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Contract Law - Paper 3 > Vitiating Factors: Misrepresentation > Flashcards

Vitiating Factors: Misrepresentation Flashcards

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1
Q

What is misrepresentation?

A

A vitiating factor which makes a contract voidable if a false statement of fact was made by a party to the contract that induces the other party to enter the contract

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2
Q

What does the case SPICE GIRLS LTD V APRILIA WORLD SERVICE say about how a false statement can be made?

A

The statement can be verbal, written or by conduct

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3
Q

Why is silence insufficient for misrepresentation?

A

Because of the caveat emptor principle

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4
Q

What is the caveat emptor principle?

A

Let the buyer beware

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5
Q

What does the case GORDON V SELICO say about when silence may amount to misrepresentation?

A

Taking active steps to conceal a defect may amount to misrepresentation

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6
Q

What does the case DIMMOCK V HALLET say about when silence may amount to misrepresentation?

A

It is a misrepresentation to make a half truth

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7
Q

What does the case SPICE GIRLS V APRILIA WORLD SERVICES say about when silence may amount to misrepresentation?

A

Where a truthful statement of fact is made, but becomes misleading by a change of circumstances before the contract is made, there is a duty to correct what has become a false impression

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8
Q

What does the case TATE V WILLIAMSON say about when silence may amount to misrepresentation?

A

Where the relationship between parties is based on trust then silence may be a misrepresentation

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9
Q

What is the final instance where silence may amount to misrepresentation?

A

Where the contract is a contract of ‘utmost good faith’ then all material facts must be described whether asked or not

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10
Q

What does the case BISSETT V WILKINSON say about a statement of fact?

A

A statement of opinion which is honestly held by the statement maker but which proves to be false is insufficient

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11
Q

What does the case SMITH V LAND AND HOUSE PROPERTY CORPORATION say about a statement of fact?

A

Where the statement maker is in a good position to know the truth they are representing that they have reasonable grounds for making their statement and thus making a statement of fact, if the statement turns out to be false there will be a misrepresentation

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12
Q

What does the case EDGINGTON V FITZMAURICE say about a statement of fact?

A

A statement of intention will amount to a statement of fact if the statement maker has no intention of carrying it out as he is then misrepresenting the fact that he possesses the intention

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13
Q

Who must the false statement of fact be made by?

A

The representor or representee

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14
Q

What are the four factors that must be satisfied to prove the statement induced the other party to enter the contract?

A
  • it must positively influence a reasonable person to enter the contract
  • it must be known to the party who is considering entering the contract
  • it must be intended by its maker to be acted upon by the person entering the contract
  • it must actually be acted upon
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15
Q

What does the case ATTWOOD V SMALL say about the statement inducing the other party?

A

If the party entering the contract decides not to rely on the misrepresentation but check the truth of a statement by making their own investigations then there is no misrepresentation

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16
Q

What does the case REDGRAVE V HURD say about the statement inducing the other party?

A

It does not matter if the person entering the contract fails to take advantage of an opportunity to discover the truth

17
Q

What is fraudulent misrepresentation?

A

A false statement made dishonestly

18
Q

What does the case DERRY V PEEK say about fraudulent misrepresentation?

A

The statement maker knows it to be untrue or is reckless as to whether or not it is true

19
Q

What does the case ERLSON PRECISION HOLDINGS V HAMPSON INDUSTRIES say about fraudulent misrepresentation?

A

A deliberate or dishonest failure to disclose a change in circumstances during negotiations will amount to fraudulent misrepresentation

20
Q

What is negligent misrepresentation?

A

A false statement made honestly but the statement maker has no reasonable grounds for believing its true

21
Q

What does S.2(1) MISREPRESENTATION ACT 1967 state?

A

The statement maker will be liable unless they can prove they had reasonable grounds to believe up to the time the contract was made that the statement was true

22
Q

What is innocent misrepresentation?

A

A false statement made honestly by someone who had reasonable grounds for believing it was true

23
Q

What is the remedy of recission ?

A

The contract is set aside and the parties are returned to the positions they were in before the contract was made

24
Q

When will recission be barred?

A

If it’s no longer possible to restore the parties’ original positions

25
Q

What does the case LONG V LLOYD say about when rescission will be barred?

A

Recission will be barred if the contract is affirmed by the representee after discovering the true state of affairs

26
Q

What does the case LEAF V INTERNATIONAL GALLERIES say about when recission will be barred?

A

Recission will be barred if there has been a delay in requesting recission

27
Q

What does the case LEWIS V AVERAY say about when recission will be barred?

A

Recission will be barred if an innocent third party has gained rights over the contract property before recission was requested

28
Q

What remedies are available for fraudulent misrepresentation?

A
  • damages

* recission

29
Q

What does the case DOYLE V OLBY say about damages being awarded for fraudulent misrepresentation?

A

The courts will compensate all loss that is a direct result of making the contract regardless of any foreseeability

30
Q

What does the case EAST V MAURER say about damages being awarded for fraudulent misrepresentation?

A

The representee can claim for expenses incurred as a result of contracting and also claim for a loss of profit based on the profit they might have made if they had entered a different contract with someone else

31
Q

What remedies are available for negligent misrepresentation?

A
  • damages

* recission

32
Q

What section of the MISREPRESENTATION ACT 1967 allows damages to be awarded for negligent misrepresentation?

A

S.2(1)

33
Q

What remedies are available for innocent misrepresentation?

A
  • damages

* recission

34
Q

What does S.2(2) MISREPRESENTATION ACT 1967 state about remedies for innocent misrepresentation?

A

A discretionary award of damages prevents recission in the case of trivial misrepresentations for which compensation would be an adequate remedy

Contract Law - Paper 3 (18 decks)

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