mistake and misrepresentations

Question 1

mistake

Answer 1

unilateral: one party makes a mistake and other party not mistaken
mutual: both parties = made mistake and theyre at completely cross - purposes
common: both parties = made mistake about the same thing

2 poss outcomes - an agreement has never acc been reached (void)
agreement has been reached but something which removes the efficacy of agreement (voidable)

smith v hughes - old oats being bought for race horses, seller thought selling new oats - causes bloatinf - did they have to be accpeted? yes ASA they appear old - if buyer really wnted to know if oats = old shouldbe said (caveat emptor - buyer needs to beware)

hartog v collin and shields - mistake as terms of contract - sale of hre skins - mixed up price per piece with price per pound - other person knew they made mistake and decided to accept deal before other party noticed mistake - unfair as took advantage

Question 2

common mistake

Answer 2

acc mutual mistake - raffles v whichelhouse - 2 ships with same name - mixed up -void contract as mutual mistake and no consensus

common mistake = before contract

mcrae v commonwealth disposals - mcrae = owner of ship - if tanker runs good do you want ti? forgot to close front part of ship and sunk but still goes out to look for tanker but none - boat never existed - both mistakes but guaranteeing boat = there - risk allocation

the great peace - both parties mistken as to quality of subject matter
ship suffered structual damage, asked for assistnce from lavage service told ship = 35 miles away acc 410 miles - no contract

Question 3

effects of vitiating factors (undermine consent) to a contract

Answer 3

misrepresentation: renders contract voidable e.g. false info given
mistake: renders contract void - no party @ fault - subject matter not what they intended for
duress and undue influence: voidable e.g. bullied to sign
illegality: e.g. contract with accountant to help client evade taxes

Question 4

law of misrepresentation

Answer 4

mirep = untrue statement of fact by one party which has induced the other party to enter into the contract - persuaded

can be any form - written, spoken or by conduct

for misrep to be actionable must have 3 reqs.
1. statement must be untrue
2. statement = fact not opinion
3. induced other party to enter contract

Question 5

untrue statements

Answer 5

conduct:
spice girls ltd v aprilia world service BV - entered into neg. w/ motor scooter contract, all members to promote in return for sponsor but jerry informed rest of group shes leaving but hid from company and signed contract, A refused to mke further sponsorship and stated misrep. as SG knew J was leaving before contract signed - if A informed wouldnt have entered

silence: if tell some truth obliged to tell everyone
with v o’elanagan: doctor selling practice stated worth £200 yearly (true) but doctor fell ill and vale of practice went down - info not told before signing - should be told change of circumstances

what about silent about facts - completely silent
caveat emptor (buyer beware) a purchaser = req. to ask Qs, seller not norm. expected to volunteer info which may put buyer off - links to good faith and self interest and not worry ab. other party
EXCEPTIONS: where contract of good faith - law imposes duty to disclose info e.g. insurance, sale of shares, fiduciary relationship, sale of land and consumer contracts (crim. off. for trader unfairly misleading consumer by failing to give info)

Question 6

statement must be fact

Answer 6

merely delivering an opinion wont create an actionable misrepresentation

bissett v wilkinson - B = seller of land in NZ, W intention for land = sheep farming, farm never used for that purpose but B stated could accomodate 2000 sheep - opinion not fact, if used in past then fact bud hadt

smith v land and house property corporation: claimant trying to sell hotel, stated tenant = most desirable but acc late on rent - statemtn = fact not opinion as party could arg. it is reliable

edgington v fritzmaurice - statemtn fo intention can amount to fact - loans from oublic money would be used to extend business and improve building but money used to pay off business troubles - court held fraudulent mirepresentation but statement of intention = fact not opinon as lied

Question 7

inducement

Answer 7

atwood v small - illustrated there must be reliance on statement - owner of mine made exag. statement about the earnign capacity of mine to buyer - buyer had own surveyors look at mine prospects (2nd party) - suerveyor agreed on value with sellers - buyers enteres but found statement = false
court held no inducement as 3rd party go assess truth of stat. so no reliance

regrave v hurd - solicitor wished to sell practice and gave info ab cinome and said to confirm it by looking @ paperwork -buyer said trusted - court held even though claimant rejected offer to check there was inducement

Question 8

fraudulent misrep.

