Misrepresentation Flashcards
What are vitiating factors?
Are factors that spoil the contract at the point of formation and make the contract voidable.
What is recission?
If the party affected by the misrepresentation chooses to avoid the contract it’s known as recission.
This is a remedy which returns the party to their pre-contract position.
What is misrepresentation?
A false statement of material fact, made by one party to another which induces the contract.
-All 4 parts of this definition must be proved in order for their to be misrepresentation.
What is a false statement?
This is a statement which is not true or accurate, and it must involve a statement or some form of conduct as silence will not be considered misrepresentation.
Statement can be verbal, written or by behaviour.
- Spice Girls V Aprilia world service
What was decided in Walters V Morgan?
Stated that ‘a nod, a wink, a shake of the head or a smile’ would all be considered to be a statement.
What was decided in the case of Fletcher V Krell?
Silence will not be considered misrepresentation.
Failed to mention that she was divorced although she was never asked.
What are exceptions to the silence rule?
- Where you tell a half-truth.
Dimmock V Hallett- must tell the whole truth if they do not it will be misrepresentation. - Where the relationship between the parties is based upon trust.
Tate V Williamson- Financial advisor breached their trust by failing to tell them his plan. - Where the contract is one of ‘upmost good faith’ (Only applies to insurance contracts)
Lambert V Co-op insurance- must disclose all relevant information. - If the statement becomes false you must correct the statement.
With V O’Flanagan- Misrepresentation as they should have told them when the situation changed.
What is a statement of material fact?
This is the statement which would have a reasonable person to make the contract and it did influence them to make the contract.
What can a statement of material fact be distinguished from?
- Statements of opinion:
- This will not be a statement of fact if its the honest opinion of the seller therefore not misrepresentation. (Basset V Wilkinson)
- Will be a statement of fact if the person giving the statement has greater skill and knowledge. ( Smith V Land & house property corporation) - Statements of future opinion:
- If when the statement is made its what you believe at the time it will not be misrepresentation.
- Unless you make a statement about the future which you know is false. (Edgington V Fitzmaurice) - A statement of law:
- Assumption that everyone has equal access to the law so these are not regarded as statements of fact.
- Unless made by a professional.
What is meant by made from one party to another?
Can only be statement made by one of the parties, unless its made by an agent acting on someones behalf as in the eyes of the law they are seen as one.
Whats meant by it induces the contract?
Means that it was a critical part of the statement and the other party relied on the statement.
- It does not matter whether it was reasonable or not for the party to rely on it (Museprime properties V Adhill properties)
- It also doesn’t matter that if you tried you could find out the truth (Redgrave V Hurd)
- If you do your own research you have not relied on the statement, must be entirely (Attwood v Small)
What does consumer statute law say?
A trader must provide certain information in a contract to supply goods in order for the contract to be binding.
- Contained in S.12 of Consumer rights act 2015.
What are the three types of misrepresentation?
- Innocent
- Negligent
- Fraudulent
The type of misrepresentation affects the remedies that are available.
What is innocent misrepresentation?
This is when the statement is false but you made it honestly believing it was true.
- Can receive recission or damages but not both.
- Will not be possible if they cannot be returned to their pre-contract position.
- If the contract is affirmed (they choose to carry on with it)
- There has been a delay.
- If a third party now has rights over the property.
What is negligent misrepresentation?
Is a false statement made by a person who had no reasonable grounds to believe it was true (not a deliberate lie but nothing to suggest that it was ever true).
Two types:
- Under the common law of negligence
- Under the misrepresentation act 1967
- Under the misrepresentation act all that needs to happen for it, is that there is a misrepresentation which leads to a contract and a loss suffered.
- Recission and/or damages.
