Misrepresentation Quiz

The elements of a claim in misrepresentation are:
1.
2.
3.
4.
5.

A. Untrue statement of fact:

o Test of = whether the statement is “”? – (2000) per Rix J
The notion of “” can extend to – World Service (2002)
o The following are NOT :
o A mere “” or “” – (1866)
o Statements of intention, unless at the time of stating the the party did not actually have such an intention – (1885)
o Statements of , unless the maker of the statement did not actually hold the opinion or had no on which to base the opinion – (1927)
o Statements of law in the , unless made dishonestly or without reasonable basis. But a statement about the in a particular situation can be actionable as misrepresentation – v London Borough of Hackney (2002)
o There is no duty to disclose which if known would have affected the other party’s decision to enter into the contract – (1895)
o However, amounts to misrepresentation in four situations:
(i) : if a party makes a statement which is in fact true, they may still be guilty of misrepresentation by what is left unsaid – (1866)
(ii) : if a statement, which was true at the time, becomes untrue, then the representor has a duty to inform the representee about the change – v O’Flanagan (1936)
(iii) Contracts of – e.g. insurance contracts
(iv) Certain confidential or

B. to the contract:

Misrepresentation must be made by a party to the contract, though it can be made by via a party’s . There is no in contract law for a misrepresentation made by a non-party; there may be, however, a remedy in .

C. Inducement:

o The must a party in deciding whether or not to enter the contract. It need not be the inducement – (1885)
o If the misrepresentation is , there is a that it induced the contract – Group International v Simms (2009)

Thus the misrepresentation is not actionable if the representee:
o Never knew of its – (1862)
o Did not allow it to affect their – (1884); Attwood v Small (1838)
o Verification duty? (1881)

Types of Misrepresentation:

o FRAUDULENT – false statement made (i) , or (ii) without belief in its , or (iii) – (1889)
o NEGLIGENT – misrepresentation made
o –representor honestly believes in the truth of the statement and had for their belief
o NEGLIGENT MISSTATEMENT AT COMMON LAW – arises in the context of a “” between persons. The maker of the statement is under a at common law to do all that is reasonable to ensure that the statement is correct – (1964). This tort provides a remedy where the statement is made by a

D. Remedies:

(I)

o remedy available for all types of misrepresentation.
o Innocent party must exercise choice: to or to contract.
o Effect of rescission: parties are put back to their position.
o Notice: Generally, innocent party must notify of decision to rescind. If impossible to find representor, contract can be by conduct of representee – Finance Co. Ltd. v. Caldwell (1965)
to rescission:
o When innocent party contract (after discovering true state of affairs) – (1958)
o When parties cannot be restored to substantially same pre-contractual position (principle of restitutio in integrum)
o When third party has acquired an interest in and for value of subject matter of – White v. Garden (1851); cf. Car and Universal Finance Co. Ltd. v. Caldwell (1965)
o When substantial time has elapsed. However, in cases of or breach of duty, lapse of time before discovery that statement is false is not bar to rescission, but after discovery is evidence of affirmation.

(II)
For fraudulent misrepresentation:
o Damages available in tort of . Innocent party can recover all loss (including consequential loss) directly flowing from to put them in position they would have been in had representation not been made: Doyle v. Olby (Ironmongers) Ltd. (1969); affirmed in Smith New Court Securities Ltd. v. Scimgeour Vickers (Asset Management) Ltd. (1997). Innocent party also entitled to for loss suffered after date of contract.
o Representee under duty to mitigate loss once they discover fraud: Down v. Chappell (1997).
For negligent misrepresentation:
o Damages available under s.2(1) of Misrepresentation Act 1967
o Burden of proof (or, more accurately, disproof) is quite onerous – Howard Marine & Dredging Co. Ltd. V. A. Ogden & Sons Ltd. (1978).
o Damages assessed as for tort of deceit (“fiction of fraud”) – Ltd. v. Rogerson (1991); cf. Smith New Court Securities Ltd. V. Scrimgeour Vickers (Asset Management) Ltd. (1997).
o Where misrepresentation is made by an agent, the innocent party can only bring action under MA s. 2(1) against contracting party, not party’s agent: Resolute Marine v. Nippon Kaiji Kyokai (1983).
o may be reduced if evidence of on part of innocent party – see Gran Gelato v. Richcliff (Group) Ltd. (1992).
o Damages may be awarded in of rescission in cases of (non-fraudulent) negligent and misrepresentation: see MA s.2(2).
o Measure of damages here is at court’s .
o Damages in lieu of rescission usually assumed as not available if right to rescind has already been lost – Government of Zanzibar v. British Aerospace (Lancaster House) Ltd. (2000); cf. Thomas Witter v. TBP Industries (1996) per Jacobs J.
For innocent misrepresentation:
o MA s.2(2) may give monetary relief in cases of wholly innocent misrepresentation, but up to the court to decide.
o Note too possibility to get in connection with action for rescission – Whittington v. Seale-Hayne (1900).
o Misrepresentations which become terms – See MA s. 1: right to rescission for misrepresentation not lost when misrepresentation becomes term.
Limiting liability for misrepresentation:
o Contractual clauses attempting to exclude or limit liability for are construed strictly – Thomas Witter v. TBP Industries Ltd. (1996); Inntrepreneur Pub Co. v. East Crown Ltd. (2000).
o Also several statutory controls, the central of which is MA s. 3.
o However, some types of (e.g. “no-reliance” clauses) may not be caught by MA s. 3 – Watford Electronics Ltd. v. Sanderson CFL Ltd. (2001).