Vitiating factors (Misrepresentation)

Question 1

What does misrepresentation (MIS) do to a contract?

Answer 1

MIS makes a contract void/voidable.

Question 2

To make a contract voidable there must be what?

(All 4 parts).

Answer 2

1) To make a contract voidable there must be the making of a false statement (SM).
- If it is made and it is true, it can become a MIS if it becomes false before the contract is made (With v O’Flannagan).

2) of material fact.
- A SM of opinion is not a Sm of fact (Bisset).
- It can be made through words, actions, or conduct (Spice Girls).
- Silence can be MIS if the relationship between parties is based on trust (Tate v Williamson).

3) Made by a party to the contract to the other during negotiations.

4) That induces them to enter the contract.
- The SM must be important to the person making the contract and they must have relied upon it (Attwood).

Question 2

Describe innocent MIS:

Answer 2

Maker of the SM always believes it is true but turns out to be false later.

Question 2

What are the three types of MIS?

Answer 2

Fraudulent, innocent, negligent.

Question 3

Describe fraudulent MIS:

Answer 3

A SM is made knowingly/deliberately or being reckless as to whether it is true. The injured party can sue in the tort of deceit (Derry v Peek).

Question 3

Describe negligent MIS:

Answer 3

A false SM made by a person who believed the SM was true & had no reasonable grounds for believing it to be true.
There are two types:
- Under common law in the tort of negligence. But there must be a ‘special relationship’ and the person making the SM owes a DOC to the other party (Hedley).

• Under s2(1) MRA (1967), no special relationship is required under the Act, but there must be a contract, and V must suffer loss.