Misrepresentation Flashcards
Statement of existing fact or law, case:
Bisset v Wilkinson (1927)
Facts: a farmed in NZ told the plaintiff, a prospective buyer of the land, that it would support 2,000 sheep. Plaintiff bought the land but it failed to support 2,000 sheep and sought to rescind the contract.
Held: Privy Council held that this was not a misrepresentation even though it turned out to be inaccurate. Neither the farmer nor anyone else had at any point carried out sheep farming in the land, and the purchaser was aware of this. The farmer’s view on the matter was no more than an expression of opinion. Rescission request refused.
Three situations where a statement that appears to be one of opinion can nevertheless be treated as one of fact:
1) If the person making the statement was in a position to know the correct facts.
Smith v Land and House Property Corp (1884)
Statement that a tenant was ‘most desirable’ while on its face an opinion was treated as a misrepresentation because the maker of the statement knew that the tenant had in fact been in arrears with his rent for some time.
2) Where the statement of opinion comes from an expert.
Esso Petroleum v Mardon (1976)
A representative of Esso gave a view as to the liner throughout of petrol at a station. Representative had overlooked the facts at hand. CoA held that it involved a representation that proper care had been taken in giving it, statement of fact.
3) A statement of opinion which is not genuinely held.
Edgington v Fitzmaurice (1885)
Facts: a company prospectus designed to attract subscribers contained false statement about the uses to which the money would be put but was actually used to pay off debts.
Held: CoA held that this statement of intention could be treated as a representation of the director’s state of mind and thus could be treated as a false statement of fact.
Misrepresentation by silence, situations and cases:
1) One party tells a half-truth.
Dimmock v Hallett
The statement in this case that farms were fully let when, in fact, the maker of the statement knew that the tenants had given notice to quit.
2) If a true statement is made and a change of circumstances is not disclosed.
With v O’Flanagan (1936)
Facts: a doctor seeking to sell his practice told a prospective purchaser that it made £2,000 per annum. True at the time but as a result of the doctor’s illness the practice decline considerably over the next few months so that by the time it sold it only made £5 per week.
3) Contracts is utmost good faith require the contracting party to disclose all relevant facts.
Misrepresentation must induce the contract:
In Edgington v Fitzmaurice the plaintiff was influence not only by the prospectus but also his own unrelated mistaken belief. His action was nevertheless successful because it provided misstatement was ‘actively present in his mind’ when he decided to advance the money.
Doesn’t matter that the party deceived has spurned the chance to discover the truth, as in Redgrave v Hurd. Where false statements were made by the plaintiff about the income of his practice as a solicitor, but he had been given the chance to examine the documents which would have revealed the true position but decline to do so. This did not prevent his claim of misrepresentation.
Types of misrepresentation, fraudulent case:
Derry v Peek (1889)
Lord Herschell: false representation must be proved ‘to have been made (1) knowingly; or (2) without belief in its truth; or (3) recklessly, careless whether t be true of false.’
Types of misrepresentation, negligent case:
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1963]
Facts: claimant an advertising agency which had asked the defendant bank for a credit check in respect of one of its clients which was a customer of the bank. Bank replied saying the client could meet its financial obligations.
HoL held that negligent statements could attract liability and that this would extend to pure economic loss. Liability arises if: the defendant carelessly makes a false statement to the client, has been relied upon and a ‘special relationship’.
