Law- Seminar 6-Misrepresentation

  • Created by: Heather
  • Created on: 13-04-17 09:52
What is misrepresentation?
An unambiguous, false statement of fact or law which is addressed to the party misled, which is material and which induces the contract,
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What are the three different things misrepresentation can be?
-Innocent, -Negligent, Fraudulent,
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What is an exception to the definition of misrepresentation- where else can it occur?
It can also be a term of the contract,
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What case is used to show misrepresentation as a term of a contract?
Oscar Chess v Williams
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Give the case of Oscar Chess v Williams.
A private seller sold a car to a firm of car dealers. He told them the car was a 1948 model, and the car log book proved this. In fact it was a 1939 model and the log-book had been altered. The buyers said they wouldn't have paid such a high price.
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What did the Court of Appeal decide?
They held that the seller's statement was not a term of the contract, but merely an innocent misrepresentation not giving rise to an action for breach of contract.
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What are the 7 parts misrepresentation requires?
1) An unambiguous statement 2)of fact 3) made by or on behalf of the representor 4)to the representee 5)That is false 6)That is material 7) That induces the representee to enter into a contract,
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For representation must be a statement, in general what cannot be a misrepresentation and why?
Silence- In English law, silence doesn't constitute as such and cannot be used as acceptance of an offer,
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However, what case shows there is an exception to the silence rule based on changes in circumstances? what was held in court?
With v O'Flanagan- When a statement is rendered false by change in circumstances, there is a duty to disclose the change. A failure to do so will result in an actionable misrepresentation,
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However, what can make the statement into a misrepresentation linked to silence?
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Give two cases to show non-disclosure leading to misrepresentation?
Dimmock v Hallett and Notts Patent Brick and Tile Co v Butler
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Give the case of Dimmock v Hallett.
In selling some farm land, the defendant told the claimant that all of the farms were under tenancy, which was factually true. The defendant failed to mention all of the tenants had given notice to vacate their land,
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What was held at court?
It was held there was a misrepresentation as it was misleading to omit such vital information where the reason for the question was clear,
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What else can be perceived as a statement without words as such to have a misrepresentation?
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What case described how conduct can lead to a statement? What was held?
Walters v Morgan, -"a nod, or a wink, or a shake of the head, or a smile, intended to induce the vendor to believe the existence of a non-existing fact... would be sufficient"
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Give a case where conduct amounted to misrepresentation?
Spice Girls Ltd v Aprilia World Service BV
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Give the Spice girls ltd v aprilia world service BV case.
Contract to sella Spice girl scooter and advertise it. However, they were concealing that one of the band members were planning to leave, although their conduct in the photoshoot suggested to Aprilia otherwise,
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What was held in court?
It was held that conduct can be a statement of fact. Misrepresentation had taken place-They bought and participated with the view of all five members of the spice girls, and did nothing to make the company aware one was leaving,
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In any event, what must the statement be?
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Give an example of a case to show that for misrepresentation to occur, the statement must be unambiguous?
McInerny v Lloyds Bank Ltd
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Give the case of McInerny v Lloyds Bank ltd?
It was stated loan was 'suitable for purposes'. This clearly wasn't intended as a guarantee.
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For the representation must be one of fact, this means it cannot be a statement of what?
Opinion or belief,
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What can be the problem with a statement of opinion v a statement of fact?
It can be hard to distinguish between the two and dificulty to identify,
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When else does a statement of fact not work based on both parties?
Where both parties are aware and know that the statement is without authority,
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Give an example of a case and the facts?
Bissett v Wilkinson- Misstatement as to sheep bearing capacity of land where both parties knew that land had not been used for sheep farming and the vendor had no special knowledge
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Is it a misrepresentation if only the representor knows the facts?
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Give an example case and the facts?
Smith v Land and House company PC- Representation as to the desirability of an existing tenant when the vendor knew that the tenant was in arrears with rent,
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Therefore, what was held in Smith v Land and House PC?
It was held that opinion where the statement maker has greater knowledge can be elevated to fact,
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Is one part is an expert, can misrepresentation take place?
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Give an example of a case where one party is an expert?
Esso Petroleum co Ltd v Mardon-
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Give the facts of the case.
Mardon entered a tenacy agreement for a new Petrol station. Esso experts estimated it would sell 200,000 gallons based on figures prior to planning. However, planning permission changed the sales rate and Esso made no amendments to statement.
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What did the Court of Appeal decide?
They held there was no action for misrepresentation as the statement was an estimate of future sales rather than a statement of fact,
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Can a statement of intention be a misrepresentation?
No- If honestly held at the time of making. The mere fact that you do not do something you have stated you would do is not a misrepresentation
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Give a case where a statement as to future intent was never intended to be carried out and summary of case?
Edgington v Fitzmaurice- Money borrowed on the bassi that the borrower intended to use it to improve and expand his company. In fact, he intended to pay off the company debts,
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However, where is the law unclear in terms of a statement of intention?
What happens if you change your mind- Should you tell the other party?
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Give an example of a case where this occured and the facts?
Insurance company changed its mind as to how much of the risk it would retain but didn't advise the reinsurer that it had done so,
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What was decided?
It was decided the contract could be rescinded as there was a significant statement of intent,
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For the representation must be made on behalf of the representor to the representee, what is the view on third parties?
In general, the contract cannot be challenged if the statement is made by a third party unless the other party to the contract is aware of the misrepresentation and does nothing,
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Can the representation be made to a third party of the representee?
No- It must be made directly to the party seeking to challenge the contract- If he happens to overhear it, he cannot rely on it,
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For the representation must be material, a misrepresentation is actionable only if material except what?
