OCR A2 Law - The Law of Contract - Misrepresentation (3)

Types of Misrep:

1. Fraudulent Misrep (FM): Was defined in the CASE: of "Derry v Peek". In this case a tram company issued a prospectus making a false statement of fact. HELD: Peek's action failed since there was insufficient proof of fraud.

The Lords said a FM is a statement made knowing it's false, or having no belief in its truth, or made recklessly (not caring if it's true/false).

AO2: It is very difficult to prove as the victim must prove the other parties state of mind, who may use the defence of stating that they honestly believed what they said was true at that time. (HARDEST TO PROVE!!!)

2. Negligent Misrep (NM): This was defined as an 'obiter' statement in the CASE of: "Hedley Byrne v Heller". This is a statement made where the parties are in a 'special relationship', the statement maker has specific qualities/expertise the victim relies on it, the statement maker knows of this reliance and he accepts his statement.

AO2: The victim must prove this Hedley Byrne criteria, and that the statement maker 1. Owed a duty of care; 2. breached that duty; 3. The breach caused loss. This principle was confirmed in "Esso v Mardon".