Contract 4-1 Cases

Front 1

Misrepresentation Act 1967 s3...

Back 1

Any clause purporting to exclude or restrict liability for misrepresentation only upheld if satisfies reasonableness test in UCTA 1977.

Front 2

Case where buyer was in as good a position to judge representation...

Back 2

Oscar Chess Ltd v Williams (1957)
- Car dealer bought 1939 model car believing from supplied logbook it was a 1948 one.
- Would have paid £175, not £290 had he known
- Did not imply a warranty as both parties in equally good position to know, seller merely passing on logbook.

Front 3

If statement maker is in a better position to know, it is more likely to be a contract term...

Back 3

Dick Bentley v Harold Smith (Motors) Ltd (1965)
- Private buyer bought car with false 20k miles odometer reading, defendant had relied on reading in sales statement
- Court found against defendant

Front 4

Lapse of time between statement and contract indicates representation, not term...

Back 4

Routledge v McKay (1954)
- Lapse of time between statement and contract points to s being a representation
- Motorbike was 1930 model, not 1942 one

Front 5

Court may incorporate oral element into written contract...

Back 5

Birch v Paramount Estates Ltd (1956)
- Seller gave oral promise that house would be as good as the show house

Front 6

Statement more likely to be a term if recipient makes clear its importance...

Back 6

Bannerman v White (1861)
- Buyer of hops would not even ask price if hops were treated with sulphur
- Seller gave false assurances
- Where seller makes it clear the statement is of crucial importance, it is much more likely to be a term

Front 7

Statement less likely to be a term if maker asks recipient to verify...

Back 7

Ecay v Godfrey (1947)
- Seller of boat asked if buyer getting it surveyed
- Court decided this showed he did not intend his statement of quality to be a term

Front 8

If statement maker says not to bother with checks, it's more likely to be a term

Back 8

Schawel v Reade (1913)
- If seller says not to bother with independent checks, this points to their statements being a term

Front 9

What are the consequences for breach of a term?

Back 9

If it was a term, consider:
- Remedy for breach
- Misdescription under SGA79 s13, SGSA82 s3, sale by description
- Damages? Reject goods? Additional consumer remedies?

Front 10

Silence does not normally constitute misrepresentation

Back 10

Hamilton and Others v Allied Domecq plc (2007)
- exceptions where there are fiduciary obligations to disclose facts (eg solicitor/client)
- also contracts of utmost good faith, eg insurance

Front 11

Telling a half-truth can be a misrepresentation

Back 11

Curtis v Chemical Cleaning and Dyeing (1951)
- Told of exclusion for “sequins and beads”, but exemption had much wider scope.

Front 12

If a statement is true when you make it, you may be obliged to update recipient if the facts change

Back 12

With v O’Flanagan (1936)
- If a statement of fact is true when it is made, but circumstances change making it false, failure to disclose this may be a misrepresentation

Front 13

You do not lose the right to claim misrepresentation just because you have been given the chance to discover the truth

Back 13

Redgrave v Hurd (1881)
- A person does not lose the right to claim misrepresentation just because he has been given the opportunity to discover the truth

Front 14

You have to rely on a false statement for it to be a misrepresentation

Back 14

Attwood v Small (1938)
- For there to be misrepresentation, you have to rely on a statement. If you got incorrect independent advice corroborating a false statement, you may not have relied on the original statement

Front 15

Misrepresentation by conduct

Back 15

Spice Girls v Aprilia World Service BV (2000)
- By doing a TV advert, they stated by conduct that none of them would quit the group

Front 16

4 Exceptions to rule that silence cannot be misrepresentation

Back 16

Fiduciary relationship
- contract of utmost good faith
- Presence of a half truth (Curtis v Chemical Cleaning)
- Facts change and falsity not disclosed (With v O’Flanagan)

Front 17

Case where both parties knew statement of opinion was not made in full possession of the facts

Back 17

Bisset v Wilkinson (1927)
- Farmer reckoned farm he was selling might support 2000 sheep
- Both parties knew he had never done sheep farming, so was not in possession of the facts

Front 18

Statement of intention that was not genuinely held

Back 18

Edgington v Fitzmaurice (1885)
- Directors borrowed money saying it was to expand business
- Used it to pay debt
- Found to be a misrepresentation

Front 19

Statement must be one factor causing other party to enter contract

Back 19

Edgington v Fitzmaurice (1885)

Front 20

Corrected statement in written contract can negative misrepresentation (see Curtis)

Back 20

Peekay Intermark Ltd v Australia and New Zealand Banking Group (2006)
- Investment described in general terms
- Later got a contract with full terms but didn’t inspect much
- Experienced businessman, so expected to check contract – not just rely on description

Front 21

Innocent party must give notice of rescission, can be telling the police or applying to courts

Back 21

Car and Universal Finance Co Ltd v Caldwell (1964)
- Seller sold car but payment dishonoured, buyer disappeared
- Reported to police and AA
- Court found this to be notice of intention to rescind, ownership reverted

Front 22

Four bars to rescission

Back 22

1. If an innocent buyer acquires an interest in property before the contract is rescinded
2. Affirmation bars rescission. It can be either by notice or conduct suggesting affirmation
3. Undue delay (Leaf case)
4. Where it is impossible to substantially restore goods to other party

Front 23

Case where undue delay bars rescission

Back 23

Leaf v International Galleries (1950)
- Buyer bought a non-Constable Constable painting
- Sought rescission five years later after making discovery
- Denning held that it was barred because right to reject from breach would have been. Clock runs from when misrepresentation SHOULD have been discovered

Front 24

Case where rescission includes award for lost value from a worked mine

Back 24

Erlanger v New Sombrero Phosphate Co (1878)
- Contract for purchase of a mine rescinded after it had been worked
- Equitable court can take account of profit and deterioration
- Awarded an allowance for profit and deterioration

Front 25

Case where rescission is barred because restoration impossible

Back 25

Crystal Palace FC (2000) Ltd v Iain Dowie (2007)
- Entered compromise agreement to release from contract, including £1 million fee if join premiership club
- Court refused rescission after misrepresentation alleged; rescission of agreement would be restoration of original contract, which was no longer possible
- Rescission can’t just be paying the £1 million

Front 26

Authority for indemnity for contractual obligations

Back 26

Whittington v Seale-Hayne (1900)
- Claimant entered lease for property to breed chickens
- As result of misrepresentation about sanitary conditions, chickens died and he became ill; contract rescinded
- Indemnity covered only costs imposed by terms of the contract (no recovery for chickens etc)

Front 27

Misrepresentation Act 1967 s2(2)

Back 27

For non-fraudulent misrepresentation, if innocent party is entitled to rescind, a court may uphold contract and award damages instead if equitable to do so, considering:
- the nature of misrepresentation
- the loss caused by upholding contract
- the loss caused by rescission to other party

Front 28

Big authority on damages for deceit

Back 28

East and another v Maurer and another (1991)
- Claimant bought hair salon in area where defendant owned another one
- Defendant claimed they would not work full-time in their other salon, but misrepresented
- Judge at first instance awarded damages contract-style, putting c in the position they would have found had the statement been true (old profits minus deduction for experience)
- CA upheld that lost profit is a head of damage, but enforced a tortious award, ie expected profits had they opened a different rival salon after not being induced.

Front 29

Case where reasonable grounds for honest belief fail to be established

Back 29

Howard Marine & Dredging v Ogden (1978)
- Rep told potential barge charterer an incorrect tonnage for capacity based on Lloyd’s register
- Would have known had he used ship’s documents
- Failed to prove he had reasonable grounds for the belief (he could and should have used ship’s documents)