Misrepresentation Flashcards
What is misrepresentation
- Misrepresentation ≈ mistake, BUT with distinct legal responses
- Must have been a false representation -> Behn v Burness (1863) defines a representation as a statement made by one party before/at time of contract relating to some matter of it
- Even if misrepresentation becomes a term in the contract, can still claim for misrepresentation (s 1(a) Misrepresentation Act 1967)
When is misrepresentation actionable?
- For actionable misrepresentation:
1) There must have been an unambiguous false statement
2) The false statement must have been of law or fact
- Only statements regarding past/present -> statement ‘something will be done in future’ not misrepresentation (Beattie v Lord Ebury (1872))
- Must be fact or law, not an opinion (e.g Bisset v Wilkinson [1927])
-> Can be fact and law (Pankhania v Hackney LBC [at 57])
- Cannot be a “trade puff” - vague and exaggerated statements -> not intended to be relied upon (Carlill v Carbolic Smokeball (1893) not regarded as this)
-> Exceptions to opinions not actionable where opinion can be regarded as fact:
a) Where the opinion given by X contradicts the true facts X already knows
- So X knows his opinion he is giving is not true (e.g Smith v Land and House Property Corp (1884))
b) Expert opinion can be treated as statement of fact (if representor has knowledge/experience) (e.g Esso Petroleum Co ltd v Mardon [1976])
c) An opinion which is not usually had can be treated as a false statement of fact (e.g Edginton v Fitzmaurice (1885) - Fitzmaurice’s intention was not what he said it was)
- Misrepresentations can also be made by actions/conduct
e.g nod, wink, shake of head, smile (Walters v Morgan (1861))
e.g act of painting (Gordan v Selico Ltd (1986))
- Generally, cannot have misrepresentation by silence (Keates v The Earl of Cadogan (1851); Fletcher v Krell (1873))
-> BUT, exceptions:
a) Where only half the facts are given (e.g Dimmock v Hallett (1866))
b) A true statement made originally, but when circumstances change and these are not disclosed (e.g With v O’Flanagan (1936) - continuing representation, not corrected)
c) Where there is good faith and parties must disclose all relevant facts (e.g in insurance contracts), but don’t
3) The false statement must lead the other party to enter the contract (induces)
(JEB Fasteners Ltd v Bloom [1983] - negligently created accounts were not the reason for claimants purchasing a company. No reliance on the accounts. Motive for takeover was getting two of the company directors ∴ no actionable misrepresentation)
a) The representation must have been material to the decision to enter into the contract
b) The representation must have been relied upon by the representee
Also, not necessary to show that representee believed the misrepresentation e.g. Hayward v Zurich Insurance co (2016) - Zurich not believe extent of injury of employer but irrelevant as Zurich were still influenced by misrepresentation to agree to settlement, to avoid larger potential bill if went to court
What are the types of misrepresentation?
1) Innocent misrepresentation:
- Situation where misrepresentor had a reasonable belief his misstatement was true (claim made honestly)
- Almost entirely redundant after 1967 act
- Remedies = usually rescission OR damages under s2(1) of misrep act
- Representee needs to show representation was a but-for reason for entering into the contract (BV Nederlandse Industrie Van Eiprodukten v Rembrandt Enterprises (2019))
-> damages awarded as if misrepresentation has not been made
-> may also take into account missed beneficial opportunities due to misrepresentation (e.g. Doyle v Olby [1969])
2) Negligent misrepresentation:
a) Under Common Law (Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964):
-> Can claim damages where:
i) Party making statement has specialist skill;
ii) There is proximity between the two parties;
iii) The party making the statement is aware that the statement will be relied on
b) Under the misrepresentation Act 1967:
-> Easier to claim negligent misrepresentation under this act
- (S2 (1)):
-> No need to prove special relationship
-> Only need to show there is a misrepresentation which results in a contract where claimant suffers loss
- Remedies = damages and/or rescission (on tort of deceit basis)
- Representee needs to show representation was a but-for reason for entering into the contract (BV Nederlandse Industrie Van Eiprodukten v Rembrandt Enterprises (2019))
3) Fraudulent misrepresentation (assessed on tort of deceit basis):
- ‘a false representation made knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false’ (Lord Herschell, Derry v Peek (1889))
- e.g Spice Girls v Aprilla (2002) - made implied representation that they would stay together, when not true -> became actionable misrepresentation
- Remedies = rescission and damages
- Only need to show they had been materially influenced by representation, with it being actively in their mind (BV Nederlandse Industrie Van Eiprodukten v Rembrandt Enterprises (2019))
When is recission not available?
Rescission becomes unavailable when:
· Affirmation - where parties continue with contact despite knowing statement was false (e.g Long v Lloyd [1958])
· Lapse of time - if too much time has passed (e.g Leaf v International Galleries [1950]) (e.g Salt v Stratstone (2015))
· Impossibility of restitution - if can’t ‘return what he has received’ then rescission impossible (e.g Clarke v Dickson (1858))
· Adverse effect on third parties - i.e if goods obtained by misrepresentation sold to third parties, then third party not expected to give goods back (e.g Phillips v Brooks [1919]) (e.g Crystal Palace v Dowie (2007) - Dowie left Crystal Palace, fraudulently misrepresenting why he left to avoid £1m compensation fee for Dowie joining other PL club (Charlton) -> BUT, could not rescind agreement as unfair to Charlton ∴ Dowie ordered to pay damages to Crystal Palace for compensation fee they would have received)
