Misrepresentation

Description

Misrepresentation
pavlina.hunt
Flashcards by pavlina.hunt, updated more than 1 year ago
pavlina.hunt
Created by pavlina.hunt almost 9 years ago
37
1

Resource summary

Question Answer
Misrepresentation (definition) Only a false statement of fact (not opinion, future intention or abstract law) made by the misrepresentor to the misrepresentee, which induces the second to enter into a contract, can constitute an actionable misrepresentation rendering the contract voidable and give rise to possible remedies for misrepresentation.
5 questions to be answered (1) Is the statement a term of the contract or representation? (2) Is there a false statement of fact? (3) Does it induce the other party to enter into a contract? (4) Type of misrepresentation? (5) What remedies are available?
Term or representation? - Term = breach of contract - compensate for expectation losses - Misrepresentation = voidable contract at the discretion of the misrepresentee - compensate for reliance losses
False statement? Statement - may be true - Conduct - covering patches of dry rot (Gordon v Selico Co. Ltd) - Omission - GP silence is not misrep, no obligation to disclose (Smith v Hughes - old or new oats it was the buyer's decision), but misrepresentation if: .... half true (does not paint the whole picture) (Dimmock v Hallett - farms had tenants, but they have given notice to quit) .... it was true when made, but circumstances changed before contracting - has to be disclosed (Spice Girls Ltd v Aprilia World SErvices BV the group eventually knew that one of them was leaving)
Statement of fact? NOT facts: - Beliefs and opinions - Statements of future conduct or intention - Abstract statement of law
Beliefs and opinions (Statement of fact?) GP: Beliefs or opinions are not facts as long as both parties do not have a reason to believe so - (Bisset v Wilkinson - both parties knew the land has not been used for sheep farming seller stated opinion on the number of sheep it can sustain); - the representor is in a stronger position to know the truth (Smith v Land & House Property Corporation - tenants were behind on rent, so could not have been most desirable tenants) -experts opinion can be viewed as a fact (Esso Petroleum obiter)
Statement of future conduct or intention (Statement of fact?) GP: Not facts as the future is unpredictable; - unless at the time making them the representor has the intention of not fulfilling them (Edgington v Fitzmaurice - stating that raising funds to buy assets, but intending to cover company's debts)
Abstract statements of law (Statement of fact?) GP: Abstract statements of what the law is cannot be statements of fact. - But where there is factual context they can be (Pankhania v Hackney London Borough Council - wrongly described the legal status of a tenant occupying a property for sale, which impacted the new owner's ability to eject them)
Material reliance? - Causal link - must induce the reasonable person to contract - Actual knowledge (Horssfall v Thomas unaware of a defect in a gun prior to purchase) - Own investigation - not obligatory (Redgrave v Hurd false statement of profits, given opportunity to examine, but not actioned upon - contributory negligence) ..... but if done and relied upon then no misrep (Attwood v Small - relying on their own experts) - Knowledge of falsehood before entering into contract nullifies misrep
Type of misrepresentation? - Fraudulent - Negligent - Innocent
Fraudulent misrepresentation - Subjective test - misrepresentor must (1) have known the statement was false at the time it was made; (2) or not believing it is true; (3) or not caring whether it is true or false (recklessness) - Burden of proof is on claimant and not easy (Derry v Peek genuinely believed in the statement they made) - Remedies - rescission + damages for all losses that flow directly from the fraud whether foreseeable or not (Doyle v Olby) including loss of opportunity had they used the money to purchase another business istead (East v Mauerer)
Negligent misrepresentation - An honest belief that the statement is true but the representor has failed in their duty to use reasonable care and skill to check accuracy. Two types: - Negl. misrep at common law - Negl. misrep under statute s 2(1) MA 1967
Negligent misrepresentation (Common Law) - Special relationship i.e. expert; proof of duty of care owed; no need for contract between them - agent/third party (Hedley Byrne &Co Ltd v Heller & Partners Ltd); - No need to prove actionable misrepresentation (can be opinion, etc.) - Burden of proof on C; - Remedies - rescission and / or (s 2(2) MA if equitable) damages for reasonably foreseeable losses (no general right for damages) / indemnity
Negligent misrepresentation (s 2(1) Misrepresentation Act 1967) - There must be a contract between misrepresentor and misrepresentee; - Burden of proof on D -reasonable grounds to believe it's true; - Remedies - Same as fraud: rescission and / or (s 2(2) MA) damages for all losses that flow directly from the misrepresentation whether foreseeable or not including loss of opportunity /indemnity (Royscot Trust Ltd v Maidenhead Honda Centre Ltd)
Innocent misrepresentation - An honest belief that the statement is true where that belief is based on reasonable grounds. - Burden of proof on D - Remedies - rescission (where available); indemnity OR discretionary damages available in lieu (instead) applying s 2(2) MA 1967
Bars to rescission - Affirmation - find out about it, but continues with the contract (Long v Lloyd) - Lapse of time - finds out too late (Leaf v International Galleries) - Restitution impossible - too costly and or difficult to return shares/business - Third party acquires rights
Contributory negligence - GP the claimant does not have to check the facts, but - The damages awarded may be reduced to take account of the misrepresentee's contributory negligence in contributing to their own loss. - Does not apply to cases of fraud (Alliance and Leicester), only to negligence including s. 2(1) (Gran Gelato v Richcliffe)
Show full summary Hide full summary

Similar

Contract Law
sherhui94
Exemption clauses
pavlina.hunt
Contract Law
Tim Mitchell
Contract Law Key Terms
jdavisbyhs
GCSE law Consumer Contract B144 WHOLE UNIT
Angela Dickinson
CONTRACT LAW
remy.richman
Offences Against Property Offences and Defences
Lucy Nove
Express Terms
Aryn Rozali
Law of Contract
Laura Tamás
Lease - Umowa najmu lokalu
PJ. K
Consideration
chloe.crismani