Misrepresentation

Question 1

What is a misrepresentation?

Answer 1

“an unambiguous false statement of fact, addressed to the party misled, which causes them to enter into the contract”

Question 2

Three elements of a misrepresentation?

Answer 2

1. unambiguous false statement of fact
2. addressed to the party misled
3. causing misrepresentee to enter into the contract

Question 3

Case law for misrepresentation being an objective test?

Answer 3

Shaftsbury House (Developments) Ltd v Lee

Question 4

Are contracting parties required to disclose information that the other party may want to know?

Answer 4

Fletcher v Krell

• No general duty to provide information
• Misrep arises when active statements are false or misleading

Question 5

What are the three types of misrepresentations?

Answer 5

1. Fraudulent
2. Negligent
3. Innocent

Question 6

Remedies for misrepresentation?

Answer 6

Rescission or damages

Question 7

Bars to rescission?

Answer 7

1. Impossible to restore parties to pre-contractual position
2. Affirmation of contract by misrepresentee
3. Lapse of time
4. Third party has acquired rights

Question 8

What is rescission?

Answer 8

Putting the parties back into the position they were before they agreed to the contract

Question 9

How is rescission and termination different?

Answer 9

In a rescission the contract is unwound… a retrospective effect
In a termination the contract comes to an end with a prospective effect .. damages are used to put non-breaching party into the position as if the contract had been performed

Question 10

Derry v Peek

Answer 10

Fraudulent misrepresentation: A statement “(1) made knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false”

Question 11

Edington v Fitzmaurice

Answer 11

False statement of current intention can be treated as a false statement of fact; this is just as valid as actionable misrepresentation

Question 12

Notts Patent Brick v Butler

Answer 12

White lies/Half truths can be considered as misrepresentation

Question 13

Redgrave v Hurd

Answer 13

Right to rescission (restoring a party back to their pre contractual obligations)

Question 14

Leaf v International Galleries

Answer 14

Lapse of time: right to rescission is lost when the issue could have been dealt with at a much earlier stage

Question 15

Salt v Stratstone

Answer 15

Substantial rescission: idea that so far as it is practical to rescind, lapse of time shouldn’t be a bar to rescission

Question 16

William Sindall plc v Cambridgeshire CC

Answer 16

Damages awarded in lieu of rescission under s.2 of the misrep act … 3 parts to consider:

1) Nature of the misrepresentation (how minor or major)
2) Loss caused to the misrepresentee if contract still in force
3) Loss caused to the misrepresentor if rescission is granted