Misrepresentation 2 Flashcards
Different types of misrepresentation:
- Fraudulent Misrep
- Negligent MIsrep
- Innocent Misrep
Fraudulent misrepresentation:
A false statement is deemed fraudulent at common law if made, knowingly, without belief in truth and recklessly.
Derry v Peek
Negligent misrepresentation:
Honestly believing a statement is true. Statement maker fails to check its accuracy.
Section 2(1) MIsrep Act 1967 Howard Maine dredging v Ogden and Sons
Innocent misrepresentation:
Honest belief, based upon reasonable grounds, that statement is true. Statement turns out false.
Section 2(2) Misrep Act 1967
What is the basic remedy for misrepresentation?
Rescission
What is Rescission?
When the contract is set aside and all property received under contract is handed back.
Remedy for Fraudulent/ Negligent Misrep where rescission alone is available?
If additional loss is suffered, then damages are awarded. Section 2(1) Misrep Act 1967
Remedy for Fraudulent/ Negligent Misrep where rescission has been lost?
Damages alone.
Remedy for Innocent MIsrep where rescission is available?
Rescission may be too drastic and courts may award damages. Section 2(2) Misrep Act 1967
Remedy for Innocent MIsrep where rescission has been lost?
No rescission = No damages.
Possible indemnity
Indemnity
Legalizing illegal contracts
Barz to rescission: Affirmation
Aware of misrep but continues performance of contract.
Long v Lloyd
Barz to rescission: Lapse of time
Period of time from date of contract and from date when fraud could have been reasonably discovered,
Leaf v International galleries.
Barz to rescission: Restitution impossible
Impossible to restore parties to original positions. Can make financial alteration should rescission prove too expensive.
Erlanger v New Sombrero
Barz to rescission: Third Party Rights
Cannot claim returns of property to defeat rights acquired by third party.
Section 23, Sale of Goods Act 1979
