Misrepresentation Flashcards
What is misrepresentation?
This area is concerned with false statements that are made before the contract is entered. If these pre-contractual statements are actionable misrepresentations, then the innocent party may be able to end the contract and may even be entitled to damages.
What is an actionable misrepresentation?
A FALSE STATEMENT OF EXISTING OR PAST FACT MADE BY ONE PARTY TO THE OTHER BEFORE OR AT THE TIME OF MAKING THE CONTRACT, WHICH IS INTENDED TO AND DOES INDUCE THE OTHER PARTY TO ENTER INTO THE CONTRACT.
- an untrue statement of fact;
- which induced the party to enter the contract.
The statement must be factual - meaning that some types of statements are excluded;
(i) Commendatory puffs (sales talk/hype)
(ii) Statements of opinion
(iii) Statements of future intention
(iv) Purely abstract statements of law
What are mere commendatory puffs (sales talk)?
These are vague or non-specific statements whose truth would be difficult to verify by objective means, for example where goods are described as ‘a great buy’, ‘wonderful value’. Being a statement of fact for the purposes of misrepresentation.
What was held in Dimmock v Hallett - commendatory puffs
Here land was described as ‘fertile and improvable.’ This was held to be mere sales talk and not actionable misrepresentation. This is probably because the words ‘fertile and improvable’ are vague, non-specific and subjective.
What is a key point to note with commendatory puffs?
If the statement is really very far from the truth when the actual circumstances are taken into account then, what might otherwise have been a non-actionable sales puff, may turn into a misrepresentation
What are Statements of opinion/forecasts?
Beyond sales talk, statements may be made which, seemingly, have a verifiable factual content, yet are hedged around with qualifications such as “I think” or “I believe” or in some other way indicate that they are merely statements of belief or opinion. An honest statement of belief or opinion alone is not actionable.
What was held in Bisset v Wilkinson 1927? - unequivocal statement of fact may be viewed as a mere statement of belief.
The evidence showed that the seller was not a sheep farmer and the field had not been used for sheep. Since the buyer was aware of this, it meant that the statement was a mere opinion and the buyer could only treat the statement as an opinion (ie the buyer was aware that the seller could not know the facts behind the statement).
Can a statement of opinion also be classed as a misrepresentation?
Yes - where the party who states the opinion has greater knowledge or expertise, then it is implied that s/he knows the facts behind the statement
What was held in the case of Smith v Land and House Property 1884?
was a most desirable tenant - if the facts are not equally well known to both sides, then a statement of opinion by one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion
What about where a person is lying about their opinion?
Bowen LJ in Edgington v Fitzmaurice - The state of a man’s mind is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man’s mind at a particular time is, but if it can be ascertained, it is as much a fact as anything else. A misrepresentation as to the state of a man’s mind is therefore, a misstatement of fact
What about statements as to future intentions?
Statements of future intentions are generally not actionable as they are not statements of existing fact
What was held in the case of Inntrepreneur Pub Co (CPC) Ltd v Sweeney ?
it was held that there had not been a misrepresentation - simply an honest statement as to future intention.
What was held in the case of Edgington v Fitzmaurice 1885?
If it can be proved that the representor never intended to do the promised thing at the time of making the statement, then there is indeed a false statement of fact. Here a statement in a company prospectus stated that any investment would be used to expand the company. Whilst it was a statement of intention, it was not an honest one because it could be shown that they never intended to use the investment in that way. For that reason, the statement was actionable as a misrepresentation of the state of the representor’s mind.
