Misrepresentation COMPLETE

Question 1

What is a misrepresentation

Answer 1

A lie/ keeping of secrets which induces a party to enter into a contract.
When the lie/ secret is found out, the contract can be voidable

Question 2

What are the factors that determine voidability?

Answer 2

1. The misrepresentation must be a false statement of facts which induces the party to enter into the contract.
2. The false statement must be clear/ unambiguous.

Question 3

The false statement must be clear/ unambiguous.
Name the Case and explain

Answer 3

O’Donnell v Trucks and Machinery

Facts: Defendants claimed that their truck was comparable in all aspects with respect to the market-leading truck at the time.

Held: Although the statement was unambiguous, it wasn’t necessarily false and therefore it wasn’t a misrepresentation.

Question 4

Misrepresentation can be carried out by conduct. Name the Case and Explain it.

Answer 4

Spice Girls v April World Service

Facts: Defendants were a motorcycle company who employed the spice girls to advertise their scooters in Italy. At the time of the agreement, all, 5 spice girls were present and they all agreed. Baby spice left the group and when it came time for the photoshoot, only 4 of the spice girls were there so the defendant refused to pay and the spice girls sued.

Held: The plaintiff made a false representation of them all attending the photoshoot and the defendant entered into the contract induced by the fact that there were 5 of them. As a result, the contract was voidable for misrepresenation.

Question 5

Does Silence Constitute Misrepresentation?
Name the cases.

Answer 5

1. O’Donnell v Trucks and Machinery
2. Carey v Independent Newspapers
3. Bank of Ireland v Daly

Question 6

O’ Donnell v Trucks and Machinery

Answer 6

Facts: The plaintiff wanted chunkier tyres added to the truck and the defendant agreed. Defendant failed to tell the plaintiff that adding chunkier wheels would decrease the truck’s performance. Plaintiff argued that their silence to disclose this undercut the initial statement of the truck being ‘ comparable in every aspect to the market- leading one’

Held: The defendant’s silence had to have distorted the positive representation and didn’t do this, so it was not a misrepresentation.
A company is not obliged to disclose, however a duty to disclose will arise where the silence will distort the positive representation.

Question 7

Carey v Independent Newspapers.

Answer 7

Facts: Def was an editor and wanted to employ the plaintiff, a political journalist. She said that she would accept the job on the basis that she could work remotely in the mornings to be able to look after her children and take them to school. Defendant said that was perfectly fine, when he went back to his superiors they said that it could potentially be an issue but would trial it. Defendant failed to disclose of this to Carey and she eventually got fired because of this.

Held: The defendant made a false representation to Carey and failed to disclose that the superiors were advert to it. She was misled and those terms are what induced her to enter into the contract in the first place.

Question 8

Bank of Ireland v Daly

Answer 8

Facts: Daly was a successful barrister and he wanted to give a guarantee to the bank to enable his son to purchase a home. The bank offers the loan subject to proof of the son’s creditworthiness; Mr Daly knew of this offer and was happy with this. However, The proof of the son’s creditworthiness drops away and the bank offers the loan without the pre-conditions as to the son’s credit. Daly didn’t know of this. The son defaults and the bank calls in for the guarantee. Daly passes away and his wife becomes executrix of Daly’s estate.

Held: The bank kept silent about the change and allowed Daly to make the guarantee anyway. this was a misrepresentation. If the new conditions had been flagged to the deceased, then Daly would not have entered into the guarantee.

Question 9

Misrepresentation and Intention.
Name and explain the case.

Answer 9

Eddington v Fitzmaurice

Facts: The defendants were selling debentures for the army and navy provision market and they had a prospectus on what they were going to do with the money. They asserted that they were going to use the money to grow the business and the plaintiff invested 1500 pounds because he believed in the representation that they were going to grow the business. He believed he was getting shares of the company.
Argued: Defendants didn’t state clearly what they were going to do with the money and they always intended to use the money towards the debts.

Held: A false statement of intention is a misrepresentation but a statement of intention that is then changed is not a misrepresentation. However, in this case, they always intended to use the money for debts so they were instilling a false notion that it was going to be used for something else and they were, therefore, liable for deceit.

