Misrepresentation

Question 1

What is the definition of a misrepresentation?

Answer 1

POOLE: an actionable misrepresentation is an unambiguous, false statement of fact made to the claimant that induces the contract and results in a loss.

UNAMBIGUOUS: Mcinerny v Lloyd
FALSE: Avon v Swire Fraser
STATEMENTS OF FACT: Kleinwort v Benson
OR LAW: Packania v Hackney
ADDRESSED TO THE MISREP'D PARTY: Com. Bank Sydney v Brown.

Question 2

UNAMBIGUOUS?

Answer 2

Mcinerny v Lloyd

Question 3

FALSE?

Answer 3

Avon v Swire Fraser

Question 4

STATEMENT OF FACT/LAW?

Answer 4

Kleinwort v Benson/Packania v Hackney

Question 5

ADDRESSED TO MISREP’D PARTY?

Answer 5

Com Bank Sydney v Brown

Question 6

Statements may be oral or implied by conduct; elaborate.

Answer 6

Denning in CURTIS v CLEANING CHEMICALS: any behaviour.

GORDON v SELICO: Concealing.
SPICE GIRLS v APRILIA: taking part.

Question 7

Can silence amount to a misrepresentation?

Answer 7

KEATES v EARL of CADOGAN: no general duty to disclose facts.

EXCEPTION:

1. Half truths: Dimmock v Hallet.
2. Continuing representations: WITH v O’FLANAGAN; if something later transpires to be untrue.
3. FIDUCIARY RELATIONSHIP: Tate v Williamson.

Question 8

Statements of opinion are not actionable misreps (BISSET v WILKINSON); but when are they elevated such?

Answer 8

If they are given by an expert: ESSO v MARDEN.

Question 9

Are statements of future intention actionable?

Answer 9

No: Beattie v Edbury; and there is no duty to inform of a changed intention: Wadham v Wales.

UNLESS: the state of mind at the time of the misrep can be proven to have been false: EDGINGTON v FITZMAURICE; but difficult.

Question 10

How does a statement induce a contract?

Answer 10

PAN ATLANTIC v PINE TOP: must be material.

If yes, then the inducement is presumed: SMITH v CHADWICK (provided it was acted upon: PEEKAY v AUS & NZ BANKING).

If no, inducement fails (Pan atlantic).

UNLESS: MUSEPRIME v ADHIL: if subjective reasonable test; if C can prove was induced.

Question 11

Is there a general duty to check facts before relying on them?

Answer 11

REDGRAVE v HURD: NO.

But a court may say C should have reasonably checked: SMITH v ERIC BUSH.

& so if no check takes place they may refuse to deem inducement took place: HORSFAL v THOMAS.

OR if a check takes place and is wrong, relying on this means there has been no inducement: ATOOD v SMALL.

BUT if was fraudulent misrep then the check is discounted: PEARSON v DUBLIN.

Need not be the only inducing factor anyway: Edgington v Fitzmaurice.

Question 12

What is the definition of fraudulent misrepresentation?

Answer 12

DERRY v PEEK: a false statement made knowingly, or without belief in tis truth, or recklessly careless whether it is true or false.

Thomas witter v TBP: recklessness is a flagrant disregard for the truth.

High burden of proof on the claimant!

Question 13

What is the definition for negligent misrepresentation?

Answer 13

s2(1) MA 67: liable unless can prove had reasonable grounds to believe and did believe up until the time the contract was entered the facts were true.

Burden of proof on the defendant: Howard Marine v Ogden.

Question 14

What is the definition of innocent misrepresentation?

Answer 14

s2(1) MA 67: when statement maker prove he believed what he said was true an had reasonable grounds to believe it true.

Question 15

What is the definition of negligent misstatement?

Answer 15

A TORTIOUS CLAIM.

Hedley Byrne v Heller: needs a special relationship and must be reasonably foreseeable for someone to rely on the statement & be reasonable for the law to impose a duty (caparo) if none exists.

Unlikely to be used unless party is 3rd party to contract and this is the only way to sue.

Damages are limited by remoteness: Wagonmound.

Question 16

What remedies are available for fraudulent misrep?

Answer 16

1. RESCISSION: contract voidable; courts do what is practical and just: ERLANGER v NEW SOMBRERO.
2. DAMAGES: all loses flowing from the transaction not rendered too remote by claimants actions: DOYLE v OLBY. Note: claimant must mitigate and any value retained is deducted from damages: SMITH NEW COURT v VICKERS
3. INDEMNITY: WHITTINGTON v SEALE: for expenses incurred by contract.
4. LOSS OF PROFITS: how much would have made if entered a similar contract elsewhere: EAST v MAUR; Note: not available if any amount of profit has been made.

Question 17

What remedies are available for negligent misrep?

Answer 17

1. RESCISSION: contract voidable; courts do what is practical and just: ERLANGER v NEW SOMBRERO.
2. DAMAGES: HOWARD MARINE v OGDEN: fiction of fraud: confirmed in ROYSCOTT v ROGERSON: but curtailed somewhat by SMITH NC v VICKERS: only losses from the statement in question.
3. INDEMNITY: WHITTINGTON v SEALE: for expenses incurred by contract.
4. LOSS OF PROFITS: ROYSCOTT says yes; but Poole, argues no.
5. DAMAGES IN LIEU OF RESCISSION? at the courts discretion if R would be a burden: SINDELL v CAMBRIDGE.
6. Contributory negligence? GRAN GELATO: if a concurrent tort claim.

Question 18

What are the bars to rescission?

Answer 18

1. AFFIRMATION: LONG v LLOYD.
2. LAPSE: LEAF v INT GALLERIES: 5 years too long.

For fraudulent: time from date of misrep. Neg: date of contract.

3. IMPOSSIBILITY: CLARKE v DICKINSON.

Note: minor imperfections wont bar: ERLANGER.

4. 3rd PARTY RIGHTS: PHILLIPS v BROOKS.

Question 19

What is the potential impact of an exemption clause regarding misrepresentation?

Answer 19

May be voidable: UTCCR/MA s3.

HIH CASUALTY v CHASE MANHATTAN: of employees of firm but not own.