Contract (LLB) - Misrepresentation

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Note when answering misrepresentation exam questions ->
1. Consider whether the representation formed a term of the contract Was the representation a misrepresentation? 2. Is it a false statement of fact which induced the party to enter into the contract?
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(Continued) Note when answering misrepresentation exam questions ->
3. If so, what type of misrepresentation was it? 4. Which remedies are available?
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What are the four tests that are used to determine the objective intention of the parties and therefore whether the statement is a term or representation?
1. When was the statement made? 2. The importance of the statement. 3. Was the contract reduced to writing? 4. Did the maker of the statement have special knowledge?
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1. When was the statement made? How does this affect whether the statement would be a term or a representation? Give a case example.
The longer the time lapse between making the statement and entering the contract the more likely it will be a representation - Routledge v Mckay
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2. The importance of the statement. How does this affect whether the statement is a term or a representation? Give a case example.
Where the representee indicates to the representor the importance of the statement, this is likely to be held to be a term - Bannerman v White
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3. What does the parole evidence rule state?
Where the contract has been put into writing only the terms included in the written document are terms any verbal statements will be representations.
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4. If the person making the statement has special knowledge, how will this affect whether the statement is objectively seen as a term or representation? Give two case examples.
If the representor has the greater knowledge, it is more likely to be a contractual term. Conversely if the representee has the greater knowledge it is more likely to be a representation - Oscar Chess v Williams & Dick Bentley v Harold Smith Motors
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Once the courts have decided that the statement is a representation, it then needs to be decided whether it was a misrepresentation. What is a misrepresentation?
An actionable misrepresentation is a 1. false statement of a fact that 2. induces another party to enter into a contract with the representor.
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1. The representation must be a false statement of past or current fact, as apposed to what? Give two case examples.
As apposed to an opinion or sales puff. Bisset v Wilkinson (opinion as to the amount of sheep land could hold) &
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The statement must be of past or current fact, what case evidences this?
Esso Petroleum v Mardon - statement of how much petrol would sell was based on future estimations that did not turn out to be fact. Held: Not a misrepresentation.
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A statement of opinion may amount to a misrepresentation in what situation? Give case example.
When the representor was in a position to know the facts. Smith v Land and House Property Corp - The D sold a hotel to C stating that one of the tenants was highly desirable, knowing full well they were not as they were on the verge of bankruptcy.
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A statement can be made by words or conduct. What case shows this?
Spice Girls v Aprilia
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Does silence amount to a misrepresentation? Give a case example.
Generally it won't amount to a misrepresentation. Fletcher v Krell
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Will attempts to conceal the truth amount to consideration? Give a case example.
Yes this may amount to misrepresentation. Horsfall v Thomas
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A representor makes an actionable misrepresentation where he knows that the statement will give a false impression because he suppresses important facts.What case evidences this?
Dimmock v Hallett
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If circumstances change and the statement subsequently becomes false is the representor under a continuing duty to notify the representee of the change in circumstances? Give a case example.
Yes the representor must notify the parties of changes, if they don't, the initial statement, although true at the time, may amount to an actionable misrep. With v O’Flanagan
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2. The misrepresentation must induce the contract. Must the statement be the sole inducing factor? Give case example.
No it doesn't have to be the sole inducing factor. Edgington v Fitzmaurice 1885
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If the representee is unaware of the representation could he have relied upon it? Give a case example.
No. Horsefall v Thomas
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Where the representee tests the truthfulness of the statement for himself, can he be said to have relied upon that statement? Give a case example.
No he cannot be said to have relied upon the statement. Attwood v Small
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If the representee refused an offer to check the truthfulness of the statement from the representor, can the representee still claim for misrep? Give a case exmaple.
Yes. Redgrave v Hurd
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There are three different types of misrepresentation. What are they?
1. Fraudulent misrepresentation 2. Negligent misrepresentation (common law & statutory) 3. Innocent misrepresentation
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What is fraudulent misrep (give case example) and what remedies are there for a successful claim?
A false statement which the representor did not honestly believe was true. Derry v Peake. You get receive damages or a rescission.
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What did Lord Hurschell state had to be proved for fraudulent misrep in Derry v Peake?
The claimant must prove that the representor knew the statement to be false, ii) without belief in its truth, or iii) recklessly, careless as to whether it be true or false.
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What is negligent misrepresentation under the Misrepresentation Act 1967?
False statement of fact which representor believed was true but had no reasonable grounds to believe was true
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What does S.2(1) of the Misrepresentation Act 1967 state? Give a case example.
A negligent misrepresentation is a statement made without reasonable grounds for belief in its truth. The burden of proof being on the representor to demonstrate they had reasonable grounds for believing the statement to be true.Howard Marine v Ogden
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Negligent misrepresentation in common law is a tort, and is even harder to prove than in statute as a special relationship must be found. What case shows this?
Hedley Byrne v Heller
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What is innocent misrepresentation?
A false statement that the representor believed was true and had reasonable grounds to believe was true.
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What is the remedy for innocent misrep?
Rescission or damages in lieu of rescission (s.2(2) of the Misrep Act 1967) The representee must not have lost the right to rescind in order to claim damages in lieu of the rescission.
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What is rescission?
Rescission seeks to put the parties in the position they were in before the contract
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What are the bars to rescission?
1.Restitutio ad integrum 2. Lapse of time 3. Affirmation 4. 3rd party acquires rights
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1.Where Restitutio ad integrum is impossible, is rescission possible?
No, as the items are unable to be restored, for example if they are perishable goods that have done so. No restitutio ad integrum can take place.
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2.The right to rescind will be lost after a lapse of time. If the misrep is negligent or fraudulent, time only starts to run from discovery. If a wholly innocent misrep time runs from the entering of the contract. What case shows this?
Leaf v International Galleries
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3. If the representee does an act to adopt the contract, or demonstrate a willingness to continue with the contract after becoming aware of the misrepresentation they will lose the right to rescind. What case shows this?
Long v Lloyd
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Damages for fraudulent misrep and negligent misrep in statute use what test of remoteness? Give three case examples.
A generous test of remoteness. You do not need to show that the loss was forseeable. Doyle v Olby. Royscott Trust v Rogerson contrast with Smith New Court v Scrimegeour Vickers
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Damages for negligent misrep in common law use what test for remoteness? Give case example
They use the general tortious measure of remoteness, which deems harm must be forseeable and not too remote. The Wagon Mound
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Which of the three types of misrep can you exclude liability for? Give section and statute.
Negligent and innocent, as long as you can prove doing so would be reasonable. S.3 of the Misrepresentation Act 1967
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(Continued) Note when answering misrepresentation exam questions ->

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3. If so, what type of misrepresentation was it? 4. Which remedies are available?

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What are the four tests that are used to determine the objective intention of the parties and therefore whether the statement is a term or representation?

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Card 4

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1. When was the statement made? How does this affect whether the statement would be a term or a representation? Give a case example.

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Card 5

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2. The importance of the statement. How does this affect whether the statement is a term or a representation? Give a case example.

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