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Paper 3 Contract Law > Vitiating factors-Misrepresentation > Flashcards

Vitiating factors-Misrepresentation Flashcards

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1
Q

Vitiating factor

A

Something that makes a contract void or voidable

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2
Q

Void

A

A void contract is one that is declared to be a nullity-it never had legal effect.
A void contract is said to be void ab initio (from the beginning)

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3
Q

Voidable

A

A voidable contract is one that can be made void in certain circumstances.
If the right to make it void is not exercised then the contract remains valid.

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4
Q

Representation

A

Something which was said during the negotiation but does not form part of the final contract

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5
Q

Is a term part of a final contract?

A

Yes

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6
Q

Where a misrepresentation occurs, what can and cannot the wronged party sue for?

A

Can = Misrepresentation
Cannot = Breach of contract

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7
Q

Factors considered when deciding whether something is a representation or a term.

A
  1. Importance attached to information
  2. Special knowledge or skill of the party giving the information
  3. Time between giving the information and the contract.
  4. Whether the agreement was in writing
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8
Q

Case for importance attached to the information.

A

Couchman v Hill (1947)

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9
Q

Facts of Couchman v Hill (1947)

A

Before an auction, the purchaser specifically asked the auctioneer whether a heiffer (type of cow) was unsowed (not pregnant). He said yes. Yet the cow was pregnant and died in childbirth.
Term as clearly so important to purchaser

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10
Q

Cases for special knowledge or skill of the party giving the information.

A

Oscar Chess Ltd v Williams (1957)
Dick Bentley Ltd v Harold Smith Motors (1965)

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11
Q

Facts of Oscar Chess Ltd v Williams (1957).

A

Private seller misinformed purchaser of car as to date of the model.
Representation

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12
Q

Facts of Dick Bentley Ltd v Harold Smith Motors (1965).

A

Expert car dealer wrongly stated the mileage a car had done.
Term

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13
Q

Case for time between giving the information and the contract.

A

Routledge v McKay (1954)

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14
Q

Facts of Routledge v McKay (1954).

A

Seller wrongly stated date of the model of motorbike he was selling.
Contract, which did not mention this date, signed a full seven days later.
Representation

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15
Q

Case for whether the agreement was in writing.

A

Routledge v McKay (1954)

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16
Q

Principle from Routledge v McKay (1954) for an agreement which is written.

A

If the parties have made a written contact, the courts will assume the key points are included and all other points were therefore representations.

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17
Q

Representor

A

Person who makes the statement

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18
Q

Representee

A

Person to whom the statement is made

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18
Q

6 rules for a statement to be a misrepresentation

A
  1. An untrue statement
  2. Of material fact, rather than opinion or advertising puff
  3. Made by one party to another
  4. Said during negotiations
  5. Induced the other party to enter the contract
  6. Is not a term of the contract
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18
Q

2 ways in which a statement can be untrue.

A
  1. Statement is incomplete
  2. Information in statement previously given has become wrong due to changing circumstances and representor does not inform the other party of this
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19
Q

Case for an untrue statement due to it being incomplete.

A

Dimmock v Hallett (1866)

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20
Q

Facts of Dimmock v Hallett (1866).

A

D truthfully told C all of the farms he was selling to him had tenants and were under tenancy.
Failed to mention all the tenants had given their notice.

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21
Q

Case for an untrue statement due to the D not informing the C of changing circumstances.

A

With v O’Flanagan (1936)

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22
Q

Facts of With v O’Flanagan (1936).

A

C purchased medical practice from D.
D truthfully said practice took £2000 per annum.
D fell ill and many patients went elsewhere.
But C brought practice on original information.

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23
Q

3 ways a statement can be of material fact rather than opinion or advertising puff.

A
  1. By words
  2. By conduct
  3. A statement of intention when the representor never had any intention of doing what they said
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24
Q

Is a statement of intention, GENERALLY, one of fact?

A

No-only where representor had no intention of doing what they said

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25
Q

Case for statement being given by words.

A

Bisset v Wilkinson (1927)

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26
Q

Facts of Bisset v Wilkinson (1927).

A

C purchased land to graze sheep.
Seller had not used land for sheep but estimated that it would graze 2000.
Turned out to be wrong.
Not misrepresentation as it was a statement of opinion not fact.

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27
Q

Case for material fact statement given by conduct.

A

Spice Girls Ltd v Aprilia World Service Ltd BV (2000)

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28
Q

Facts of Spice Girls Ltd v Aprilia World Service Ltd BV (2000).