Except where fraudulent,
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What does material mean?
It is an objective test where a reasonable person would regard the fact as relevant when deciding to enter the contract,
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However, what can't it be?
A "mere puff"
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For the representation must induce the contract, what does this mean?
-A subjective test, -Did the representee rely upon the misrepresentation,
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Therefore, if the representee has the statement in his mind then decides to enter into the contract, what type of misrepresentation is this?
Fraudulent misrepresentation,
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For fraudulent misrepresentation, does the inducement need to be the sole reason?
No- But the representee must have the statement in his mind,
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Give an example where the inducement wasn't a misrepresentation because they didn't rely on it?
Edgington v Fitzmaurice
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Give tne facts for the Edgington v Fitzmaurice?
In addition to the use to which the money would be put,the buyer believed he would get a charge over the company's land, although no representation made about this. Combination fo factors meant fraud not the decisive inducement,
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For non-fraudulent misrepresentation, what does Assicurazioni Generali SpA v Arab Insurance Group suggest needs to be proven for this?
'In order to prove inducement, the representee must show that the misrepresentation was an effective caue into entering the contract on the terms he did. He must therefroe show... he would not have entered into the contract on those terms."
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For inducement, what action shows the representee will not have been induced to enter into the contract?
If they don't believe it and investigate for themselves,
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Give an example of a case where this occured?
Atwood v Small
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Describe the facts of Atwood v Small.
Purchased an estate for £600,000. Preliminary agreement made where claimant needed to be satisfied that the reports were accuraate about the mining land, and was checked by his accountants. it then trasnpired the accounts had exaggerated the income,
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Where does inducement again not occur based on knowing the truth?
If knowing the truth would make no difference,
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Give an example of a case which shows this?
JEB Fasteners Ltd v Marks, Bloom and Co
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Give the facts of this case.
The claimants acquired a company to make use of the directors. They then sought to rescind the contract on the basis of misrepresentation made in the accounts of the company,
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What was held at court?
They were denied- The misrepresentation had not played a 'real and substantial' part in inducing the claimants- The motive for entry was to acquire the directors only,
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For inducement, shoud the representee check what is said?
THere is no duty for the representee to do so,
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What was decided on this based on Redgrave v Hurd?
'No-one is entitled to make a statement which on the face of it conveys a false impression and then ecuse himself on the ground that the person to whom he made it had available the means of correction."
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What happens if there is a misrepresentation?
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What is recession?
The retrospective setting aside of the contract and the primary remedy for all types of misrepresentation. It is where an innocent party says his agreement to the contract wasn't valid,
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What is the effect of recission on each party?
Each party gets back what it gave under the contract,
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How is recession decided?
it is an act of the representee and not a remedy granted by the court,
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However, when can the court have a role?
The court may have a discretion not to allow rescission and to substitute damages
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What five things mean rescission may not be available?
-Unjust environment, -Intervening third party rights, -Affirmation, -Lapse of time, -Discretion of court
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Why does an unjust environment mean recession isn't available?
What if what was given can't be given back?- One party would gain an advantage at the expense of another.
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What is the court looking for in terms of restitution if this occurs?
They are looking for substantial restitution rather than exact restitution,
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Give a case where they couldn't undo their contract as such as they couldn't give it back?
Erlanger v New Sombrero Phosphate Co
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Describe the Erlanger v New Sombrero Phosphate co case.
Where there had been a misrepresentation leading to the purchase of a mine, the mine had been partially worked.
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What did the court decide?
Rescission was allowed but in addition profits made were ordered to be given,
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Why does intervening third party rights mean rescission isn't available?
where a third party has gained rights, rescission won't be possible e.g. if the property recieved under the contract has been sold to an innocent third party,
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Why does affirmation mean rescission isn't available?
Where the representee knows of the misrepresentation, he elects to continue with it- His choice,
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Why does a lapse of time mean rescission isn't available?
As the representee has waited so long that it would be unfair to allow rescission- How long is too long is a matter for the court,
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Why does discretion of court mean rescission isnt available?
Sometimes the courts have discretion to refuse to grant rescission if not barred for other reasons, particularly in non-fraudulent misrepresenation,
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For fraudulent misrepresentation ,what is the innocent party entitled to?
To rescind the contract and claim damages,
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What is negligent misrepresentation?
it 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.
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What is the innocent party entitled to?
To rescind the contract and claim damages,
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what is innocent misrepresentation?
An innocent misrepresentation exists where the representor can demonstrate reasonable grounds for belief in the truth of the statement,
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What is the remedy for the innocent party?
They are entitled to rescission OR damages in lieu of rescission. The claimant can't claim both,
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For non-consumer contracts, damages are awarded under which act?
s2 (1) Misrepresentation Act 1967,
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How can damages be available?
Only if the representor can't prove he had reasonable grounds to believe and did believe at the time of the contract the facts were true,
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In non-consumer contracts, when can the court award further damages in lieu of rescission?
If recession would be available and if the representation is not fraudulent,
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What act does this come under?
S2 (2) Misrepresentation act 1967
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Card 2


What are the three different things misrepresentation can be?


-Innocent, -Negligent, Fraudulent,

Card 3


What is an exception to the definition of misrepresentation- where else can it occur?


Preview of the front of card 3

Card 4


What case is used to show misrepresentation as a term of a contract?


Preview of the front of card 4

Card 5


Give the case of Oscar Chess v Williams.


Preview of the front of card 5
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