MISREPRESENTATION

Question 1

MISREPRESENTATION

Answer 1

False statements or assertions that relate to existing facts (not to future conduct)
B) Must relate to facts, not opinions
1) Fact disguised as opinion will count as misrepresentation (i.e. car dealer tells customer that he thinks the car runs pretty well when he knows it doesn’t)
2) Where a party holds himself out to have knowledge/special skill and asserts an opinion in that capacity—his assertions are held to relate to underlying facts and can establish misrepresentation (i.e. mechanics)

Question 2

Fraudulent Misrepresentation (active misrepresentation)—elements

Answer 2

a) Representation—conduct, words, writing
b) False
c) Materiality of representation— concealment qualifies
d) The one who makes the representation know that it’s false or is ignorant of the truth
e) Speaker’s intent that false statement will induce action—intent to mislead
f) Person seeking remedy must not be aware of falsity—can’t know the truth
g) Must allege that thy relied on representation
h) Injury caused by false misrepresentation

Question 3

Non-fraudulent misrepresentation—elements

Answer 3

a) D must have made assertion that was inconsistent with existing facts
b) Misrepresentation must be material to the contract; and
c) There must have been reasonable reliance on the misrepresentation

Question 4

Fraudulent nondisclosure (duty to disclose cases)—passive misrepresentation elements

Answer 4

(i) The nondisclosure was material to the contract; and

(ii) There was reasonable reliance on the nondisclosure

Question 5

Duty to disclose if

Answer 5

(i) The party knows the other party is unaware of the relevant information
(ii) The knowledge of the relevant information would be likely to influence the party’s decision to enter into the transaction
(iii) The information isn’t readily accessible to the other party by diligent inquiry
(iv) The information is not fairly regarded as the party’s property through special efforts or study (deliberate investment)

(v) The parties enjoy a relationship of trust and confidence
(vi) A party has made an assertion that was true at the time but has been rendered false since
(vii) The obligation of good faith would require disclosure

Question 6

Caveat emptor

Answer 6

says seller can remain silent/take no steps to actively conceal a material fact
(i) Courts don’t like this so the misrepresentation rules get around it

Question 7

Fraud in factum

Answer 7

relates to the document being signed

Question 8

Fraud in the inducement

Answer 8

motivating fact behind entering the contract

Question 9

R2C §161

Answer 9

When non-disclosure is equivalent to an assertion

1) Where he knows the other party is mistaken and disclosure would resulting correct that mistake (PROF: this is nonsense—we cannot know when the other party is mistaken, that’s the nature of a mistake)
2) Good way to think of these: “nondisclosure induces a unilateral mistake that goes to the heart of the contract”