Misrepresentation Flashcards
Fletcher v Krell
Fact:
A woman applied for a 12 month governess post for the Clms children without revealing she
was a divorcee.
When the Clm discovered the truth, Clm wanted to withdraw the contract on the grounds of
misrepresentation.
Held:
The Def had not misrepresented the truth since she was never asked about her marital
status and silence does not constitute misrepresentation.
The contract was hence valid and if the Clm wanted to rescind the contract, it is can only be
done by paying compensation due to breach of contract.
THERE IS NO OBLIGATION TO DISCLOSE INFORMATION TO OTHERS ALTHOUGH IT IS
IMPORTANT TO ANSWER QUESTIONS HONESTLY.
Skyes v Taylor-Rose
Fact:
During the negotiations of the sale of a house, the buyer asked ‘is there anything else that
you think the buyer should know?’ and the Def (seller) said no.
After the sale, the buyer got to know that there was a gruesome murder that happened in
the house years ago.
Clm asked the court to rescind the contract on the grounds of misrepresentation.
Held:
The answer ‘no’ was not a misrepresentation because the seller honestly believed that the
buyer had no right to be told about the murder so it was the genuine answer to the
question.
FAILING TO VOLUNTEER INFORMATION IS NOT MISREPRESENTATION
Historical facts that may not affect the quality of life of an avg. person is not
misrepresentation.
Spice Girls Ltd v Aprilia
Facts:
A motor scooter manufacturer entered into a negotiations with Spice Girls Ltd for a
promotional work
Before the contract was signed Geri Halliwell informed that she is intended to leave.
The group then participated in photo shoots and promotional material for the scooters.
Aprilia refused to make any further payment after Geri left the group.
Clm sued for non-payment
Defence: Def would never enter the contract if they know
Held:
As the group and management all knew that Geri was intending to leave
Their actions in taking part in the promotion amounted to misrepresentation by
CONDUCT
The court set the contract aside as a result
In addition, since Aprilia had made a COUNTERCLAIM, they were awarded
damages for their losses caused by this misrepresentation
Bisset v Wilkinson
Fact:
Def was selling a land to the Clm in New Zealand
The land had never been used for sheep farming and the Clm knew this.
The def, who had no experience in sheep farming told the Clm that the land can hold 2000
sheeps.
It turned out to be untrue and Clm wanted the contract to be rescinded for
misrepresentation.
Held:
It was not a misrepresentation as it was merely a statement of opinion.
This is due to the fact that the Def had no experience of sheep farming and the Clm was well
aware of it. So, even though it induced the Clm to enter the contract, it is not actionable.
Hence, in considering whether it is a statement of opinion or not, the knowledge of both
parties need to be considered. It is more likely to be a statement of fact if the party that
gave out the statement has some knowledge or skill to impart with regards to the subject of
the contract.
Smith v Land & House
Fact:
Def was selling a house with a protected tenant in the residence.
In the particular, he stated that the tenant is very desirable whilst in reality he is in arrears of
his rents and is irresponsible.
Clm discovered this only after he purchased the house and sued the def for rescission on the
grounds of misrepresentation.
Held:
The description of the tenant of being most desirable was not a mere expression of opinion
as it woulve been impossible for the landlord to have such an opinion about the tenant if he
had acted in such an irresponsible way.
Instead it was a false assertion of fact and the contract can be set aside
Redgrave v Hurd
Fact:
Clm was a solicitor who wished to take a partner into his practice and during the
negotiations with the Def, the Clm stated that the income of the business is £300 p.a
The Clm showed the financial paper containing the income of the business and it showed
less than £200 and he continued by saying that the extra income came from evidence that
can be seen from an extra bundle of documents, which in reality just added only a little
additional income.
The Def did not check and agreed to become a partner in the firm but as soon as he
discovered the truth, Def refused to complete the deal. The Clm sued him for breach of
contract and Def raised misrepresentation as defence.
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Held:
The contract could be rescinded for misrepresentation as the Def had relied on the Clms
statements about the income of the business and they were untrue.
