types of misrepresentation

Question 1

three types of misrepresentation:

Answer 1

1. Fraudulent
2. Negligent
3. innocent

Question 2

innocent misrepresentation

Answer 2

a representation which is genuinely held on reasonable grounds. This is a false statement made honestly - person making the statement always believed it true + no element of negligence in that belief

Question 3

remedies for innocent misrepresentation

Answer 3

recission - court will only award them if it is fair to do so in all circumstances
OR
damages

Question 4

situations in which the court will use its discretion and not grant rescission
‘bars to recission’

Answer 4

1. restitution to original pre-contract position is impossible
2. the contract is affirmed
3. delay
4. a 3rd party has gained rights over the property

Question 5

1. Restitution to pre-contract position is impossible

Answer 5

circumstances may have changed

Question 6

Clarke v Dickson

Answer 6

C was misled into becoming a partner in the business, company changed to an Ltd before C wanted to rescind the contract.
Recession not available
He couldn’t return the partnership as the firm had become an Ltd.

Question 7

2. The claimant has ‘‘affirmed’’ the contract

Answer 7

innocent party decides to carry on with the contract despite being aware of the misrepresentation

Question 8

Long v Lloyd

Answer 8

C told by seller that lorry was in excellent condition, but after the sale it broke down. C noticed faults with the lorry + contacted D, who offered to pay half repairs, he agreed. Lorry broke down again + C wanted to rescind the contract.
Court refused recission - preserving with the lorry after it broke down + agreeing to split the cost indicated willingness to carry on with the contract.

Question 9

3. Delay

Answer 9

once a contract has been completed, any complaints are likely to arise within a short time and after that you can assume there is no major problems.

Question 10

Leaf v International Galleries

Answer 10

in 1944, C brought a picture of Salisbury Cathedral from D and was told it was by constable. Found out it was not by hime when he tried to sell it 5 years.
Recission not allowed because of the delay in bringing the claim.

Question 11

4. A 3rd party has gained rights over the property

Answer 11

Where someone else has gained interest in the subject matter of the contract, then recission will not be granted - it’d be unfair on the innocent party.

Question 12

Lewis v Avery

Answer 12

C sold his car in exchange for a cheque which was worthless. D persuaded C he was a famous actor and the signed the cheque with his initials, D then sold the car to an innocent 3rd party.
Only effective remedy was recission + to get the car back. The claim failed as between the two innocent parties, it would be more unfair to deprive the 3rd party who purchased it in good faith.

Question 13

Negligent misrepresentation

Answer 13

Misrepresentation Act 1967
this means a false statement made by a person who believed the statement was true , but had no reasonable grounds for believing it to be true.

Question 14

Howard Marine v Ogden

Answer 14

Ogden hired 2 dredgers from Howard when asked for the capacity Howard checks registry. This was incorrect, actual capacity was much lower so work carried out took much longer + cost more.
Howard had the registration document of the dredger which stated the correct capacity so his argument failed - he didn’t have reasonable grounds to believe his statement.

Question 15

remedies for negligent misrepresentation

Answer 15

> Recission
AND/OR
damages - calculated as in Fraud

Question 16

Fraudulent Misrepresentation

Answer 16

the person making the statement knew it was untrue, or is reckless as to whether or not it is true

Question 17

Greenridge v Kempton

Answer 17

HC held that the buyer of a commercial property was entitled to have its deposit returned because of an untrue representation made recklessly or fraudulently by the seller, that there were no service arrears when in fact there was arrears.
Fraudulent misrep + entitled to damages

Question 18

remedies for fraudulent misrepresentation

Answer 18

recission
AND/OR
damages - calculated to put V in position they were in before

Question 19

East v Maurer
it is possible to recover damages for loss of profit following fraudulent misrepresentation

Answer 19

C brought a salon from D who continued to trade from another he owned, despite telling the purchaser that he didn’t intend to continue work at the other. Purchaser lost business to D
C had suffered loss due to Ds misrepresentation which arose misrepresentation

Question 20

‘bars to recission’ are the same for…

Answer 20

innocent misrepresentation