Question 10

Opinions and Misrepresentation- explain.
Name and Explain the Case.

Answer 10

An opinion is not seen as a misrepresentation because it is not a statement of facts.

Bissett v Wilkinson:

Facts: Relates to 1000 acres of Sheep farm in New Zealand. The defendant was selling the property, the claimant asked the defendant how many sheep can be raised on the property. The defendant said that he had not raised sheep on it but in his opinion, 2000 sheep could be raised. Only 500 sheep could be raised. The claimant sued to argue that he was induced into signing the contract by the defendant’s statement that the farm could fit 2000 sheep.

Held: This was an opinion, expressed to be an opinion and his true opinion. It was not claimed to be a statement of fact and therefore could not amount to a misrepresentation

Question 11

It’s not enough for the person to prove a false statement of facts, must prove that they were induced to enter into the contract because of it. Explain with mention to a case.

Answer 11

Getting advice from a 3rd party to enter into a contract means that the advice you were given was inducing you to enter into the contract and not the statement of false facts.

Eddington v Fitzmaurice

Facts: Eddington’s own belief that the debentures were shares.

Issue: Could the misrepresentation induce/ sufficiently cause him to enter into the contract?

Held: It is sufficient that the misrepresentation was a reason and therefore it did cause him to enter into the contract.

Question 12

What are the remedies for misrepresentation?

Answer 12

1. Rescission.
2. Damages- tort only

Question 13

Explain Rescission.

Answer 13

If there is a false statement that induces the party to enter into the contract, the innocent party is entitled to rescission.
Rescission- the contract is voidable and liable to be set aside.
Rescission is the process of unwinding the performance of the contract unless the recession is barred.

Question 14

What are the Bars for Recession

Answer 14

1. The Party entitled to recession delays it.
2. The party seeking rescission affirms it.
3. The property has been transferred to a 3rd party
4. Impossibility- too difficult to unwind.

Question 15

Damages and misrepresentation

Answer 15

Fraudulent Misrepresentation = Tort of Deceit
Negligent Misrepresentation= Tort of Negligence
Innocent Misrepresentation ( He/ she believed to be true) = No tort

Question 16

Explain the aims of S2 of the Misrepresentation Act.

Answer 16

The aim is to add a statutory remedy of damages beyond fraudulent damages.
If the misrepresentation has given rise to a loss, then the innocent party will be liable to receive them.

Question 17

Name 2 Comparable cases in relation to misrepresentation.

Answer 17

1. Leaf v International Galleries
2. Harlingdon v Christopher Hull

Question 18

1. Leaf v International Galleries

Answer 18

Facts: The plaintiff purchased a picture from the defendants who represented that it was painted by the artist, J. Constable. Five years later, the plaintiff tried to sell the painting at an auction house and was told it had not been painted by the artist he had been told previously. He subsequently returned the painting to the defendant who retained it for inspection. The plaintiff brought an action to rescind the contract as the defendant had responded maintaining that the artist of the painting was J. Constable, despite the information that the plaintiff had been given by the auction house.

Issues:
1. whether the plaintiff had the right to rescind the contract, five years after agreeing on the terms with the defendant.
2. whether the mistake as to the painter of the art was fundamental enough to void the contract between the parties.

Held: The trial judge found in favour of the defendants, despite explaining that they had made an innocent misrepresentation regarding the artist of the painting, on the basis that the contract had been executed. The plaintiff’s claim had failed as a significant amount of time had lapsed between agreeing on the contract and the window to rescind. The court found that the mistake that was made regarding the painter of the art was fundamental but it was not severe enough to make the contract void. On this basis, the plaintiff’s claim failed.

Question 19

2. Harlingdon v Christopher Hull

Answer 19

Facts: Both parties were art dealers. The defendant contacted the plaintiff and offered to sell a painting of a famous artist. Hull bought it and it turned out to be a forgery. Hull sued to get out of the contract.

Held: The plaintiff bought a painting and got what he wanted and could appreciate it for what it was and not dwell on what it could’ve been. Hull hadn’t relied on the defendant’s description and bought them on the basis of his own viewing of the painting.
In Leaf, The plaintiff was depending on the description of the painting and therefore the argument would’ve worked if brought up.