Misrepresentation

  • Created by: huth0
  • Created on: 06-04-17 16:19
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  • Misrep
    • If a representation turns out to be untrue, the claimant can make a claim for misrep
      • An actionable misrepresentation renders a contract voidable
    • An untrue statement of fact addressed by one party to the other before, or at the time, the contract is made which is one of the factors that induces the formation of the contract
      • Must be a statement of fact not other types of statements
        • Bisset v Wilkinson 1927 - Honest statement of mere opinion
        • A statement of opinion may imply a statement of fact where the statement maker is an expert
          • Smith v Land and House Property Corporation 1884 - seller was in a position to know the facts
          • Esso v Mardon 1976 - a statement made by an apparent expert
        • A statement of future intention will not give rise to misrep but a persons present state of mind or intention, constitutes as fact
          • Edgington v Flitzmaurice 1885 - Invest shares to pay off debt not to boost company. Statement of fact
            • In comparison to Inntrepreneur Pub Co v Sweeney 2002 - Statement of future intention and based on good grounds
        • Must not be sales talk
          • Dimmock v Mallett 1866 - Land described as 'fertile and improvable' Mere sales talk
    • Mere silence or non-disclosure does not give rise to misrep
      • Fletcher v Krell - teacher did not disclose divorce but school could not revoke
      • Exception (1) - Truth, but not the whole truth
        • Spice Girls Ltd v Aprilia World Service 2002 - Truth about all 5 but not whole truth as one was leaving
        • Exception (2) - Contracts of utmost good faith - with such contracts there is a duty to disclose material facts
          • Conlon v Simms 2008 - partners in a partnership
          • Consumer Insurance Act 2015 - section 2 - consumers do not have to volunteer material facts but must take reasonable care not to make a misrep
          • Exception (3) - Some fiduciary relationships give rise to disclose key facts about a transaction
            • Examples: Principal and agent - Solicitor and client
            • Exception (4) - Change of circumstances - If a representor later discovers that his representation is false, he should correct it
              • With v O'Flanagan 1936
    • Statement must induce party to enter into the contract - statement must be material and must have been relied on
      • JEB Fasteners Ltd v Marks Bloom & Co 1983
      • The representation must be intended to be acted upon
        • Peek v Gurney 1873
      • The representation must actually be acted upon
        • Attwood v Small 1883
      • The innocent party must not have been aware of the truth when they entered into the contract
        • Redgrave v Hurd 1881
      • A misrepresentation need not be the only representation in order to be said to have induced the contract
        • Edington v Fitzmaurice 1885
      • Recission is an equitable remedy and is therefore discretionary. it sets the contract aside and puts the parties back in their former positions. Notice must be given to the other party, by words or conduct, to rescind the contract
        • Damages are a form of remedy that are not always available depending on the type of misrep.
          • Indemnity payment is a remedy payment of a sum of money, but is not the same as damages. It allows the claimant to recover expenses which the claimant was obliged to incur as a result of the creation of the contract and which benefited the other party
      • The bars to rescission are a) The contract is affirmed or lapse of time (Long v Lloyd 1958 - Affirmed) or (Leaf v International Galleries 1950 - lapse of time) b) Restitution impossible (Thomas Witter Ltd v TBH Industries Ltd 1996
        • c) Third party gains rights - If a buyer in good faith, acquiring goods under a voidable contract before the contract is avoided, will gain the title to the goods
        • d) Damages under Section 2(2) Misrep Act 1967 - the right to rescission will be lost if the court exercises its discretion to award damages instead of rescission
    • Fraudulent misrep is a false statement that is made knowingly; or without believing it to be true; or being reckless as to whether or not it is true
      • Established in; Derry v Peek 1889
        • Example case: Thomas Witter Ltd v TBH Industries Limited 1996
      • Negligent misrep is a false statement made in the belief that it is true, but without reasonable grounds for that belief
        • Common law negligent misstatement is ignorance to an obligation to tell the truth. Where a 'special relationship' arises between the parties, there is a duty of care owed by the statement maker to take reasonable steps to ensure that the statement is accurate
          • Hedley Byrne v Heller 1964
        • Statutory negligent misrep under Section 2(1) of Misrep Act 1967 This resulted in there not needing to establish a special relationship and the burden of proof is reversed so the D must prove he was not negligent.
          • If a claim fails under Section 2(1) of the 1967 Act because it is proved that the D had reasonable grounds to believe that the statement was true, and did believe at the material time that the statement was true, the claimant could make out a claim for innocent misrep
            • Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd 2005
    • Misrep renders a contract voidable meaning that the contract is valid but the innocent party can choose whether to set it aside or to affirm it
      • A contact may be affirmed in two ways; a) the innocent party expresses an intention to affirm the contract; or b) the innocent party's actions would indicate to a reasonable person that he intends to proceed with the contract

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