Answer 8

a false statement thats made -
1.knowingly
2.without belief in its truth
3.reckelessly as to whether its true or fasle (derry v peek)
but in practice rare as difficult to prove a defend had one of the states of mind - tort of deceit

absence of an honest belief that the statement is true

Question 9

negligent misrepresentation

Answer 9

s.2(1) misrepresentation act 1967 - false statemtn by a person who believes that the statement is true but as no reasonable ground for such a belief - statement maker is honest but careless in reaching the conclusion

Question 10

innocent misrepresentation

Answer 10

false statement made honestly believing it is to be true

Question 11

remedies for misrep

Answer 11

default remedy - rescission - brings parties back to pre contractual position - equitable remedy

fraudulent - damages on tort of deceit - in lieu of rescission - insead of recesssion as a remedy - harsher - may award damages instead - court will compensate all loss that is a direct result of transaction - doyle v olby (ironmongers)

negligent - decision on tort of negligence - damages under 2(1) of misrep act 1967

innocent - damages under 2.2(2) MA 1967 at courts discretion

Question 12

bars to rescission

Answer 12

factors which may not allow operation of remedy

affirmation: once innocent party aware of misrep - 2 options , continue contract or rescind it
continuing = implied affiramtion which abrs innocent party from claiming misrep

lapse of time: innocent party = barred if unreasonable elngth of time has pasted after contract = made so it would be inequitable to rescind contract - depends on subject matter of contract

impossible to return to precontractal position: counter restitution e.g. bought a car from dealer and misrep in sale and want to rescind but in car accident and car can never be restored to what it was

innocent 3rd party has aquired rights under contracts - e.g. sells car to rogue who pays with stolen cheque, accepted as given false ID, rogue then sells car to innocent 3rd party but seller later realises cheque bounced and calls police

Question 13

advanced issues - negligent misstatment

Answer 13

hedley byrne and co ltd v heller and partners ltd - HOLs extended the common law tort of negligence to the field of negligent statements that cause loss - claimants asked defendants to seek financial position of another company, claimed financially sound carelessly - financial loss claim made

Question 14

MA 1967 s.2(1)

Answer 14

where a person entered into a congract after a misrep has been made and they suffer a loss, then liable to damages in respect of fraudulent misrep.
once claimant has proved misrep burden of proof is reversed - defendant must prove their statment not negligent

Question 15

damages for misrepresentation

Answer 15

damages = aim to compensate innocent party by putting it back in position before misrep. taken place

fraudulent mistatements - damages for tort of deceit (burden of proof lies with claimant)
negligent mistatements - damages under tort (burden of proof = claimant to prove all elements of negligence in tort)
negligent misrep. under statute - damages under s.291) OF MA (burden of proof reversed to defendant defendant) - best route if available
innocent misrep - either rescission or damages - in lieu of recession

Question 16

calculation for damages

Answer 16

using tort measure - reliance interest - place claimant back in position before contract - more generous when good bargain

damages for breach of contract - put claimant in position they would be held if contract has been performed as agreed (expectation interest) - more successful when bad bargain

Question 17

remedies under consumer protection for unfair trading regulations 2008

Answer 17

4(a) provides certain remedies
right to redress their call for consumers in cirvumstances which include cases where consumers entered contracts in reliance on other party misrep

right to unwind contract e.g. reject prouct within 90 days
get full refund
right to discount
right to damages

Question 18

excluding liability for misrepresentation

Answer 18

non reliance clauses - operate as an estoppel preventing the subsequent claim for misrep where one aprty states they didnt rely on representations or statements made by other party doesnt apply when representation = fraudulent (pert stevenson associates v brian holland)

B2B contracts - s.3 MA 1967 - of contract inc terms which would exclude or restrict any liabilty to which a party to a contract may be subject to reason of any misrep. made beore contract or a remedy available to another party to a contract by reason of misrep. - that term = no effect ASA satisfied the rq. of reasonablness as stated in s.11(1) UCTA and it is for those claiming that the term satisfies req. to show that it does