.
Remedy Of Rescission Not Available when:
1) Contract Is Affirmed:
* Long v Lloyd: innocent party decides to carry on with contract despite being aware of misrep.
2) Restitution Of Original Pre-Contract Position Is Impossible:
* Clarke v Dickinson: confirmed this.
3) Delay:
* Leaf: delay between contract + finding out truth - assume there’s no major problems.
4) Third Party’s Gained Rights Over Property:
* Lewis v Averay: someone else’s gained interest in goods - recession not granted as this would be unfair on innocent 3rd party.
*Damages:
* S.2 (2) Misrepresentation Act 1967: discretion to award damages where rescission is inequitable - however, damages unlikely for innocent misrep.

Question 8

Explain the remedies for negligent misrepresentation.

Answer 8

Recision + / or damages.
* S.2 (1) Misrepresentation Act 1967: right to damages for negligent misrep.
* Damages calculated according to tort measure, because claim under Act is made where cannot be proved.
* S.2 (2) Misrepresentation Act 1967: discretion to award damages where rescission is inequitable.

Question 9

Explain the remedies for fraudulent misrepresentation.

Answer 9

• Recission + damages in tort of deceit.
• Damages - aim to put V back in position they were in before misrep occurred.
• East v Maurer: possible to recover damages for loss of profit following fraudulent misrep.