Misrepresentstion Flashcards
What is a representation?
A pre-contractual statement made during negotiations before entering into contract
What is misrepresentation?
A pre-contractual statement made during negotiations before entering into a contract, which is false
What is the requirement for a misrepresentation to be claimed for?
The misrepresentation must be actionable
What are the elements of actionable misrepresentation?
An unambiguous false statement of fact, no silence works, addressed to the claimant and induces the claimant to enter into the contract with the representor
In regards to the statement of fact requirement for actionable misrepresentation, what are examples that are not statements of fact?
1) mere puffs/sales talk - talk to the sales person makes one trying to sell as new real substance to them
2) statements of opinion - give an opinion before entering a contract is not a statement of fact exception: if the representor has some special knowledge or skills, their opinion is likely to be fact (eg works in the industry or knows more than the other party)
Can a statement of future intention be a statement of fact, for the purposes of actionable misrepresentation?
No - in the future can never be a fact
(I will do x)
Turn silence give rise to an actionable misrepresentation?
No - you must actually say the representation
When buying something in a shop or dealership that turns out to be less valuable than you hoped, and the seller hasn’t said anything , this is buyer, beware
Nothing said = no misrepresentation
What is the half truth exception to the rule, the silence cannot give rise to an actionable misrepresentation?
Half truths - statements which are technically true, but misleading or where the truth is weak
For example, asking the seller if they are aware of any faults in the car and the seller states, they aren’t aware of any, but only because they haven’t checked
This is technically true, but it is a weak truth - it is true that the seller isn’t aware, but it is only true that they’re unaware, because they haven’t bother to look - in other words, it is not the whole truth
What is the continuing representation exception to silence, not being a part of their an actionable misrepresentation?
If at the beginning of negotiations, a statement is made, which is true of the time, it is made the bin circumstances changed to make that statement false statement must be corrected before the contractors entered into, or it will be a misrepresentation
What is the contracts of utmost good faith, exception to silence, not being a part of actionable misrepresentation ?
There is a duty to disclose all material facts in contracts of upmost good faith.
Contracts of utmost good faith are those were only one party knows the material facts(a fact which could affect the price of the contract, or whether the other party enters into it) and the other party is in a weaker position
Insurance contracts order me an example - in health insurance, you must disclose your full health history, so the insurer can decide to accept the contract or set the price
Can misrepresentation be engaged in via conduct
Yes
Explain the provision that the misrepresentation must be addressed to the claimant in order to be actionable?
The misrepresentation must be addressed to the claimant - this can be done by conduct
Explain the principle that the misrepresentation must introduce the claimant enter into the contract with the representor in order to be actionable
Representation must’ve called the claimant to enter into the contract
The claimant must have relied on the statement when entering into the contract and think that it is true in doing so
The representation does not have to be the only reason the claimant entered into the contract - but must at least to be a real and substantial cause so that if there is no misrepresentation and the claimant would have entered into the contract anyway, there is no actionable misrepresentation
What are the three categories of actionable misrepresentation?
1) fraudulent misrepresentation
2) negligent misrepresentation
3) innocent misrepresentation
Why is it important to know which category of misrepresentation the defendant has engaged in?
Because the remedy for each form of misrepresentation is different
The rules regarding whether liability for misrepresentation can be excluded or limited are also different depending on the type of misrepresentation
Turn liability ever be excluded for fraudulent representation?
No
Can liability for misrepresentation be excluded or limited in the case of negligent or innocent misrepresentation?
Liability can only be excluded under business to business contracts if this would be reasonable under the unfair contract terms act 1977 and if it is fair under the consumer rights act, 2015
The burden of proof to show that it is reasonable or fair, it’s on the party, trying to rely on the clause (misrepresentation act, 1967)
What are the requirements for fraudulent misrepresentation?
1) fraudulent representation must be made (a statement must be made, which is untrue)
2) that’s false statement must be made:
-knowingly;
-without belief in its truth or
- Recklessly (without care as to whether the statement is true or false, and with flagrant, disregard for the truth)
3) the motive of the representer is irrelevant
Who has the burden of proof and demonstrating fraudulent misrepresentation?
The burden of proof is in the claimant to show the represented made a fraudulent misrepresentation
What are the remedies for fraudulent misrepresentation?
Recession and damages
What type of remedy is rescission?
Recession is an equitable remedy
Under which circumstances involving fraudulent misrepresentation will recession be used as the remedy?
It will only be used where parties can be restored to their original position by returning all the property that has been exchanged between the parties back to the original owners
What does the claimant do in order to claim recession?
The claimant must communicate to the defendant they intend to rescind the contract, and have property returned between the parties were commence proceedings in court, which amounts to communication of intention to rescind
What is a bar to recession?
Factors that make giving recision impossible
What are the three bars to recession?
1) the claimant chooses to continue the contract, even though they knew there has been a misrepresentation
2) lapse of time - too much time, passes from the discovery of the fraudulent misrepresentation
3) restitution is impossible - the goods under the contact of Paris to change the nature (renovations to a property), new contract has been entered into, or a bona fide third party with no notice to the representation has rights in the property
Precision is not available can the claimant still claim damages
Yes
What are damages design to achieve in regards fraudulent misrepresentation?
