Misrepresentation - unfinished Flashcards
Misrepresentation - definition
“A false statement of fact or law which induces a person into a contract”
3 Types of misrepresentation
- Innocent
- Negligent under s.2 (1) Misrepresentation Act 1967
- Fraudulent
Action for misreprsentation - “If mere…
If mere representation turns out to be false but was used to induce a party then an action can lie under law of tort for misrepresentation
A representation must be a statement of fact - “Only a…
Only a false statement of fact will give rise to an action
Cases of opinions rather than a statement of fact
Mere opinion - Bisset v Wilkinson
Expert opinion - Esso petroleum v Mardon
Bisset v Wilkinson
- Claimant purchased land to use as a sheep farm
- estimated it would hold 2000 sheep
- Estimate was wrong and C brought and action of misrepresentation
Held:
- Statement was only one of an opinion, not of fact therefore not an actionable misrepresentation
Esso Petroleum v Mardon
- Mr Mardon entered into a tenancy agreement with esso in respect of a new petrol station
- Essos experts estimated station would sell 200,000 gallons of petrol
- Planning permission changed effecting the sales rate
- The estimate was not amended
- Station only sold 78,000 gallons with a loss of £5,800
Held:
- No action for misrepresentation as statement was estimate of future sales rather than one of fact.
- C was entitled to damages based on negligent misstatement at common law or breach of warranty of a collateral contract
Statement of opinion may amount to an actionable misrepresentation where.. (& case)
..the representor was in a position to know the facts
- (Smith v Land & House Property Corp)
Smith v Land & House Property Corp
- C purchased a hotel
- Seller described a tenant as “most desirable”
- Seller knew that the tenant was in arrears and on the verge of bankruptcy
Held:
- Statement was a statement of fact rather than an opinion as the seller was in a position to know the facts
Statements of future intent cannot amount to a misrepresentation unless.. (& case)
..the representor had no intention of carrying out the stated intent
- (Eddington v Fitzmaurice)
Eddington v Fitzmaurice
- C purchased some shares in D’s company
- Company stated shared were being offered in order to raise money to expand the company
- Company was actually in financial difficulty and the shares were going to be used to pay company debts
Held:
- Was an actionable misrepresentation as D had no intention of using the money to expand the company
False statement of law will now amount to an actionable misrepresentation - case
Pankhania v Hackney
Pankhania v Hackney
- C purchased property induced by representation that current occupiers were contractual licencees whose occupation could be terminated on giving 3 months notice
- Current occupant was actually protected under Landlord and Tenant Act 1954
- Was a misrepresentation of law and claimants action was successful
Silence will generally not amount to a misrepresentation - Cases
Smith v Hughes
Walters v Morgan
Smith v Hughes
- C purchased quantity of what he thought were old oats
- Actually were new oats
- New oats were of no use to him
- Seller was aware of the mistake but said nothing
- C brought action based on mistake and misrepresentation
- Both actions failed
- Silence cannot amount to a misrepresentation
Walters v Morgan
- D purchased some land
- C wished to mine the land and pressured D to sign lease before he found out true value of the land
- D discovered true value and refused to let C mine
- D sought to have contract rescinded for misrepresentation
- No misrepresentation as C did not mislead D as to the value of the land.
- Silence cannot amount to misrepresentation
In a contract of uberrimae fidei (one of utmost good faith) a duty exists to disclose all material facts and a failure to do so may give rise to an action for misrepresentation - Case
HIH Casualty and General Insurance Ltd v Chase Manhattan Bank
HIH Casualty and General Insurance Ltd v Chase Manhattan Bank
- HIH provided insurance for an event which did not make enough profit to pay loan back
- HNA obtained insurance policies and made certain fraudulent misrepresentations and failed to disclose a report that suggested the films were unlikely to make a profit.
- Insurance company refused to pay out claiming to rescind the contract
- The insurers were entitled to rescind the contract of insurance through both the misrepresentation and the non-disclosure
If a statement made becomes false because of a change in circumstances, there is an obligation to disclose the change of circumstances - Case
With v O’Flanagan
With v O’Flanagan
- C purchased medical practice from D
- Induced on D’s statement that the practice took £2000 per annum which was true at the time
- D became ill and patients went else where
- Practice was virtually worthless by the time sale was made
- Where statement is rendered false due to change of circumstances there is a duty to disclose the change
- Failure to do so will result in an actionable misrepresentation
It is necessary for the representee to demonstrate that the false statement induced them into the contract
There can be no inducement or reliance if the representee was unaware of the false statement - Case
Horsfall v Thomas
Horsfall v Thomas
- C purchased a gun which had a concealed defect
- His action for misrepresentation failed as he hadn’t inspected the gun before purchasing it
- Misrepresentation did not induce him as he was not aware of it
If representee or their client checks validity of the statement they have not relied on the statement - Case
Attwood v Small
Attwood v Small
- C purchased land from D
- C had his accountants check the accounts and reports which they were satisfied to be accurate
- Accounts had been found to be exaggerated and C sought to rescind the contract based on the misrepresentations in the accounts and reports
- Claimant was unsuccessful in his action for misrepresentation
- Getting his own experts to check out the reports meant he had not relied on the accounts but his own judgement
