Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Contract Law > Misrepresentation - unfinished > Flashcards

Misrepresentation - unfinished Flashcards

1
Q

Misrepresentation - definition

A

“A false statement of fact or law which induces a person into a contract”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

3 Types of misrepresentation

A
  • Innocent
  • Negligent under s.2 (1) Misrepresentation Act 1967
  • Fraudulent
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Action for misreprsentation - “If mere…

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

A representation must be a statement of fact - “Only a…

A

Only a false statement of fact will give rise to an action

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Cases of opinions rather than a statement of fact

A

Mere opinion - Bisset v Wilkinson

Expert opinion - Esso petroleum v Mardon

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Bisset v Wilkinson

A
  • 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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Esso Petroleum v Mardon

A
  • 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
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Statement of opinion may amount to an actionable misrepresentation where.. (& case)

A

..the representor was in a position to know the facts

- (Smith v Land & House Property Corp)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Smith v Land & House Property Corp

A
  • 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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Statements of future intent cannot amount to a misrepresentation unless.. (& case)

A

..the representor had no intention of carrying out the stated intent
- (Eddington v Fitzmaurice)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Eddington v Fitzmaurice

A
  • 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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

False statement of law will now amount to an actionable misrepresentation - case

A

Pankhania v Hackney

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Pankhania v Hackney

A
  • 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
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Silence will generally not amount to a misrepresentation - Cases

A

Smith v Hughes

Walters v Morgan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Smith v Hughes

A
  • 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
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Walters v Morgan

A
  • 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
17
Q

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

A

HIH Casualty and General Insurance Ltd v Chase Manhattan Bank

18
Q

HIH Casualty and General Insurance Ltd v Chase Manhattan Bank

A
  • 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
19
Q

If a statement made becomes false because of a change in circumstances, there is an obligation to disclose the change of circumstances - Case

A

With v O’Flanagan

20
Q

With v O’Flanagan

A
  • 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
21
Q

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

A

Horsfall v Thomas

22
Q

Horsfall v Thomas

A
  • 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
23
Q

If representee or their client checks validity of the statement they have not relied on the statement - Case

A

Attwood v Small

24
Q

Attwood v Small

A
  • 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
25
Q

If representee is given the opportunity to check out the statement but does not, they are still able to demonstrate reliance - Case

A

Redgrave v Hurd

26
Q

Redgrave v Hurd

A
  • Solicitor purchased into partnership in the firm
  • Told that it had a £300 per year income and was given the opportunity to look at the accounts
  • Declined to check the accounts
  • Income was actually only £200 per year
  • Was entitled to rescind the contract as he relied on the statement
  • Fact that he had declined the offer to look at accounts reinforced rather than negated that relieance
27
Q

Fraudulent Misrepresentation - Definition and Case

A

Lord Herschell defined it in Derry v Peek as:

  • Knowing it to be false
  • Without belief in its truth
  • Recklessly, careless as the whether it be true or false
  • The burden of proof lies on the claimant
28
Q

Derry v Peek

A
  • D stated company had the right to use steam as oppose to horse powered trams.
  • However this was subject of approval of the Board of Trade
  • C purchased shares on reliance of the statement and brought a claim based on the alleged fraudulent representation of the D

Statement was not fraudulent but made in honest belief that approval was forthcoming.

Lord Herschell defined fraudulent misrepresentation in this case

29
Q

Negligent Misrepresentation under the Misrepresentation Act 1967 - Case

A
  • Under S.2(1) a negligent misrepresentation is a statement made without reasonable ground for belief in its truth.
  • Burden of proof is on the representor to demonstrate they had reasonable grounds for believing the statement to be true - This burden of proof is difficult to discharge
  • Howard Marine v Ogden
30
Q

Howard Marine v Ogden

A
  • C (Ogden) hired from D (Howard Marine)
  • To make an accurate estimate of work to be completed ogden asked HM the capacity of the barges that were being hired
  • HM checked Lloyds register
  • The register turned out to be wrong
  • Took a lot longer a cost a great deal more
  • C brought action for negligent misrepresentation
  • D had not discharged burden of proof
  • They had the registration document which contained the correct capacity and there was no reason why they would have chosen to use the Lloyds register over the document
31
Q

Innocent Misrepresentation

A
  • The representor can demonstrate reasonable ground for belief in the truth of the statement
32
Q

Remedies for the different types of misrepresentation

A

Fraudulent - R + D

Innocent - Indemnity

Negligent - R + D

Contract Law (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions