Misrepsantation Flashcards
What is misrepresentation?
Misrepresentation is a false statement of material fact made by one party to another that induces the other party to enter into a contract.
What are the possible effects of misrepresentation?
Misrepresentation makes the contract voidable, meaning the innocent party can choose to rescind the contract. The contract is not automatically void.
What are the key elements for identifying misrepresentation?
1) False statement of material fact.
2) Made by one party to another.
3) Made to induce the other party to enter the contract.
4) The statement must have induced the other party to enter the contract
What is an untrue statement of material fact?
An untrue statement of material fact is a statement that is false and has a significant impact on the decision to enter the contract (e.g., “the car has a new engine” when it doesn’t).
Are statements of opinion, intention, or law considered misrepresentations?
No, statements of opinion, intention, or law are generally not misrepresentations unless the speaker did not genuinely hold that opinion or intention, or the statement was made recklessly.
What is the general rule about silence/non-disclosure in misrepresentation?
There is no general duty to disclose information, but exceptions apply, such as when there is an active concealment of facts or a special relationship exists (e.g., Curtis v Chemical Cleaning [1951]).
What are the three types of misrepresentation?
- 1) Fraudulent Misrepresentation
2) Negligent Misrepresentation
3) Innocent Misrepresentation
What is fraudulent misrepresentation?
Fraudulent misrepresentation occurs when a false statement is made knowingly, without belief in its truth, or recklessly, with disregard for its truth.
What is negligent misrepresentation?
Negligent misrepresentation occurs when a false statement is made carelessly or without reasonable grounds for believing it is true.
What is innocent misrepresentation?
Innocent misrepresentation occurs when a false statement is made with no fault, and the maker honestly believes the statement to be true.
What remedies are available for fraudulent misrepresentation?
The remedies for fraudulent misrepresentation are:
• Rescission: The contract is voidable and can be canceled.
• Damages: The claimant can be compensated for the loss caused by the fraudulent misrepresentation (full damages).
What remedies are available for negligent misrepresentation?
The remedies for negligent misrepresentation are:
• Rescission: The contract is voidable and can be canceled.
• Damages: Under Misrepresentation Act 1967, s.2(1), the claimant can be awarded damages for loss caused by the misrepresentation if the defendant cannot prove reasonable grounds for their statement.
. What remedies are available for innocent misrepresentation?
The remedies for innocent misrepresentation are:
• Rescission: The contract is voidable, and the innocent party can cancel the contract.
• Damages: Under Misrepresentation Act 1967, s.2(2), the court can award damages as an alternative to rescission.
What is rescission?
-Rescission is the remedy that cancels the contract and restores the parties to their original positions. Rescission is only available if:
• The contract has not been affirmed (i.e., continued or accepted after discovering the misrepresentation).
• No third-party rights have intervened (e.g., third parties have acquired rights under the contract).
How are damages awarded for misrepresentation?
-How are damages awarded for misrepresentation?
A: Damages are awarded to compensate the claimant for losses suffered due to the misrepresentation. The type of misrepresentation determines the remedy:
• Fraudulent misrepresentation: Full damages for all losses caused.
• Negligent misrepresentation: Damages for the loss caused by the misrepresentation under Misrepresentation Act 1967, s.2(1).
• Innocent misrepresentation: Damages may be awarded under Misrepresentation Act 1967, s.2(2).
Is a contract induced by misrepresentation void or voidable?
A contract induced by misrepresentation is voidable. The innocent party has the right to choose whether to rescind it. If the contract is affirmed or performed, it remains valid.
What case established fraudulent misrepresentation?
. Derry v Peek (1889) – This case established that fraudulent misrepresentation occurs when the false statement is made knowingly, without belief in its truth, or recklessly, with disregard for its truth.
