Misrepresentation

Question 1

Ceveat emptor

Answer 1

The general rule on silence, let the buyer beware. No duty disclose.

Question 2

Esso v Mardon (1976)

Answer 2

Collateral warranties result in damage.
Esso represented to the defendants that they could sell a certain amount of petrol despite a change of planning permission. This was deemed to be a term in the contract. They were given a remedy under misrepresentation and negligent misstatement.

Question 3

Dick Bentley v Harold Smith (Motors) (1965) CA

Answer 3

“… the question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended that will suffice.” per Denning LJ
Car was misrepresented to have only driven 20,000 miles and have had a new gear box fitted. The CA held this was a term in the contract as the defendants had special knowledge and skill.

Question 4

Routledge v McKay (1954)

Answer 4

There was too much time between the misrepresentation and the contract to be misrepresentation.

Question 5

Bannerman v White (1861)

Answer 5

It was of great importance to the claimant that the hops hadn’t been cultivated in sulphur. This was a term as the representee attached importance to the statement.

Question 6

Definition

Answer 6

A false statement of fact (by words or conduct) made by one party to the contract to the other which, although not a term in the contract, induces the latter to enter into the contract.

Question 7

Edgington v Fitzmaurice (1885) CA

Answer 7

A false statement of conduct must be dishonestly made in order to be a misrepresentation.
“There must be a misstatement of existing fact: but the state of a man’s mind is as much a fact as the state of his digestion” per Bowen LJ

Question 8

Bisset v WIlkinson (1927)

Answer 8

The opinion that the farm would support 2000 sheep was an honest opinion so was not actionable.

Question 9

Notts Patenet Tile Co v Butler (1886)

Answer 9

Defendant was not aware because they had not checked but gave a misleading impression this was knowledge. The court ruled this was a misrepresentation.

Question 10

Curtis v Chemical Cleaning and Dyeing Co (1951)

Answer 10

There was a half truth as the defendant stated the company was exempt from damage to bead and sequins but the document stated it was exempt from all damage.

Question 11

With v O’Flanagan (1936)

Answer 11

Case concerning the cost of a medical practice - the defendant’s silence/failure to reveal the change of circumstances amounted to an actionable misrepresentation.

Question 12

Uberrimae fidei

Answer 12

Contracts of the utmost good faith, such as insurance contracts

Question 13

Fiduciary relationships

Answer 13

Under an obligation to disclose some information as in a special duty of trust and confidence, such as a doctor and patient

Question 14

Attwood v Small (1838)

Answer 14

B had not relied on A’s statement as they had employed an expert agent to investigate the mine for them.

Question 15

Redgrave v Hurd (1881)

Answer 15

There was an actionable misrepresentation even though there was an offer to view the accounts. In modern law it is likely the damages will be reduced in contributory negligence.

Question 16

Horsfall v Thomas (1862)

Answer 16

The misrepresentee must be made aware of the misrepresentation.

Question 17

Peek v Gurney (1973)

Answer 17

Misrepresentation must be made to the party misled.

Question 18

Derry v Peek (1889) HL

Answer 18

“The statement must be made (1) knowingly or (2) without belief in its truth or (3) recklessly, careless whether it be true or false.” per Lord Herschell
The prospectus falsely stated the company had the right to run trams as they where under the assumption that the permission was a formality. This was not a fraudulent misrepresentation.

Question 19

Remedies

Answer 19

Rescission when inducement (tortious/backwards).

Term/breach of contract compensates had the contract successfully taken place.

Question 20

Doyle v Olby (1969) CA

Answer 20

All consequential losses compensated for. Not foreseeable losses.

Question 21

Smith v Scrimgeour (1996) HL

Answer 21

Put the claimant in the position he would have been had the fraudulent misrepresentation not been made.

Question 22

East v Maurer (1991) CA

Answer 22

Hairdresser case was able to claim for loss of profits for fraudulent misrepresentation.

Question 23

Leaf (1950) CA

Answer 23

Time was a bar to rescission. It would not be correct to hold a contract open indefinitely.

Question 24

Vigers v Pike (1842)

Answer 24

Destruction of a piece of property that is one half of the claim means that there cannot be rescission.

Question 25

Third parties’ bona fide rights

Answer 25

When voidable rescission is not available

Question 26

Hedley Byrne v Heller (1964) HL

Answer 26

Negligent misrepresentation is actionable in tort

Question 27

Misrepresentation Act 1967, section 2(1)

Answer 27

(i) there must be a contract
(ii) fiction of fraud; imposes liability as if the defendant is fraudulent
(iii) it reverses the burden of proof (“so liable… unless he proves”)
(iv) the defendant will not have to pay damages if he can prove he had reasonable cause to believe and he did believe up to the time the contract was made that the facts represented where true

Question 28

Howard Marine v Odgen & Sons (1978) CA

Answer 28

It was not reliable to rely on the Lloyd’s register.

Question 29

Royscott Trust v Rogerson (1991)

Answer 29

Claimants where entitled to all consequential losses (car % case).

Question 30

Misrepresentation Act 1967, section 2(2)

Answer 30

For a wholly innocent misrepresentation there is no right to sue for damages for misrepresentation and the victim is only entitled to rescission (and an indemnity intended to help restore the parties to their original positions).

Question 31

William Sindall v Cambridgeshire CC (1994) CA

Answer 31

This shows the couts using their discretion to avoid a disproportionate response to innocent misrepresentation. The courts awarded £18,000 damages to remove the drain rather than the £5m the property cost.

Question 32

Thomas Whitter v TBP (1996) CA

Answer 32

A liberal approach is taken to interpretation of section 2(2). It applies even where there are bars to rescission. Overruled in Government of Zanzibar (HL).

Question 33

Misrepresentation Act 1967, section 3

Answer 33

Any attempt to exclude liability is subject to the reasonableness test in UCTA, section 11.

Question 34

Manhattan Bank (2003) HL

Answer 34

As a matter of public policy liability cannot be excluded for fraudulent misrepresentation.