Misrepresentation

Question 1

Give the definition of Misrepresentation: from Ewan McKendrick

Answer 1

“An unambiguous false statement of fact or law which is addressed to the party misled, which is material and which induces the contract”

Contract Law 7e p.273

Question 2

What are the Two rules concerning ‘Fact’ and ‘Opinion’

Answer 2

Generally mere opinion will not count as fact. (yes, i think so…)

Where one of the parties has some special knowledge or skill that from which the other would imply some level of expertise, then this opinion may count as fact.

Question 3

Give a supporting case regarding mere ‘Opinion’

Answer 3

Generally mere opinion will not count as fact:

Bisset v Wilkinson (1927)

Question 4

When can an Opinion be taken as a Fact?

Give the supporting cases supporting ‘Expertise’

Answer 4

Leaf v International Galleries (1950)

Esso Petroleum Co Ltd v Mardon (1976)

Question 5

A ‘check’ on the original statement

Who is making the misrepresentation?

Answer 5

If one party seeks an expert opinion from a third party then he will be deemed to have relied on the expert statement rather than that of the other contractual party.

If one party has been invited to check on the statement but declines, he is still relying on the statement from the other contractual party and could claim misrep.

Question 6

A ‘check’ on the original statement

What are the leading cases?

Answer 6

Relied on expert opinion
Attwood v Small (1838)

Declines offer of expert opinion
Redgrave v Hurd (1881)

Question 7

Is ‘Silence’ misrepresentation?

Name a leading case.

Answer 7

The classic position is that silence is never a misrepresentation:

Keates v Earl of Cadogan (1851)

Question 8

What would the court consider when there is a material change in circumstances?

Answer 8

The courts have found there to be a duty to disclose material facts when considering a case for misrepresentation.

Question 9

What charge might the court levy if material facts have not been disclosed?

Answer 9

Misrepresentation by conduct

Question 10

Duty to Disclose Material Facts

Give the case law

Answer 10

Where there is a material change of circumstance
With v O’Flanagan [1936]

Misrepresentation by conduct
Spice Girls Ltd v Aprilia World Service BV [2002]

Question 11

Is ‘Intention’ to be taken as material fact?

Give the general position, and the case law exception.

Answer 11

‘Intention’ is not generally regarded as material fact and any argument from this position would not be upheld in most instances.

One exception to this rules has arisen in the case Edgington v Fitzmaurice (1885) - the defence in this case was that the misstatement did not actually change his intention as he would have taken the same course of action anyway - the court upheld the plaintiff’s claim as the misstatement was intended to influence the mind of the reader.

Question 12

Define FRAUDULENT Misrepresentation

Answer 12

Fraudulent misrepresentation is, in simple terms, a straightforward swindle - it is identical to the tort of deceit. It can be very difficult to prove, but damages can be heavy.

Question 13

FRAUDULENT Misrepresentation

Give the 3 leading cases

Answer 13

Leading cases:
Derry v Peek (1889)
Smith New Court Ltd v Scrimgeour Vickers (Asset Management) Ltd (1996)
Doyle v Olby (1969)

Question 14

Define NEGLIGENT Misrepresentation

Answer 14

Here, the maker of the statement took insufficient care to be sure that it was accurate.

Question 15

NEGLIGENT Misrepresentation

Give the two leading cases

Answer 15

Leading cases:
Hedley Byrne + Co Ltd v Heller & Partners Ltd (1964)
Esso Petroleum Co Ltd v Mardon (1976)

Question 16

Define INNOCENT Misrepresentation

Answer 16

A Misrepresentation that it made in good faith and believed to be true by the person making it, but is in fact false - this would be a DEFENSE against fraudulent or negligent misrep..

Question 17

Rescission as remedy

Define Recission

Answer 17

The main remedy for misrepresentation is ‘Rescission’; this is an equitable remedy which put both parties back in their original position as was before the misrepresentation was made.

Question 18

Recission as remedy

Two caveats to how the court will decide

Answer 18

Rescission being an ‘equitable’ remedy means that it will not be automatically granted; it is discretionary and will be granted at the conscience of the court, where appropriate.

Some circumstances may call for extra ‘indemnity’ to prevent or compensate for ‘unjust enrichment’, where further work/effort has increased property value, for instance.

Question 19

Bars to rescission

State the three ‘bars to recission’

Answer 19

Affirmation

Third party rights

Lapse of time

Question 20

State a case law example for ‘Lapse of Time’ as a bar to recission

Answer 20

Leaf v International Galleries (1950)

Question 21

State a case law example of ‘Affirmation’ as a bar to recission

Answer 21

Long v Lloyd (1958)

Question 22

State a case law example of ‘Third Party Rights’ as a bar to recission

Answer 22

Car and Universal Finance Co Ltd v Caldwell (1965)

Question 23

What is the governing statute regarding ‘Misrepresentation’?

Answer 23

Misrepresentation Act 1967

Question 24

Misrepresentation Act 1967

Summarise S.2 (1)

Answer 24

The key section is S. 2 (1) - in summary:

If somebody enters into a contract because of a misrepresentation, and

He suffers financial loss as a result, then

He can claim loss (damages)

The maker of the statement must then prove that he had reasonable grounds to believe the statement was true and did believe that it was true

Question 25

Burden of Proof

What must the plaintiff show and what must defendant show?

Answer 25

The burden of proof is on the defendant in this instance:

The Plaintiff does not need to show fraud
The Plaintiff does not even need to show the defendant was negligent

The defendant himself must show he was not negligent (Howard Marine v Ogden 1978)