Misrepresentation And Mistake

Question 1

What is a misrepresentation?

Answer 1

A misrepresentation is an unambiguous false statement of fact made to the claimant, inducing them to enter into a contract with the statement maker.

Question 2

What does ‘unambiguous’ mean in the context of misrepresentation?

Answer 2

‘Unambiguous’ means the representation must be clear; the representor won’t be liable if the representee has placed their own unreasonable construction on the representation.

Question 3

What does ‘false’ mean in the context of misrepresentation?

Answer 3

‘False’ means that the statement won’t be considered false if it is substantially correct.

Question 4

What is a ‘statement of fact’?

Answer 4

A statement of fact asserts a given state of affairs; it is not an undertaking to do or not to do something.

Question 5

Can advertisements be considered statements of fact?

Answer 5

No, advertisements are not considered statements of fact.

Question 6

Can statements of fact be made by conduct?

Answer 6

Yes, statements can be made by conduct.

Question 7

What is the test for materiality in misrepresentation?

Answer 7

The test for materiality is objective: did the statement relate to an issue that would influence a reasonable person?

Question 8

What happens if a statement is found to be material?

Answer 8

If the statement is found to be material, inducement will generally be inferred as a matter of fact.

Question 9

What must the claimant prove if the statement is not found to be material?

Answer 9

The claimant must prove that they were subjectively induced.

Question 10

What is a statement of opinion in the context of misrepresentation?

Answer 10

A statement of opinion usually cannot form the basis of misrepresentation unless the representor is in a position of superior knowledge.

Question 11

What is a statement of future intention in misrepresentation?

Answer 11

A statement of future intention is not a misrepresentation unless the representor misrepresents their existing intention.

Question 12

What is the general rule regarding silence in misrepresentation?

Answer 12

The general rule is that there is no duty to disclose facts that might affect the other party’s decision.

Question 13

What are exceptions to the rule of silence?

Answer 13

Exceptions include half-truths, continuing representations, and contracts of uberrimae fidei.

Question 14

What are the categories of misrepresentation?

Answer 14

The categories are fraudulent, negligent, and innocent misrepresentation.

Question 15

What is fraudulent misrepresentation?

Answer 15

Fraudulent misrepresentation is when a false statement is made knowingly or recklessly.

Question 16

What is negligent misrepresentation?

Answer 16

Negligent misrepresentation occurs when the defendant cannot prove they had reasonable grounds to believe the statement was true.

Question 17

What is innocent misrepresentation?

Answer 17

Innocent misrepresentation occurs when the representor proves they had reasonable grounds for belief in the truth of their statement.

Question 18

What remedies are available for misrepresentation?

Answer 18

Remedies include rescission, damages, and indemnity.

Question 19

What is the effect of exemption clauses in contracts regarding misrepresentation?

Answer 19

Exemption clauses will be ineffective unless they satisfy the requirement of reasonableness as per the Misrepresentation Act 1967.

Question 20

What are non-reliance clauses?

Answer 20

Non-reliance clauses state that neither party has made any representations to the other regarding the contract.

Question 21

What is the significance of a representation incorporated into a contract?

Answer 21

If a representation is incorporated as a term, it can give rise to a claim for breach of contract.

Question 22

What is an operative mistake?

Answer 22

An operative mistake is recognized in contract law as preventing a contract from taking legal effect, rendering it void from the outset.

Question 23

What is a common mistake?

Answer 23

A common mistake is a mistake as to a fact or quality fundamental to the agreement.

Question 24

What is unilateral mistake of identity?

Answer 24

Unilateral mistake of identity occurs when one party is mistaken about the identity of the other party.

Question 25

What is the leading case on unilateral mistake of identity?

Answer 25

The leading case is Shogun Finance Ltd v Hudson [2004] 1 AC 919.

Question 26

What is the general rule regarding contracts for illegal acts?

Answer 26

Contracts to perform illegal acts are generally declared void and unenforceable.

Question 27

What did the Supreme Court establish in Patel v Mirza regarding illegal contracts?

Answer 27

The court adopted a discretionary approach, considering public policy and proportionality in determining the consequences of illegal contracts.

Question 28

What is privity of contract?

Answer 28

Privity of contract is the principle that only parties to a contract can sue or be sued on it.

Question 29

What is the principle of privity of contract?

Answer 29

No person can sue or be sued on a contract unless they are a party to it.

This is established in Dunlop Pneumatic Tyre Co. v Selfridge & Co. [1915] AC 847.

Question 30

What are common law methods of circumventing the doctrine of privity?

Answer 30

The common law exceptions include: Agency, Assignment, and Actions in tort.

Question 31

What is an agency relationship?

Answer 31

An agency relationship occurs when an agent is authorized by a principal to contract on their behalf.

Question 32

What are the basic requirements to establish an agency relationship?

Answer 32

1. The principal should be named. 2. The agent should be authorized to act. 3. Consideration must move from the principal.

Question 33

What is a collateral contract?

Answer 33

A collateral contract is an agreement between the promisor and a third party that provides an exception to the doctrine of privity.

Example: Shanklin Pier v Detel Products Ltd [1951] 2 KB 854.

Question 34

What is the significance of the case Donoghue vs Stevenson?

Answer 34

It established that the privity principle does not restrict claims in tort, allowing for broader liability in negligence.

Question 35

What does the Contracts (Rights of Third Parties) Act 1999 allow?

Answer 35

It allows a third party, in limited circumstances, to enforce a term of a contract to which they are not a party.

Question 36

What conditions must be met for a third party to enforce a contract under the Act?

Answer 36

1. The contract must specifically provide that the third party can enforce a term. 2. The agreement must confer a benefit on the third party.

Question 37

What happens if a third party has a right under the Act?

Answer 37

The parties cannot rescind or vary the contract in a way that extinguishes the third party’s entitlement without their consent.

Question 38

How can a third party communicate assent to a term?

Answer 38

Assent can be communicated by words or conduct, but if sent by post, it is effective only when received by the promisor.

Question 39

What is the limitation on a third party’s rights under the Act?

Answer 39

The third party’s rights will never be greater than they would have been had they been a party to the contract.