types of misrepresentation Flashcards
three types of misrepresentation:
- Fraudulent
- Negligent
- innocent
innocent misrepresentation
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
remedies for innocent misrepresentation
recission - court will only award them if it is fair to do so in all circumstances
OR
damages
situations in which the court will use its discretion and not grant rescission
‘bars to recission’
- restitution to original pre-contract position is impossible
- the contract is affirmed
- delay
- a 3rd party has gained rights over the property
- Restitution to pre-contract position is impossible
circumstances may have changed
Clarke v Dickson
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.
- The claimant has ‘‘affirmed’’ the contract
innocent party decides to carry on with the contract despite being aware of the misrepresentation
Long v Lloyd
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.
- Delay
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.
Leaf v International Galleries
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.
- A 3rd party has gained rights over the property
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.
Lewis v Avery
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.
Negligent misrepresentation
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.
Howard Marine v Ogden
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.
remedies for negligent misrepresentation
> Recission
AND/OR
damages - calculated as in Fraud