A

All 5 Spice Girls filmed promotion for a scooter company knowing that one SG planned to leave the group.
Made promotion valueless.
Misrepresentation through conduct-acting as if SG would continue to have 5 members

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29
Q

Case for material fact through a statement of intention.

A

Edgington v Fitzmaurice (1885)

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30
Q

Facts of Edgington v Fitzmaurice (1885).

A

Claimant invested in company after its directors falsely stated the investment would be sued to develop the company.
Investment was in fact going to be used to pay off the existing debts.
Misrepresentation

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31
Q

Why does the statement have to be made from one party to another to be misrepresentation?

A

It is not misrepresentation if the statement is made by a 3rd party

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32
Q

Case for statement must be made during negotiations to be misrepresentation.

A

Roscorla v Thomas (1842)

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33
Q

Facts of Roscorla v Thomas (1842).

A

C buys a horse from D.
After contract was agreed, D tells C the horse is “free from vice”.
Horse turns out to be vicious.
Not misrepresentation

34
Q

Case for the statement must be what induced the other party to enter the contract.

A

Attwood v Small (1838)

35
Q

Facts of Attwood v Small (1838).

A

C purchased estate.
Preliminary agreement between C and D said C would buy the estate depending on whether the reports/accounts given by the D were accurate.
C checked with his accountants who reported they were accurate.
C purchased estate but then found the accounts had greatly exaggerated the estate income.
C sued for misrepresentation but was unsuccessful as he had relied on his own experts not the information from the sellers.

36
Q

What 2 things don’t matter when it comes to whether the statement induced the other party to enter the contract?

A
  1. If the other party could’ve reasonably checked the information for themselves
  2. It was unreasonable for them to rely on it
37
Q

Case for where it doesn’t matter if other party could’ve reasonably checked the information for themselves.

A

Redgrave v Hurd (1881)

38
Q

Case for where it doesn’t matter if it was unreasonable for the other party to rely on the statement.

A

Museprime Properties Ltd v Adhill Properties Ltd (1990)

39
Q

Why can the statement not be a term of the contract to be a misrepresentation?

A

Misrepresentation and breach of contract are mutually exclusive, meaning if one happens the other will definitely not be present.

40
Q

General rule for misrepresentation and silence.

A

Withholding information is not usually misrepresentation.
Parties negotiating in a contract are not obliged to share information with each other and one party is free to get a better deal based on superior knowledge.

41
Q

Case for general rule of misrepresentation and silence.

A

Fletcher v Krell (1873)

42
Q

Facts of Fletcher v Krell (1873).

A

Women who applied for governess position did not reveal former marriage despite single women being preferred.
No misrepresentation.

43
Q

2 exceptions to general rule of misrepresentation and silence.

A
  1. Relationships of trust e.g., family members , a lawyer and his client, a financial advisor and his client
  2. Relationships of ‘utmost good faith’
44
Q

Case for a relationship of trust exception for misrepresentation and silence.

A

Tate v Williamson (1866)

45
Q

Facts of Tate v Williamson (1866).

A

Financial advisor advised his client to sell land under value to clear his debts.
Adviser then purchased the land himself but did not tell his client.
Misrepresentation.

46
Q

Case for relationship of ‘utmost good faith’ exception for misrepresentation and silence.

A

Lambert v Cooperative Insurance Society (1975)

47
Q

Facts of Lambert v Cooperative Insurance Society (1975).

A

Woman renewed jewellery insurance without telling her insurers that her husband had been recently convicted for conspiracy to steal (which would have led to a higher premium (insurance charge)).
Misrepresentation.

48
Q

3 main types of misrepresentation.

A
  1. Fraudulent misrepresentation
  2. Negligent misrepresentation
  3. Innocent misrepresentation
49
Q

Fraudulent misrepresentation

A

Intentionally lying or being reckless as to the truth of statements

50
Q

Negligent misrepresentation.

A

Where there is carelessness as to the truth of statements

51
Q

Innocent misrepresentation

A

Where they honestly believed the statement was true

52
Q

What is fraudulent misrepresentation also known as?

A

Tort of deceit

53
Q

Case for fraudulent misrepresentation meaning.

A

Derry v Peck (1889)

54
Q

A fraudulent misrepresentation not only includes an out-and-out incorrect answer to an enquiry, but what else and name the case?

A

An overly optimistic description.
Greenridge Luton One Ltd v Kempton Investments Ltd (2016)

55
Q

Under what types of law is negligent misrepresentation dealt with?

A

Common law and statutory law

56
Q

Case for common law approach to negligent misrepresentations

A

Hedley Byrne

57
Q

What does the common law approach require there to be between two parties?