They’re designed to put the representee in the position they would’ve been have the contract been properly performed - must be a loss
The representee can recover all losses directly flowing from the misrepresentation, regardless of foreseeability
Remoteness is therefore not an issue
The represente must take steps to mitigate, as soon as the floor does discovered (trying to sell any property they bought)
What are the two actions the claimant can use to claim for negligent misrepresentation?
1) common-law (negligent misstatement)
2) statute
Where there is a contract between the parties the claimant should use statute the misrepresentation act, 1967
What are the requirements for negligent misrepresentation under the misrepresentation act??
1) a false statement is made
2) the defendant believes that the false statement is true but
3) the defendant made the statement carelessly, or without reasonable grounds for believing in its truth. Up to the time the contract is made and
4) the claimant relied on this statement and suffered a loss
What are the remedies for negligent misrepresentation?
Recession (or damages under s2(2) MA 1967) and damages
Under s2(2) damages can be given in Lieu of recession. This is in addition to any damages awarded.
For the purposes of negligent and innocent misrepresentation, when is time counted from for the lapse of time bar for the availability of recession
From the date, the contract is entered into
Higher damages assessed for the purposes of negligent misrepresentation
In the same way, as for fraudulent misrepresentation - all the horses flowing from the misrepresentation or recoverable and remoteness is not applicable
Who holds the burden of proof to show that they believed what they were saying, was true, and that they had reasonable grounds to believe so
The claimant
What is innocent misrepresentation?
This is where a false statement as me at the claimant relies on. It enters into a contract and suffers loss, but it is neither fraudulent misrepresentation. Nor negligent misrepresentation.
In other words , the representer made the statement, believing it to be true, and having reasonable grounds for that belief (so it was not made negligently)
What damages are available for Innocent misrepresentation?
Rescission (or damages under s2(2))
There is no separate ride of damages for Innocent misrepresentation
When does time run from in fraudulent misrepresentation?
From the time you discover the misrepresentation
When can a statement of opinion or future intention amount as a statement of fact
It’s a party lies about their intention or otherwise states in opinion for which there are new facts on which it can reasonably be based - such a saying a tenant is reasonable when you know they’re in Rancherias
Higher damages measured for a Projects representation
The measure of damages is how much the misrepresentee is out of pocket as a result of the misrepresentation - damages extend to all consequential losses - remoteness of laws does not come into it
The standard of damages are on a tortious basis for all consequential losses
What position did the courts tried to put the claimant in as a result of fraudulent misrepresentation?
They try to fit the claimant into the position they would have been had the misrepresentation not been made
This is different from the basis of damages under contract claims as these a.m. to put the innocent party into the position they would have been at the contract been properly performed - loss of bargain damages
Higher damages actually calculated for the purposes of fraudulent misrepresentation
The difference between the profit attained, and the profit attained had the misrepresentation of being made
What makes negligent misrepresentation negligent
The belief in the truth of the statement be honestly held, but it is not held on reasonable grounds
Negligent misrepresentation, who has the burden to show that their belief was reasonably held
The person making the misrepresentation must prove that they made the statement on reasonable grounds - set, the claimant only has to establish the misrepresentation and loss - it is there an app for the defendant to prove that it was honest and reasonable. If they wish to avoid paying damages, this can be difficult to prove.
This reverses the standard rules on burden of proof in contact claims
Higher damages assessed for the purposes of negligent misrepresentation
In the same way that they are done, so for fraudulent misrepresentation - still all consequential losses are recoverable and the aim is to put the innocent party in the position they would have been in the misrepresentation had not been made
What is innocent misrepresentation?
If the misrepresentor can establish that they had reasonable grounds to believe their statement history, this would still be a misrepresentation but one falls into the innocent misrepresentation category - no damages are available as of right for an innocent misrepresentation
What is the effect of any misrepresentation?
It makes the contract avoidable
What does it mean that misrepresentation makes a contract voidable
This means that the person who is me of the representation to can either a firm, the contract or rescind the contract
Misrepresentation does not make a contract, avoid per se
What is the recession of a contract?
Set an aside a contract
What does contractual recession attempt to achieve?
In attempt to return the parties to the pre-contractual positions - think of it, as heading to rewind button to go back to the start
What are the equitable bars to contract of recession?
1) affirmation - when the party who has had the representation, mean to them, Alex to treat the contract as continuing - doing nothing, kind does affirmation - once the innocent party has a firm, the contract, they cannot, then change their mind and rescind
2) undue delay
3) where an innocent purchaser has acquired an interest in the subject matter of the contract before it reported recession of the contract
4) where it is impossible substantially to restore goods or property
Hi, is undue delay, measured in cases of innocent and negligent misrepresentation
Delay is measured knock by looking when the misrepresentation was actually discovered, but rather looking at when it should have been discovered
How did the courts assess undue delay in case is a fraudulent misrepresentation?
Time runs from when the misrepresentation was actually discovered
What does it mean that an innocent purchaser acquires an interest in the property before the contract is rescinded and why is this a bar to recession?
The court will look at which party was deemed to have rescinded the contract before the other
If an innocent purchaser requires an interest in the property before the contract is avoided than that as a Baci recession
