Misrepresentation and Economic Duress Flashcards
What is a vitiating factor?
Any factor that makes a contract void or voidable
What are the 2 examples of vitiating factors?
Misrepresentation
Economic Duress
What is misrepresentation?
A false statement of material fact made by a party to the contract that induces the other party to enter the contract
What needs to happen for there to be a misrepresentation?
- A false statement
- A material fact
- Made by a party to the contract
- Induces the other party to enter the contract
Can silence be a misrepresentation?
No
Is there an obligation on a person wishing to enter a contract to make a statement about what is being offered?
No but anything said in that respect must be true
What are the cases for misrepresentation?
- Fletcher vs Krell
- With vs O’Flanagan
- Dimmock vs Hallett
- Tate vs Williamson
- Lambert vs Co-Operative Insurance Society
- Spice Girls Ltd vs Aprilia World Service BV
What is the POL from Fletcher vs Krell?
There was no misrep as she was under no duty to disclose her marital status as she had not been asked for it
What is the POL from With vs O’Flanagan?
The change of circumstance made the originally accurate statement false and it was held he had to tell the purchaser of this
What is the POL from Dimmock vs Hallett?
The part-truth that the tenants were on the land but were actually leaving was a misrep and the maker of the statement has a duty to reveal the whole situation
What is the POL from Tate vs Williamson?
The advisor’s failure to disclose that he was personally intending to buy the land was a breach of trust and therefore a misrep
What is the POL from Lambert vs Co-Operative Insurance Society?
Her silence about her husbands conspiracy to steal conviction was a misrep
What is the POL from Spice Girls Ltd vs Aprilia World Service BV?
By all of the group attending the promo filming represented that none of them intended to leave the group and none of them were aware that one member intended to. This was a misrep
What are the cases for material fact?
Bisset vs Wilkinson
Edgington vs Fitzmaurice
What is the POL from Bisset vs Wilkinson?
As he genuinely believed his statement was true it was not a misrep
What is the POL from Edgington vs Fitzmaurice?
Statement was seen as a statement of fact rather than just future intention as the did not have that intention so it was a misrep
What are the cases for induces the other party to enter the contract?
- Attwood vs Small
- Redgrave vs Hurd
- Museprime Properties Ltd vs Adhill Properties Ltd
What is the POL from Attwood vs Small?
No misrep as the buyer relied on the survey report and not the seller’s incorrect statement
What is the POL from Redgrave vs Hurd?
He was entitled to rely on the seller’s statement, which, as it was untrue, was a misrep
What is the POL from Museprime Properties Ltd vs Adhill Properties Ltd?
It is irrelevant what a reasonable person would’ve done in the circumstances just what the person done in that case
What act outlines what a misleading omission is?
Consumer Protection (Amendment) Regulations 2014
What are the examples of what a misleading omission could be?
- Omits material information that the average consumer needs to make an informed contractual decision
- Hides or provides material information in an unclear, unintelligible, ambiguous or untimely manner
- Fails to identify the commercial intent of the commercial practice if not already apparent from the context
What are the 3 types of misrepresentation?
- Innocent
- Negligent
- Fraudulent
What act defines an innocent misrep?
The Misrepresentation Act 1967
What is the definition of an innocent misrep?
One which is genuinely held on reasonable grounds
The person making the false statement always believed it to be true
What are the remedies for innocent misrep?
Recission
Damages
What is the case that brought about negligent misrep?
Hedley Byrne vs Heller
What is the definition of a negligent misrep?
A false statement made by a person who had no reasonable grounds to believe it’s true but did
What are the 2 types of negligent misrep?
- Under the common law tort of negligence
- Under the Misrepresentation Act 1967
What is the case for the common law tort of negligence?
Hedley Byrne vs Heller
What does Section 2(1) of the Misrepresentation Act 1967 define negligent misrep as?
A misrepresentation which results in a contract, the victim suffers a loss and there is no reasonable grounds to believe it is true
What is the case for negligent misrep under the Misrepresentation Act 1967?
Howard Marine vs Ogden & Sons
What is the POL from Howard Marine vs Ogden & Sons?
As they had the registration document for the barge they had no reasonable grounds to believe the Lloyds Register was correct
What is fraudulent misrepresentation?
When there is a statement which the person making the representation knows to be untrue, or is reckless as to whether or not it is true
What are the cases for fraudulent misrepresentation?
- Derry vs Peek
- Greenridge Luton One vs Kempton Investments
What is the POL from Derry vs Peek?
No fraudulent misrep because the issuers of the prospectus had applied for permission and reasonably expected it to be granted - the directors were only careless as to whether what they said was true
What is the POL from Greenridge Luton One vs Kempton Investments?
One party lied saying there was ‘historical issues’ but there was actually a pending dispute - this amounted to a fraudulent misrepresentation
What is the remedy of rescission?
