T3 Privity, terms and misrepresentation Flashcards
3 types of misrepresentation
Terms: the undertakings and rights that form the content of a contract
misrepresentation: things said in discussion about the contract which do not form the content of the contract
mere puffs: things said which are merely salesman hype. too ridiculous to be believed e.g. “red bull gives you wings”
3 types of misrepresentation
Terms: the undertakings and rights that form the content of a contract
misrepresentation: things said in discussion about the contract which do not form the content of the contract
mere puffs: things said which are merely salesman hype. too ridiculous to be believed e.g. “red bull gives you wings”
actionable misrepresentation
> untrue statement
material fact not opinion
induces the contract
fact v opinion
statement of FACT case example:
Oscar chess v Williams [1957]
Facts
The defendants sold a Morris car to the claimants, who were motor traders, for £290. The defendants provided a copy of the vehicles first registration indicating that the car was first registered in 1948. Some eight months later the claimants became aware that the car had actually been registered in 1939 and was therefore only worth £175. The defendant honestly believed that the car was a 1948 model. The claimants claimed damages for breach of contract.
Issues
The issue in this context was whether the statements given by the defendants constituted a warranty as to the age of the car.
Decision/Outcome
The statement relating to the age of the car was not a term but a representation. The representee, Oscar Chess ltd as a car dealer, had the greater knowledge and would be in a better position to know the age of the manufacture than the defendant.
statement of opinion case example
Dimmock v Hallett [1867]
Facts
The defendant in this matter was the purchaser of land in New Zealand which was purchased by the claimant for the purpose of sheep farming. The appeal, to which this judgment relates, is on the defendant’s counterclaim. During the purchase process, the claimant informed the defendant that the land being purchased was capable of sustaining 2000 sheep. However, after the purchase the defendant discovered that this was only possible if very careful land management was carried out, and that the land as it stood could not sustain this number of sheep. The defendant therefore sought to rescind the contract on the basis that the claimant’s statement was a misrepresentation.
Issues
The issue in this circumstance was whether the statement made by the claimant could be considered a statement of fact in terms of being a representation, or whether it was simply an opinion held by the claimant.
Decision/Outcome
The court held that the claimant’s statement was nothing more than an opinion as to the capacity of the land, based on the claimant’s knowledge of farming, together with the defendant’s knowledge of the current stock. The statement was not therefore held to be a representation
statement of future intention not actionable unless never going to happen. case example:
Edgington v Fitzmaurice (1885 - Directors of a business provided a prospectus which contained a range of debentures, in order to invite subscriptions. The directors stated that the debentures were in order to enable the business to complete alterations to the buildings of the company, to develop trade and to purchase vans and horses. However, it was later discovered that the real reason for issuing the debentures was for the directors to pay off other liabilities. The plaintiff forwarded money for the debentures that had been offered having relied upon the statements contained in the prospectus. Court held this was a material misstatement of fact and that the plaintiff had been influenced by this statement.
is a statement capable of inducing the contract?
> not if representee knew statement was false
not if representee would have entered into contract regardless
case example: Attwood v Small [1838]
Seller of a mine misrepresented its capacity. Purchaser had sellers statements checked by own surveyor, who also gave same incorrect information. Purchaser later discovered seller’s statements had been false, so tried to rescind the contract. The claimant was unsuccessful. By getting his own experts to check out the reports he had not relied on the accounts but his own judgment
3 types of misrepresentation: FRAUDULENT, negligent, wholly innocent
(common law - tort of deceit)
when it is shown that a false representation has been made knowingly or didn’t care if true or not recession/common law damages (available as a common law right)
3 types of misrepresentation: fraudulent, NEGLIGENT, wholly innocent
(misrepresentation act 1967)
no reasonable grounds to believe truth in what they are saying rescission/damages
3 types of misrepresentation: fraudulent, negligent, WHOLLY INNOCENT
(misrepresentation act 1967)
recession alone (exceptionally damages in lieu of rescission) reversal of burden to demonstrate honest held belief in truth of statement
rescission definition
an equitable remedy subject to the normal limitations to equity
case example: Leaf v International galleries [1950]
A gallery sold a drawing stating that it was by Constable. Five years later when the buyer tried to resell the picture he was told it was not by Constable. The gallery had genuinely believed it was a Constable. The buyer sought rescission. The claim failed as a significant amount of time had lapsed between agreeing the contract and the window to rescind.
