Vitiating Factors: Misrep Flashcards
Define
A false statement of fact made by a party which induces the other party to join the contract
Elements of misrep
- Makes false statement/conduct
- Statement is of fact
- Made by a party to the contract
- Statement induced other party to enter contract
Spice Girls v Aprilia World Service
Making a statement should be interpreted broadly to include written, verbal, pictures, advertising, packaging and even conduct
Fletcher v Krell
Silence/non-disclosure is usually not a statement
Lambert v Co-op Insurance service
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
Dimmock v Hallett
Half true statement can be misrep
With v O’Flanaghan
Non disclosure can amount to false statement when circum makes previous statement false- there is a legal obligation to tell other party
Consumer Rights
If business leaves out/hides any key info that helps a consumer make an informed decision this can be false statement
Bisset v Wilkinson
Statement of opinion will usually not amount to a fact especially when there is no knowledge to trust in
Smith v Land and House Property Corp
If party has a special knowledge, this statement can amount to a statement of fact
Statement of future intention or conduct
Statement that expresses future intention is speculation rather than fact
Edgington v Fitzmaurice
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
Dimmock v Hallet
Sales talk/mere ‘puff’ can be empty boasts (not a statement of fact) if too vague/ would not make reasonable person enter the contract
Carlill v Carbolic Smoke Ball Company
Sales talk/mere ‘puff’ can be statement of fact if it is serious enough/ would make reasonable person enter contract
False statement must be made by party to the contract
If statement made by third party this will not be misrep
Horsefall v Thomas
For the statement to induce the other party to enter the contract - C must have known of the statement when entering the contract
Attwood v Small
Statement can induce the other party to enter the contract if- false statement had materially affected C’s decision to enter the contract
Redgrave v Hurd
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
S2(1) Leaf v International Galleries
Innocent representations are false but representor believed them to be true and had reasonable grounds to believe the statement was true
S2(1) Howard v Marine Ogden
Negligent misrep is representor believes their statement is true but does not have reasonable grounds to believe this
Derry v Peek
Fraudulent misrep is when representor makes a statement they do not believe is true
Recission
Puts parties back in original (returning property, damages) and cancels contract
Clarke v Dickson
Revision not available if it’s impossible to put the parties back in their original position
Long v Lloyd
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)
Leaf v International Galleries
Recission will not be available if C leaves it too long before trying to rescind the contract (delay)
When does ‘delay’ start for each type of misrep
Innocent/Neglient: time of misrep statement
Fraudulent: from time misrep is discovered
Lewis v Avery
Recission unavailable when a third party , in good faith, has gained interest in the goods (unfair because innocent third party would lose out)
S2(2) Misrep Act 1967
No automatic right to damages (normally recission) but court can award damages instead of recission if they believe this would be fairer
Rules of recission and bars
If recission applies, can award damages instead if they believe this is fairer
If bars to recission- no recission and no damages
S2(1)
Type of damages for negligent misrep are the same as for fraud misrep (can get profit damages
Salt v Strastone
Damages for negligent are the same as innocent in that they can only get damages as a substitute for recission
Doyle v Olby
Fraud can claim damages for all expenses directly arising from misrep even if not reasonable foreseeable
East v Maurer
Can also sue for loss of profit with fraudulent misrep
Innocent misrep remedies
Actual losses and only as subsitute for recission
Negligent remedies
Losses directly from misrep and loss of profit but only as substitute for recission
Fraud remedies
Both losses directly and loss of profit- can be in addition to recission
