Misrepresentation

Question 1

Misrepresentation Definition

Answer 1

A misrepresentation is an untrue statement of fact, made from one party to another, which is not a term of the contract, which has an inducing effect on it.

Question 2

Instances where it is NOT a untrue statement of fact

Answer 2

A mere commendation - Dimmock v Hallett - ‘fertile and improvable’ land
Statement of opinion - Bisset v Wilkinson - sheep farm 2000 sheep - found to be untrue but buyer knew seller had never farmed sheep and was just voicing an opinion

Question 3

Unreasonably held opinion

Answer 3

In situation where one party possess greater skill/knowledge

Smith v Land and House Property - ‘most desirable tenant’ but found out to pay rent erratically and under pressure - misrep cuz seller was the only person who had this knowledge, thus he had an extra duty over his statement and his opinion considered authoritative

Question 4

Esso v Mardon (3-way misrep)

Answer 4

1: Statement of opinion - Esso expert possessed greater skill, therefore had responsibility and more material facts

Question 5

Inntrepreneur v Hollard

Answer 5

Wrong statement of takings in pub held as misrep cuz person who made it felt to be someone who should know accurate takings

Court looks for external evidence instead of traditional ‘reading’ minds of parties

Question 6

British Gas v Nelson

Answer 6

British Gas made forecasts of sales to Nelson before forming a contract that Nelson will install appliances on basis of estimation. Figures badly inaccurate.

Misrep cuz British Gas was seen to be party who held accurate knowledge

Question 7

Sykes v Taylor-Rose

Answer 7

Silence not misrep

Held that sellers of a house did not have to tell buyers that the house was a setting for a murder though buyers resold house at 25,000 pounds loss

Question 8

Statement of future intentions

Answer 8

• generally not misrep
• unless it can be proved that representator never intended to perform promised act at time of making statement = mis-statement of the state of the representer’s mind

Question 9

Statement of future intentions (case)

Answer 9

Edgington v Fitzmaurice

• publicity in business venture where shares were sold stated that aim was to expand and improve business
• letters to other people, written evidence that company planned to raise funds to pay off existing debts
• false and dishonest statements of future intentions held to be misrep
• Bowen LJ: ‘the state of a man’s mind is as much a fact as the state of his digestion’

Question 10

Mere silence general rule

Answer 10

Silence does not amount to misrep
*Walters v Morgan: Lord Campbell “simple reticence does not amount to legal fraud”

No liability for failing to disclose relevant facts to other party even if other party has wrong impression

Principle of caveat emptor - let the buyer beware

Question 11

Case for silence not misrep

Answer 11

Fletcher v Krell

• governess appointed to post - separated
• no obligation to volunteer information if not asked

Question 12

Exceptions to silence general rule

Answer 12

Conduct

Lord Campbell: ‘a nod, a wink, a shake of the head or a smile’, can be photograph/image

Question 13

Cases (3) for conduct misrep

Answer 13

St Marylebone Property v Payne
- misleading photograph for land which was for sale by auction

Spice Girls v Aprila World Service
- Motorcycle advertising job

Schneider v Heath
- seller of boat does positive act to conceal rotten hold defect in boat by submerging it

Question 14

Half-true statement case

Answer 14

Dimmock v Hallett

- all farms on estate led to tenants but omitted to say that they were all given notice to leave

Question 15

Change in circumstances cases (2)

Answer 15

With v O’Flanagan

• doctor selling practice told prospective buyer current income then fell ill
• by the time sale took place, income drastically lesser
• cuz doc didn’t revise original statement to buyer –> misrep

Esso v Mardon
- Esso representative did not revise sales forecast in light of resit of petrol pumps –> misrep

Question 16

Fiduciary relationship

Answer 16

where one party is in a position of responsibility to the other

greater duty to disclose all relevant facts as honest and forthright as possible than in ordinary relationships

Question 17

Case for fiduciary relationship

Answer 17

Hedley Byrne and Co v Heller and Partners Ltd

• Heller bankers gave assurances of creditworthiness to Hedley Bryne concerning mutual client Easipower
• Easipower eventually defaulted on payment
• Misrep claim would have succeeded if not for technical clause in letter of assurance

Question 18

Contracts uberrimae fidei

Answer 18

step beyond fiduciary relationship and impose absolute duty to disclose all material facts

Question 19

Contracts uberrimae fidei cases (3)

Answer 19

Seaman v Fonereau (captured by Spaniards)
Bufe v Turner (house owner did not report circumstances of fire in adjoining property)
Lambert v Co-operative Insurance Society (not entitled to cost of stolen jewellery cuz she did not inform insurers of husband’s conviction of conspiracy to steal)

Question 20

Misery passed on via third party case

Answer 20

Pilmore v Hood
- Seller of pub wrongly stated takings, knowing that information was likely to be passed on to another person who eventually bought the business

Question 21

Statement acted as inducement cases (3)

Answer 21

Attwood v Small (mine minerals)

• buyer of mine claimed misrep when amount of minerals in it found to be less than that stated by seller
• but buyer conducted own private survey
• held to have relied on results of private survey not seller’s

Redgrave v Hurd (representee himself tests for accuracy but fails –> held induced by representer’s statement)

Barton v County Natwest (reasonability)
- rebuttable presumption that a claimant relied on the inducing statement if a reasonable person would have done so

Question 22

Definition for Fraudulent Misrep

Answer 22

Derry v Peek in House of Lords

• Fraudulent misrepresentation is a false statement made
  1) knowing
  2) without belief in its truth
  3) or recklessness as to whether it be true of false

Question 23

Standard of proof for misrep

Answer 23

Ahmed v Addy

- standard of proof should be the criminal standard and beyond all reasonable doubt

Question 24

Misrepresentation Act 1967 s2(1)

Answer 24

Royscott v Rogerson
- confirmed that the principle in fraudulent misrep relating to tortious damages applied also to non-fraudulent misrepresentation

Question 25

Bars to Rescission - S

Answer 25

Statutory Bar

• Misrepresentation Act 1967 s.2(2)
• Zanzibar v British Aerospace

Question 26

Bars to Rescission - L

Answer 26

Lapse of Time
*Leaf v International Galleries - thought to be constable but found out to be a copy 5 years after sale

Only matters with non-fraudulent

Question 27

Bars to Rescission - A

Answer 27

Affirmation

*Long v Lloyd - willingness to share cost and used lorry was affirmation

Question 28

Bars to Rescission - R

Answer 28

Restitution impossible

*Vigers v Pike - restitution of mine impossible cuz considerable extraction took place

Question 29

Bars to Rescission - s

Answer 29

Supervening third-party rights

*White v Garden - iron bars delivered but rescission barred cuz bar had already been sold to 3rd party