Business 1: Misrepresentation

Front 1

Requirements

Back 1

1. Statement of fact
2. Falsity
3. Inducement

Front 2

Statement of Fact

Back 2

*Not made by words or conduct Gordon v Selico
*Not opinion Bisset v Wilkinson
*Not a promise or intention Edgington v Fitzmaurice

Front 3

Peek v Gurney
(Falsity)

Back 3

General rule is that silence does not constitute a misrepresentation

Front 4

Exceptions to rule on silence for falsity:

Back 4

- Half truths R v Lord Kylsant
- Statements which become untrue before contract is formed With v O'Flanagan
- Contracts unberrima fedei (where there is a duty to disclose) Pan Atlantic Insurance v Pine Top

Front 5

Horsfall v Thomas
(Inducement)

Back 5

Can't be induced if representee is unaware of fact

Front 6

Attwood v Small
(Inducement)

Back 6

If representee tests accuracy of the rep. then the reliance is on the test not the rep.

Front 7

Pearson & Son v Dublin Corporation
(Inducement)

Back 7

If the misrep is fraudulent and even after testing C fails to discover the truth, then the misrep is still actionable

Front 8

Smith v Chadwick
(Inducement)

Back 8

C must prove that he was misled by the deceit

Front 9

Must the misrep be the sole reason for entering the contract?

Back 9

No, but it must be a real and substantial part of inducing entry

Front 10

Burden of Proof

Back 10

-On representee to prove that misrep was made and capable of inducing
-On representor to show C would have entered contract anyway

Front 11

Fraudulent Misrepresentation

Back 11

A statement made which representor did not believe true Derry v Peek
1. There must be dishonesty
2. Proof of fraud

Front 12

Negligent Misstatement (Common Law)

Back 12

- Must be a duty of care:
- Reasonable foreseeability of reliance and harm
- Sufficient proximity between parties
- Must be just and reasonable for the duty to be imposed
*Courts have accepted possibility of a pecuniary loss Hedley Byrne v Heller

Front 13

Negligent Misrepresentation (Statute - Misrepresentation Act 1967)

Back 13

- Burden of proof shifts to D to establish there were reasonable grounds for believing the statement was true though the courts are strict on what will amount to reasonable grounds (Howard Marine Dredging v A Ogden & Sons)

Front 14

Innocent Misrepresentation

Back 14

Misrepresentation which is neither fraudulent nor negligent, the maker had reasonable grounds for making the statement and so he was not at fault Oscar Chess v Williams

Front 15

Rescission
(Fraud, negligence and innocent)

Back 15

Makes the contract voidable at the option of the representee.
- Can inform representor (Car and Universal v Caldwell) or ask court for an order
- At common law, never carried with it a right to damages but law allowed financial protection for obligations incurred as a result of misrep.

Front 16

Limitations on Rescission

Back 16

a. Restitution is impossible if both parties can't be restored to original position Erlanger v New Sombrero
b. Lapse of contract - when case concerns fraud there is no bar to rescission, time will run from discovery. Where case involves innocent or neg, time runs from formation of contract Leaf v International Galleries
c. 3rd Party Rights - where goods obtained by a misrep have been sold on to an innocent 3rd party, the court will not make them return the goods Car and Universal Finance v Caldwell
d. s.2(2) Misrep Act 1967 - court has discretion to award damages for innocent and negligent misrepresentations in lieu of rescission

Front 17

Damages for Fraudulent Misrepresentations

Back 17

- Damages is tortious i.e. representee can claim pocket loss, but, in certain circumstances loss of profits may be recoverable on the grounds of loss of opportunity East v Maurer
- Remoteness of damage applies Doyle v Olby

Front 18

Damages for Negligent Misstatements

Back 18

- Tortious damages allowed under Hedley Byrne v Heller
- The rule of remoteness is reasonable foreseeability The Wagon Mound

Front 19

Damages for Negligent Misrepresentations

Back 19

- Claim for damages can be made s.2(1) MA 1967
- Unclear in statute but appears to be tortious and rues of remoteness apply Royscott v Rogerson

Front 20

Damages for Innocent Misrepresentation

Back 20

For a claim made under s.2(2) MA 1967, court must consider:
- nature of misrepresentation
- loss that would be caused if contract were upheld
- loss that rescission would cause to representor

Front 21

Damages for Negligent Misrepresentation

Back 21

Wording of s.2(2) is sufficiently wide to apple here as well, meaning you can be awarded under s.2(1) and then in lieu of rescission damages may be awarded under s.2(2). You will not be compensated twice s.2(3)

Front 22

Measure of Damages

Back 22

-The loss caused by the misrep in consequence of failure to grant rescission not loss caused by representee making the contract
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