Silence and Misrepresentation Flashcards
What is the general rule?
the idea is that generally, if you are silent, you are not making a representation.
What was held in Sykes v Taylor-Rose 2004?
Here, during negotiations, the seller of a house did not mention to the buyer that a murder had taken place in the house. This failure to reveal the murder was not an actionable misrepresentation.
There are several exceptions to the silence rule - A person may make a ‘representation’ by conduct
my conduct may give a particular impression and if this is a false impression it can amount to a misrepresentation. R v Barnard - Here, a person wearing an Oxford undergraduate gown obtained boot-straps on credit from a shop. He was found guilty of obtaining goods by false pretences. (Ordinary members of the public would not have been offered credit but at the time Oxford undergraduates, perceived as ‘gentlemen’, would be given credit and Barnard had misrepresented himself as a gentleman’ by dressing up as an Oxford student).
Exception no.2 - Deliberately concealing defects
Schneider v Heath (1813) 170 ER 1462; where a ship was sold “to be taken with all faults”; despite this the vendor was held liable because he knew of secret defects and used means - keeping her constantly afloat - to hide that the bottom was worm-eaten and the keel was broken.
Exception No.3 - 3 Half-true/misleading statements
A half-truth is a representation that is technically true, but would be made false if the full facts were revealed. In such a case, the wrongdoing is the act of keeping quiet and not revealing the full facts. Such a failure to reveal the full facts at the time could be actionable. Dimmock v Hallett (1866) 2 Ch App 21
Here, during the negotiations for the sale of a large estate, one farm was described as, “let to H…” and another farm was described as “Let to W at ….” Both of these statements were true in the sense that H and W were indeed tenants of the farms. However, they were misleading ‘half truths’ because the full story was that H and W had already given notice to quit (ie notice to end their tenancies). It was held that the statements that the farms were let were misrepresentations.
application of the law to half true statements is the ruling by the Court of Appeal in: Spice Girls Ltd v Aprilia World Service BV - there is no duty to reveal facts and so it is okay to be silent. But if you do make a representation, it needs to be a full and complete one
The girls took part in a promotional film, before signing a sponsorship contract with the defendant. This amounted to a representation by conduct (see above), i.e. that they were a group of five members. This was technically true at the time. However, they knew that Geri (Ginger Spice) had already declared an intention to leave the group. As such the representation by conduct was a misleading half-truth and amounted to an actionable misrepresentation.
Exception number four - changed circumstances.
A statement may be made in negotiations, which is true when it was made but, by the time the contract has been agreed, has become false. If the representor knew of the change s/he is under a duty to correct the statement. So where a statement is made which is true at the time but later becomes false before the contract is entered, then the representor is under a duty to reveal the change if s/he knows about it. If the change is not revealed then the original statement is actionable. With v O’Flanagan
How is the ‘changed circumstances’ situation is different from the ‘half-truth’ situation above?
- In the half-truth’ situation, the statement is half true at the time when it is made.
- By contrast, in the ‘changed circumstances’ situation the statement is completely true when made, but is made untrue by the later change in circumstances (before the contract is entered).
Exception number 5 - Contracts uberrimae fidei (utmost good faith)
The most common traditional example of such contracts is insurance. The proposer (i.e. the customer who is asking to be insured) is under a duty to disclose ALL material facts to the insurance company so that the company can make a realistic assessment of the risk. This obligation continues for commercial insurance contracts. However, the obligation was removed from consumer contracts by the Consumer Insurance (disclosure and representations) Act 2012.
Exception number 6 - Fiduciary relationships
between the contracting parties - i.e. a relationship of trust and confidence such as that between a solicitor/client or agent/principal. Again there is a duty to disclose all material facts.