A

A special relationship

58
Q

What section, under what Act, is used for negligent misrepresentation in statutory law?

A

Section 2 (1) of the Misrepresentation Act 1967

59
Q

What does Section 2 (1) of the Misrepresentation Act 1967 create?

A

Created a statutory liability for negligent misrepresentation where there is no special relationship

60
Q

Where there is negligent misrepresentation, once the representee has proved there was a misrepresentation, who is the burden of proof on and what do they need to prove?

A

On the representor who needs to show that when they made the statement, they had reasonable grounds to believe it was true.

61
Q

Would C’s want to go down the common law or statutory approach more where there has been negligent misrepresentation and why?

A

Statutory route as there is no need to show special relationship and the burden of proof shifts in their favour.

62
Q

Which case suggests that sometimes the facts make it preferable for the C to go down the common law route?

A

Howard Marine v Ogden & Sons (1978)

63
Q

Two possible remedies for misrepresentation.

A
  1. Rescission
  2. Damages
64
Q

What happens if a rescission is awarded?

A

The contract is considered void. It is as if the contract never existed and the parties are put back to their original position

65
Q

What happens where damages are awarded?

A

D receives compensation for the damage that resulted from the misrepresentation (but the contract is not necessarily voided)

66
Q

Remedies for fraudulent misrepresentation.

A

Rescission and/or damages

67
Q

Remedies for negligent misrepresentation.

A

Rescission and/or damages

68
Q

2 ways in which damages will benefit the C where there is fraudulent misrepresentation and name the cases.

A
  1. Damages will be paid for all losses caused by the contract even those which were not foreseeable

Smith New Court Securities Ltd v Scimgeour Vivkers (1996)

  1. Damages will aim to put the C back into the position they would have been had they contract not been made.

East v Maurer (1991)

69
Q

What does Hedley Byrne show about damages in negligent misrepresentation where the common law approach has been followed?

A

They are only paid for loss which is reasonably foreseeable.

69
Q

What case overturns the common law approach to damages for negligent misrepresentation?

A

Royscot Trust Ltd v Rogerson (1991)

70
Q

What principle comes from Royscot Trust Ltd v Rogerson (1991)?

A

CoA interpreted the Misrepresentation Act 1967 as saying that the fraud rule applies i.e., D can be liable for damage which is not reasonably foreseeable

71
Q

Remedies for innocent misrepresentation.

A

Rescission or damages BUT not both

72
Q

In what case did Longmore LJ make it clear that the ‘normal remedy for misrepresentation is rescission’?

A

Salt v Stratstone Specialist Ltd (2015)

73
Q

What case shows that where there is innocent misrepresentation, the C cannot be granted both rescission and damages but only one or the other?

A

Government of Zanzibar v British Aerospace (Lancaster House) Ltd (2000)

74
Q

4 situations where rescission isn’t an option.

A
  1. Sometime restitution is impossible
  2. Not possible where the contract has been affirmed (where the C has continued with the contract despite misrepresentation/breach)

3.Rescission not available after a long delay

  1. Where rescission would be unfair on a third party
75
Q

Case for where restitution is impossible.

A

Clark v Dickson (1858)

76
Q

Facts of Clark v Dickson (1858).

A

C misled into buying shares.
Restitution not possible as partnership had been converted into a limited company

77
Q

Case for where rescission is not possible because the contract had been affirmed.

A

Long v Lloyd (1958)

78
Q

Facts of Long v Lloyd (1958)

A

Seller misrepresented the fuel efficiency of a lorry and the condition it was in.
Despite seeing problems, C brought lorry.
Went to defendant after first journey after noting certain faults.
D decided to contribute to half the repairs.
Claimant accepted this.
On further journey, lorry broke down completely and C wished to make contract void.
No rescission available.

79
Q

Case for where rescission will not be available after a long delay.

A

Leaf v International Galleries (1972)

80
Q

Facts of Leaf v International Galleries (1972)

A

D sold C a painting which he claimed was by the artist Constable.
C only realised this was not true when he tried to sell it 5 years later.
Rescission not available,

81
Q

Case for where rescission would be unfair on a third party.

A

Lewis v Avery (1972)

82
Q

Facts of Lewis v Avery (1972).

A

Seller gave purchaser a car before cheque had cleared having been misled as to the purchaser’s personal credentials (qualifications).
Seller could not get rescission (the car back) as the purchaser had already sold it onto a third party

83
Q
A

Paper 3 Contract Law (30 decks)

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