Misrepresentation

Question 1

Vitiating factors

Answer 1

Once a contract has been validly formed – a factor that can allow a party to argue release from a contract thus voiding the contract.

Question 2

Results of the Law’s adversarial view of contractual negotiations:

Answer 2

No duty of disclosure. You can withhold information even if you know the information is crucial to their decision to enter into a contract. But you cannot make any false statements. If they ask you can’t lie, but you don’t have to tell.
Information is valuable – makes parties ask questions and seek the truth

Question 3

A misrepresentation that is ACTIONABLE is:

Answer 3

1. An unambiguous false statement of existing fact (or law)
2. Made to the claimant
3. Which induces him to enter the contract
   All elements of this definition must be present for an action in misrepresentation to succeed.

Question 4

Statement

Answer 4

Have to figure out the nature of the statements
Some statements are terms and give rise to a breach of contract if false. This is different to misrepresentation.
Some statements will be made that are not terms, but may induce you to enter into the contract. If that proves false then you may have cause of action in misrepresentation.

Question 5

Importance of classification of statements

Answer 5

In both you might get damages, but they are different for misrepresentation than breach of contract. Damages for breach of contract are forward looking, intend to put claimant in position they would have been if statements were true. Damages for misrepresentation are backward-looking and intend to put claimant in position they would have been in if the statements had not been made.

Question 6

S. 1(A) Misrepresentation act.

Answer 6

Can pursue misrepresentation even where a statement was a term. But why would would you do this if the damages for BofC are better? BC can also get recission, to get out of contract. Maybe the damages won’t help you, you just want out. Getting out of a contract for MR is easy, more difficult for BofC.

Question 7

Ho do you determine the difference between a representation and a term of the contract?

Answer 7

Heilbut, Symons & Co v Buckleton
Look at the intention of the parties considering the totality of the case
Dick Bentley Productions v Harold Smith (Motors) Ltd
Is the statement important? How important? If you ask for something that is crucial to your decision and tell them it is important then it will be a TofC. If it’s just an aside, and didn’t seem important/a crucial motive to entering the contract, a representation
Expertise of the parties. The statements made by a professional, bc of their expertise, are more likely to be important

Question 8

Cases showing that a ‘statement’ can be made by words or conduct

Answer 8

Walters v Morgan
‘a nod or a wink…’ intended to induce the vendor to believe the existence of a non-existing fact might be actionable
Gordon v Selico
Hired a contractor to remove dry rot before selling a house. With Selico’s knowledge and approval the contractor instead merely covered the dry rot. Held that this could qualify as a misrepresentation, the covering being a statement that there was not dry rot.
Spice Girls v Aprilia
One of the Spice girls left. The group, prior to her departure were negotiating with Aprilia. Before negotiations Geri Haliwell had informed the other’s of her intention to leave. Afterwards Aprilia sued for misrepresentation. Successful. Court held that through their conduct the band misrepresented that there were going to be 5 members of the band, when really there would only be 4 involved in the sponsorship deal.
Note the fine line between an actionable MR by conduct and English law’s reluctance to admit liability for non-disclosure

Question 9

What does unambiguous statement mean

Answer 9

McInerny v Lloyd’s Bank Ltd [1974] 1 Lloyd’s Rep 246

- Has to be the only way you can interpret the statement.

Question 10

Statement of Fact (and, more recently, of law) case

Answer 10

Pankhania v Hackney LBC [2002] NPC 123.
C purchased property induced by a representation that the current occupiers of the property were contractual licensees, whose occupation could be terminated on giving 3 months notice. In fact the current occupant was a tenant protected under the Landlord and Tenant Act 1954. This was a misrepresentation as to law. The claimant’s action was therefore successful

Question 11

Are statements of opinion actionable?

