Misrepresentation Flashcards
What is misrepresentation?
A false statement of fact made during pre-contractual negotiations by one party which indices the other party to enter into the contract and as a result of which the other suffers loss
What are the elements of a misrepresentation?
A. That the statement is not a term of contract (NOT A TERM) B. Is it actionable -unambiguous -false -statement of fact or law -addresses to party misled -induces contract -causes loss
What are the remedies for a misrepresentation?
1) Fraudulent
2) Negligent
3) Innocent
How to judge if it’s a TERM or MISREPRESENTATION?
- What’s the intention of the parties
- when was the statement made
- how important was the statement to hearer
- did either party possess specialist knowledge
- did either party accept responsibility
- was the statement later put into writing
Unambiguous (case)
McInnerny v Lloyd’s Bank [1974]
False - statement needs to be untrue (cases)
Avon Insurance plc v Swire Fraser Ltd [2000]
Test is whether statement is ‘substantially correct.’
Must be a statement of FACT
If it’s an existing fact = actionable
Must be a statement of FACT is not actionable if
A) statement of intention
B) statement of opinion
C) Mere advertising ‘puff’
D) Silence or non-disclosure
A) statement of intention
Honest intention not actionable if change in future. But lying about current intention is statement of fact…..
Edgington v Fitzmaurice
(1885)- director of a company borrowed money, representing that they would use the loan for the improvement of the company’s buildings but had intended from the start to use it to pay off serious debts the company owed (The court regarded this as a false statement of material fact and an actionable misrepresentation)
Wales v Wadham (1977)
B) statement of opinion
Bissett v Wilkinson (1927)
-honest opinion with no expert knowledge so this could never be actionable (NOT LIABLE)
Smith v Land & House Property (1884)
Liability if lie or cannot honestly hold opinion (greater knowledge)
Esso Petroleum Co ltd v Mardon (1976)
Expert IS liable (but then may be a term)
C) A “mere puff”
Dimmock v Hallett (1866-67) Example of “fertile and improvable land” - no liability
Carlill v Carbolic Smoke Ball co [1893]
Not as puff as
-contained factual information
- Evidence suggested reliance, e.g. the £1000 in bank
D) silence
No general duty TO disclose
Keates v The Earl of Cadogan (1851)
Skyes v Taylor- Rose (2004) depends on the facts of the case
D) silence or non disclosure
Dimmock v Hallett (1866-7)
-Half Truths (amounted to a misrep)
With v O’Flanagan [1936]
The doctor selling his practice but the true value was not true (amounted to misrep)
-Change in circumstances
-Statement becomes false due to circumstances changing
- Compres with Wales v Wadham (was a statement of future intention)
Spice Girls ltd v Aprillia World Service BV [2000]
-Misrepresentation by conduct
Statement of law
Pankhania v Hackney Borough Council [2002]
Now the same as a statement of fact
Must be addressed to the party
- Direct
- Indirect
Commercial Banking of Sydney v RH Brown (1972)
Inducement
Objective test
Statement must be material
Must influence a reasonable man
Pan Atlantic v Pine Top Insurance (1995)
If material inducement is inferred
Smith v Chadwick (1884)
Inducement Cases
I) never knew of it
Horsefall v Thomas [1862]
Smith v Chadwick [1884]
ii) did not allow it to affect his judgement
Attwood v Small [1838]
JEB Fasteners v Mark Bloom & Co [1983]
But misrep need not be the only cause:
Edgington v Fitzmaurice (1885)
Inducement Cases
iii) was aware tht it was untrue
Cooper v Tamms [1988]
But no duty to check
Redgrave v Hurd (1881)
If commercial more reasonable to check - Smith v Eric S Bush [1990] - more reasonable for representee to check
(Iv) made after contract agreed - after contract not actionable (Roscorla v Thomas (1842)-
sale of a horse seller states horse was ‘sound and free from vice’ but couldn’t claim because it was said after contract was agreed.
Inducement Cases
Reliance on own investigations Attwood v Small (1838)
Mine was purchased and the information as to the remaining capacity of ore was false claimant couldn’t argue misrep because they had carried out a survey before buying the mine. His survey was inaccurate could get misrep because he relied on they’re own skill and judgement. NOT INDUCED
What are the 3 types of misrepresentations?
- innocent
- fraudulent
- negligent
What is need for Fraudulent Misrepresentation?
An absence of honest belief is essential to constitute fraud
Derry v Peek [1889]
a) knowingly (with knowledge that it is false) or
b) without belief in its truth or
c) recklessly,careless as to whether it is true or false
Thomas Witter v TBP Industries (1996) “flagrant disregard for the truth”
Negligent misrepresentation
Tort - Hedley Byrne v Heller & Partners (negligent misstatement) (1964)
- existence of special relationship
- duty of care
- breach of duty of care
- loss, which is foreseeable
Contractual claim - Negligent Misrepresentation under S2(1)
Misrepresentation Act 1967 - Burden of proof on defendant to show reasonable grounds
•false statement
•no reasonable grounds for belief in its truth
Innocent misrepresentation
Redgrave v Hurd (1881) & 2(1) Misrepresentation Act 1967
Burden on misrepresentor to prove
- believe it was true
- reasonable grounds for belief
What are the remedies for misrepresentation?
Rescission
Damages
Indemnity