It did not matter if the Def could’ve discovered the truth had he read all the bundles of
documents as there was no obligation to check/verify the statements of facts given by the
Clm.
It was perfectly reasonable for the Def to rely on the Clm’s factual statements.
Attwood v Small
Facts:
Clm purchased a mine after information about the remaining capacity of the ore was falsely
represented by the Def.
Before the contract, Clm had commissioned his own mineral survey which is also inaccurate
Clm attempted to rescind the contract for misrepresentation
Held:
The claim for misrepresentation failed
The Claimant had relied on his own knowledge (from the report he had commissioned) NOT
the information provided by the DEF
DEF’s false statement did not INDUCE the contract
Smith v Chadwich
Fact:
A company prospectus contained a false statement that a certain man was on the BOD
whilst he had actually retired.
The Clm invested in the Company after reading the prospectus.
When he discovered that the prospectus had contained false information, he sued to
recover his money claiming that he had been induced to enter the contract by
misrepresentation.
Held:
This was a false statement but the Clm was still bound by the contract because the mistake
was so trivial that it did not significantly affect the Clm’s decision to purchase the shares.
A statement is more likely to be held to have induced the contract if it relates to an
important element of the deal, so a misrepresentation as to a trivial matter will not allow
the Clm a remedy.
With v O’ Flanagan
Fact:
Seller of a doctor’s practice told an interested buyer that the practice was making an income
of £2000/year which was true.
However, during the 6 months of negotiations and finally the contract being signed, the
income of the practice had fall to £250/year.
When the buyer realised the true position, he requested the sale to be set aside due to
misrepresentations.
Held:
The contract could be rescinded because the representation made initially was of a
continuing nature and induced the contract made in June.
The Clm had the right to be informed of the change in circumstances.
The Def’s failure to inform the Clm of the Change amounted to misrepresentation.
Lewis v Averay
Fact:
Seller Lewis (Clm) agreed to sell his car to a thief who called on him after seeing the advert.
The theif pretended to be an actor and he agreed to buy the car in payment produced a
cheque which he had signed with the name of the actor.
Clm had allowed him to drive away with the car before clearing the cheque after the thief
had shown proof of him being the actor (while he stole most of the proof and also the
cheque book).
Thief then sold the car to Averay (Def)
Clm claimed the contract is void for mistaken identity and for fraudulent misrepresentation.
Court of Appeal Held:
Claim for mistaken identity failed as the Clm had made a contract with the person in front of
him. His identity was unimportant, so the contract was NOT void for mistaken identity.
Identity was only important when he was deciding whether he would allow the buyer to
drive away without the cheque being cleared.
The contract was voidable on the grounds of fraudulent misrepresentation because the
contract is evidenced by the receipts which were signed. It was, of course, induced by fraud.
The rogue made false representations as to his identity. But it was still a contract, though
voidable for fraud. So it cannot be voided on the grounds of Mistaken Identity but it can be
voidable on the grounds of Fraudulent Representation.
However, as an innocent 3rd party (Averay) had acquired the good title of the car BEFORE the
Clm declared the contract void, he became the rightful owner and it was too late for the Clm
to recover the car.
*a contract can be declared void by informing the police, but this must be before the sale to an
innocent third party takes place
Car and Universal Finance & Co v Caldwell
Fact:
Same fact as the case above but the original owner of the car called the police before the
thief sold it to a company called Motobella.
Motobella then sold it to Def.
Clm sued for fraudulent misrepresentation.
Held:
Since the a contract can be declared void by INFORMING THE POLICE BEFORE THE SALE TO
AN INNOCENT 3RD PARTY TAKES PLACE, the Clm was able to repossess the car and returned it
to the original owner.
The voidable contract was made void
The contract was hence voidable for fraudulent misrepresentation and no good title was
passed to the thief, who could not therefore pass the title to subsequent purchasers.
So, the Def was in breach of contract and had to refund the purchase price to the Clm.
*The original contract is valid or void – pass good title or not – breach of contract
