Misrepresentation And Mistake Flashcards
What is a misrepresentation?
A misrepresentation is an unambiguous false statement of fact made to the claimant, inducing them to enter into a contract with the statement maker.
What does ‘unambiguous’ mean in the context of misrepresentation?
‘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.
What does ‘false’ mean in the context of misrepresentation?
‘False’ means that the statement won’t be considered false if it is substantially correct.
What is a ‘statement of fact’?
A statement of fact asserts a given state of affairs; it is not an undertaking to do or not to do something.
Can advertisements be considered statements of fact?
No, advertisements are not considered statements of fact.
Can statements of fact be made by conduct?
Yes, statements can be made by conduct.
What is the test for materiality in misrepresentation?
The test for materiality is objective: did the statement relate to an issue that would influence a reasonable person?
What happens if a statement is found to be material?
If the statement is found to be material, inducement will generally be inferred as a matter of fact.
What must the claimant prove if the statement is not found to be material?
The claimant must prove that they were subjectively induced.
What is a statement of opinion in the context of misrepresentation?
A statement of opinion usually cannot form the basis of misrepresentation unless the representor is in a position of superior knowledge.
What is a statement of future intention in misrepresentation?
A statement of future intention is not a misrepresentation unless the representor misrepresents their existing intention.
What is the general rule regarding silence in misrepresentation?
The general rule is that there is no duty to disclose facts that might affect the other party’s decision.
What are exceptions to the rule of silence?
Exceptions include half-truths, continuing representations, and contracts of uberrimae fidei.
What are the categories of misrepresentation?
The categories are fraudulent, negligent, and innocent misrepresentation.
What is fraudulent misrepresentation?
Fraudulent misrepresentation is when a false statement is made knowingly or recklessly.
What is negligent misrepresentation?
Negligent misrepresentation occurs when the defendant cannot prove they had reasonable grounds to believe the statement was true.
What is innocent misrepresentation?
Innocent misrepresentation occurs when the representor proves they had reasonable grounds for belief in the truth of their statement.
What remedies are available for misrepresentation?
Remedies include rescission, damages, and indemnity.
What is the effect of exemption clauses in contracts regarding misrepresentation?
Exemption clauses will be ineffective unless they satisfy the requirement of reasonableness as per the Misrepresentation Act 1967.
What are non-reliance clauses?
Non-reliance clauses state that neither party has made any representations to the other regarding the contract.
What is the significance of a representation incorporated into a contract?
If a representation is incorporated as a term, it can give rise to a claim for breach of contract.
What is an operative mistake?
An operative mistake is recognized in contract law as preventing a contract from taking legal effect, rendering it void from the outset.
What is a common mistake?
A common mistake is a mistake as to a fact or quality fundamental to the agreement.
What is unilateral mistake of identity?
Unilateral mistake of identity occurs when one party is mistaken about the identity of the other party.
What is the leading case on unilateral mistake of identity?
The leading case is Shogun Finance Ltd v Hudson [2004] 1 AC 919.
What is the general rule regarding contracts for illegal acts?
Contracts to perform illegal acts are generally declared void and unenforceable.
What did the Supreme Court establish in Patel v Mirza regarding illegal contracts?
The court adopted a discretionary approach, considering public policy and proportionality in determining the consequences of illegal contracts.
What is privity of contract?
Privity of contract is the principle that only parties to a contract can sue or be sued on it.
What is the principle of privity of contract?
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.
What are common law methods of circumventing the doctrine of privity?
The common law exceptions include: Agency, Assignment, and Actions in tort.
What is an agency relationship?
An agency relationship occurs when an agent is authorized by a principal to contract on their behalf.
What are the basic requirements to establish an agency relationship?
- The principal should be named. 2. The agent should be authorized to act. 3. Consideration must move from the principal.
What is a collateral contract?
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.
What is the significance of the case Donoghue vs Stevenson?
It established that the privity principle does not restrict claims in tort, allowing for broader liability in negligence.
What does the Contracts (Rights of Third Parties) Act 1999 allow?
It allows a third party, in limited circumstances, to enforce a term of a contract to which they are not a party.
What conditions must be met for a third party to enforce a contract under the Act?
- The contract must specifically provide that the third party can enforce a term. 2. The agreement must confer a benefit on the third party.
What happens if a third party has a right under the Act?
The parties cannot rescind or vary the contract in a way that extinguishes the third party’s entitlement without their consent.
How can a third party communicate assent to a term?
Assent can be communicated by words or conduct, but if sent by post, it is effective only when received by the promisor.
What is the limitation on a third party’s rights under the Act?
The third party’s rights will never be greater than they would have been had they been a party to the contract.
