Vitiating Factors: Misrep

Question 1

Define

Answer 1

A false statement of fact made by a party which induces the other party to join the contract

Question 2

Elements of misrep

Answer 2

1. Makes false statement/conduct
2. Statement is of fact
3. Made by a party to the contract
4. Statement induced other party to enter contract

Question 3

Spice Girls v Aprilia World Service

Answer 3

Making a statement should be interpreted broadly to include written, verbal, pictures, advertising, packaging and even conduct

Question 4

Fletcher v Krell

Answer 4

Silence/non-disclosure is usually not a statement

Question 5

Lambert v Co-op Insurance service

Answer 5

Uberimae Fidei- contract involves utmost good faith
When a contract involves 2 people who should have high levels of honesty - non disclosure can be misrep
Eg. Insurance companies

Question 6

Dimmock v Hallett

Answer 6

Half true statement can be misrep

Question 7

With v O’Flanaghan

Answer 7

Non disclosure can amount to false statement when circum makes previous statement false- there is a legal obligation to tell other party

Question 8

Consumer Rights

Answer 8

If business leaves out/hides any key info that helps a consumer make an informed decision this can be false statement

Question 9

Bisset v Wilkinson

Answer 9

Statement of opinion will usually not amount to a fact especially when there is no knowledge to trust in

Question 10

Smith v Land and House Property Corp

Answer 10

If party has a special knowledge, this statement can amount to a statement of fact

Question 11

Statement of future intention or conduct

Answer 11

Statement that expresses future intention is speculation rather than fact

Question 12

Edgington v Fitzmaurice

Answer 12

If the party making the statement of future intention definitely did not have that intention at the time, this can amount to a statement of fact

Question 13

Dimmock v Hallet

Answer 13

Sales talk/mere ‘puff’ can be empty boasts (not a statement of fact) if too vague/ would not make reasonable person enter the contract

Question 14

Carlill v Carbolic Smoke Ball Company

Answer 14

Sales talk/mere ‘puff’ can be statement of fact if it is serious enough/ would make reasonable person enter contract

Question 15

False statement must be made by party to the contract

Answer 15

If statement made by third party this will not be misrep

Question 16

Horsefall v Thomas

Answer 16

For the statement to induce the other party to enter the contract - C must have known of the statement when entering the contract

Question 17

Attwood v Small

Answer 17

Statement can induce the other party to enter the contract if- false statement had materially affected C’s decision to enter the contract

Question 18

Redgrave v Hurd

Answer 18

It does not matter if C’s reliance on statement was reasonable or not, it only matters if C’s decision was genuinely affected by the statement

Question 19

S2(1) Leaf v International Galleries

Answer 19

Innocent representations are false but representor believed them to be true and had reasonable grounds to believe the statement was true

Question 20

S2(1) Howard v Marine Ogden

Answer 20

Negligent misrep is representor believes their statement is true but does not have reasonable grounds to believe this

Question 21

Derry v Peek

Answer 21

Fraudulent misrep is when representor makes a statement they do not believe is true

Question 22

Recission

Answer 22

Puts parties back in original (returning property, damages) and cancels contract

Question 23

Clarke v Dickson

Answer 23

Revision not available if it’s impossible to put the parties back in their original position

Question 24

Long v Lloyd

Answer 24

Recission will not be available where the contract is affirmed
Where misled party decides to carry on the contract despite being aware of the misrep (representee has accepted the situation)

Question 25

Leaf v International Galleries

Answer 25

Recission will not be available if C leaves it too long before trying to rescind the contract (delay)

Question 26

When does ‘delay’ start for each type of misrep

Answer 26

Innocent/Neglient: time of misrep statement

Fraudulent: from time misrep is discovered

Question 27

Lewis v Avery

Answer 27

Recission unavailable when a third party , in good faith, has gained interest in the goods (unfair because innocent third party would lose out)

Question 28

S2(2) Misrep Act 1967

Answer 28

No automatic right to damages (normally recission) but court can award damages instead of recission if they believe this would be fairer

Question 29

Rules of recission and bars

Answer 29

If recission applies, can award damages instead if they believe this is fairer
If bars to recission- no recission and no damages

Question 30

S2(1)

Answer 30

Type of damages for negligent misrep are the same as for fraud misrep (can get profit damages

Question 31

Salt v Strastone

Answer 31

Damages for negligent are the same as innocent in that they can only get damages as a substitute for recission

Question 32

Doyle v Olby

Answer 32

Fraud can claim damages for all expenses directly arising from misrep even if not reasonable foreseeable

Question 33

East v Maurer

Answer 33

Can also sue for loss of profit with fraudulent misrep

Question 34

Innocent misrep remedies

Answer 34

Actual losses and only as subsitute for recission

Question 35

Negligent remedies

Answer 35

Losses directly from misrep and loss of profit but only as substitute for recission

Question 36

Fraud remedies

Answer 36

Both losses directly and loss of profit- can be in addition to recission