Answer 11

Statements of opinion are not actionable as misrepresentation. UNLESS it is a dishonest opinion i.e. if the opinion is not genuinely held.
Can also apply if the statement could not reasonably be held by the stator

Question 12

Statement of opinion where one party knows more case

Answer 12

Smith v Land and House Property Corporation
Court says where the facts are equally known to both parties what on says to the other is merely a statement of opinion. Where knowledge is not equal, the one who knows more states an opinion he implies statements of fact that would justify his opinion.
Asks a vendor how many sheep he thinks could graze on a piece of land. Says 2,000. Court rules that it was an opinion as he had not grazed sheep on it before so he did not know and it was just an opinion. Implying that if he had expertise and knowledge it would have been a statement of fact.

Question 13

Statement of opinion where one party knows more case number 2, duty of stator

Answer 13

Esso Petroleum Co Ltd v Mardon [1976] 1 WLR 1
‘If a man, who has or professes to have special knowledge or skill makes a representation by virtue thereof to another – be it advice, information or opinion – with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable’

Question 14

Can statements of future intention be actionable?

Answer 14

Beattie v Ebury
A representation is an assertion of the truth that a fact exists or did exist. It is a statement of fact. It can, therefore, have no reference to future events or promises.
Statements of future intention are not actionable as misrepresentation

Question 15

Statement of future intention example case

Answer 15

Wales v Wadham [1977] 1 WLR 199
Left his wife to live with another woman. Agreed to alimony on condition she did not re-marry. She did re-marry. Husband sought to rescind the contract on basis of misrepresentation. Court ruled it was a statement of her future intention are therefore not actionable

Question 16

Future intention
If, however, you make a promise to act a certain way in the future and know at the time you will not, then it is actionable. Evidentiary problems, however.
Case?

Answer 16

Edgington v Fitzmaurice (1885) 29 Ch D 459
Prospectus asking people to buy shares, and the money would be used to improve the company. Statement of future intention?
No, the owners knew they weren’t going to use it to improve the company but to pay off debts. Therefore misrepresentation.

Question 17

Are ‘Mere Puffs’ actionable?

Answer 17

Various and exaggerated statements made by a party that can be considered neither MRs nor TofC. E.g. say a perfume will get women cuing at your door. Mere Puff. Not meant to be a statement of fact.

Question 18

“mere puffs” cases

Answer 18

Dimmock v Hallett
Boundaries a little more murky. Statement that land was ”fertile and improvable”. Was a mere puff/”flourishing description”
Smith v Land and House Property Corp
Said property ‘let to a most desirable’ tenant. Not a desirable tenant at all. A little vague but still dishonest. Vendor had knowledge of the tenant superior to the purchaser. Statement of fact
Carlill v Carbolic Smoke Ball Co
Moves from mere puff to promise. Actionable as a TofC

Question 19

Can silence be a MR?

Answer 19

In most situations mere silence does not amount to an unambiguous false misrepresentation and therefore will not give rise to an action for misrepresentation.
As in Keates v Cadogan where did not tell buyer that the house was uninhabitable

Question 20

Exceptions to the general rule on silenve in Keates v Cadogan:

Answer 20

(i) Half truths
(ii) Continuing representations
(iii) Contracts uberrimae fidei

Question 21

Half truth case

Answer 21

Dimmock v Hallett (1866) LR 2 Ch App 21.
Half truth as to tenants. Said there were paying tenants, but didn’t mention they had already given notice to quit the property.

Question 22

Continuing representation case

Answer 22

IFE Fund v Goldman Sachs International
Arranging a finance agreement. Had given information about another company’s finances crucial to whether another company invested. Then it was suggested that this information may not be accurate.
Court ruled that they did not have to disclose the information unless they had actual knowledge that the previous info was misleading. Where they do, they must disclose this or they will be making a continuing misrepresentation

Question 23

Contracts uberrimae fidei (utmost good faith)

Answer 23

The most common example of this type of contract is a contract of insurance where disclosure of all material facts must be made to the insurer.
Where there has been a material non-disclosure, the insurer may avoid the contract

Question 24

Statement must be made to the claimant

Answer 24

The misrepresentation must be addressed directly to the party misled, or to a third party with the intention that it be passed on to the claimant
Smith v Eric S Bush, surveyor made his statement to mortgage company who passed it on to Claimant