The parties are put back to where they were before the contract was made
Can rescission and damages be awarded for innocent misrepresentation?
No
What are the 4 scenarios where rescission isn’t possible?
- Restitution to the original pre-contract position is impossible
- The contract is affirmed
- Delay
- A third party have gained rights over the property
What is the case for restitution is impossible?
Clarke vs Dickson
What is the POL from Clarke vs Dickson?
He could not return the partnership as the firm had become a limited company
What is the case for when the contract is affirmed?
Long vs Lloyd
What is the POL from Long vs Lloyd?
By persevering with the lorry after the first breakdown and agreeing to share the cost of repairs he had indicated his willingness to continue with the contract and so affirmed the contract
What is the case for delay?
Leaf vs International Galleries
What is the POL from Leaf vs International Galleries?
Even though he had no means of finding out that the painting was a fake until he sold it 5 years later, the delay meant that rescission could not be awarded
What is the case for when a third party gains rights over the property?
Lewis vs Averay
What is the POL from Lewis vs Averay?
The claim for rescission failed as, between the two innocents parties, it would be more unfair to deprive the third party of the car purchased in good faith
Under what act does the court have discretion to award damages?
Section 2(2) of the Misrepresentation Act 1967
What is the case for damages under section 2(2) of the Misrepresentation Act 1967?
Gov of Zanzibar vs British Aerospace (Lancaster House) Ltd
What is the POL from Gov of Zanzibar vs British Aerospace (Lancaster House) Ltd?
Damages under section 2(2) are awarded in place of rescission; meaning that if a party loses the right to rescind the contract then they could also not claim for damages either under this section
What are the remedies for negligent misrepresentation?
Rescission and/or damages
What is the case for negligent misrepresentation?
Royscot Trust Ltd vs Rogerson
What is the POL from Royscot Trust Ltd vs Rogerson?
Court decided that the damages for negligent misrepresentation under the Act are the same as for fraud
What are the remedies for fraudulent misrepresentation?
Rescission and damages
What does the remedy of damages for fraudulent misrepresentation aim to do for the victim?
Aims to put them back to the position they were in before the misrep occured
What is the case for fraudulent misrepresentation?
East vs Maurer
What is the POL from East vs Maurer?
The court decided the victim would’ve purchased a different business if he had known the truth. The tort calculation of damages awarded him the profit he would’ve earned from that business
What is undue influence?
A principle of contract law where one party exploits their dominant position to gain an unfair advantage over the other party
What is the case for undue influence?
Allcard vs Skinner
What is the POL from Allcard vs Skinner?
The court interferes, not on the ground that any wrongful act has been committed, but on the grounds of public policy, and to prevent the relations which existed between the parties and the influence arising therefrom being abused
What is duress?
Where one of the parties alleges they have been forced to enter a contract as a result of threats made by another person
What is the case for duress?
Barton vs Armstrong
What is the POL from Barton vs Armstrong?
Death threats were made to make a party sign a contract - this was treated as duress
What is economic duress?
When someone enters into a contract as a result of financial threats
What is the case for economic duress?
Atlas Express vs Kafco
What is the POL from Atlas Express vs Kafco?
Economic duress was established as the agreement was induced by illegitimate pressure
What must there be for economic duress?
Pressure
What does the idea of pressure under economic duress involve?
- There is compulsion on, or a lack of practical choice for, the victim
- The pressure must be illegitimate
- The illegitimate pressure is a significant cause of making the contract
What is the case for pressure under economic duress?
Universe Tankships vs International Transport Workers Federation
What is the POL from Universe Tankships vs International Transport Workers Federation?
The ship owners agreed to the demands so that the ship could leave port and the court decided that the money had been extracted as a result of economic duress and must be repaid
What case set out 4 factors to consider if economic duress was present?
Pao on vs Lau Yiu Long
What is the POL from Pao on vs Lau Yiu Long?
- Did the person claiming to be coerced protest about the pressure?
- Did that person have any other available course of action that was reasonable?
- Was he independently advised before taking the action?
- After entering the contract, did he take steps to make the contract void?
What is the case for when the threat was lawful economic duress was not present?
CTN Cash & Carry vs Gallagher
What is the POL from CTN Cash & Carry vs Gallagher?
The threat to withdraw the credit facility was lawful as, under the credit agreement, credit could be withdrawn at any time - this was not economic duress
What is the case that states that illegitimate pressure can be lawful?
Progress Bulk Carriers Ltd vs Tube City
What is the POL from Progress Bulk Carriers Ltd vs Tube City?
Illegitimate pressure can be constituted by conduct which is not in itself unlawful
What is the effect of a finding of duress?
To make the contract voidable
What are the remedies for economic duress?
- Restitution of Property
- Rescission
What is the POL from The Atlantic Baron?
The contract was voidable for duress, however, since the claimants had left it for so long in bringing their claim they had affirmed the contract and lost their right to rescind
