Contract Law Uk

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Misrepresentation - Definition

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A false statement of fact before the contract was formed that induced the other party to the party to enter the contract, but did not create a binding obligation under the contract

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Inntrepreneur v Hollard

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Must be a false statement of fact that was falsely made to be misrepresentation.
Made a statement of profit of a pub before selling that was false and amounted to misrep.

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Bisset v Wilkinson

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A mere opinion is not goo enough to amount to misrep.
There was a sale of law and the purchaser was told it could hold 2000 sheep, but it could not and it was merely a statement of opinion so not misrep (didn't know anything about sheep)

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Esso Petroleum v Mardon

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Special expertise may make an opinion a misrep
Esso representative had 40 years of experience and told the other party that the garage would sell 200 gallons of petrol a year, but sold substantially less, but could rely on this because special expertise and was misrep.

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Edginton v Fitzmaurice

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Statements of intention are not normally statements of fact as long as honestly held.
Directors of a company borrowed money that they said was to fix up buildings, but actually intended to use it to pay off their debt. They were lying and misrep.

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Spice Girls v Aprilla

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Can be oral, written or implied conduct.
Spice Girls signed a contract with Aprilla to promote their product and were to do a commercial before signing and showed up with 5, but knew one was leaving... misrep

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Hilton v Barker Booth

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Silence doesn't usually amount to misrep unless relationship that requires this information.
Ex. fiduciary, insurance
Client-solicitor relationship that had duty to disclose the other party had fraud convictions for the sale of land.

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With v O'Flanagan

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Representation was true but change of circumstances and it becomes false there is a duty to correct.
Sale of doctor's practice and said the income, but he became ill and practice dwindled and profits reduced before sale, but after statement made - misrep

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Roscorla v Thomas

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misrep - statement made must be before negotiations

Said the horse was sound and free from vice, after contract formed. Not misrep even though vicious

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Museprime Properties Ltd v Adhill Properties Ltd

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Statement must induce other party to contract - subjective test
Properties were sold at an auction and argument that false statement made would not have induced anyone - misrep

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Downs v Chapple

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Suggests objective test would be more sensible approach

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Derry v Peek

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Fraudulent Misrep Defined
Lord Herschel - Making a statement knowingly or without belief in its truth or recklessly careless whether it be true or not. Company didn't explain needed govt to consent for power and hadn't gotten it (tried to), not misrep - difficult to prove

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Hedley Byrne v Heller

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Developed negligent misrep - COMMON LAW
Asked to provide advertising work and concerned the other party wasn't going to pay so contacted their bank to provide a reference, but provided carelessly and went bankrupt. Not misrep because exclusion clause, but recognized possible

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Misrepresentation Act 1967 s. 2 (1)

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Negligent Misrep under statute provides that liable unless he can show he had reasonable ground s to believe and did believe that the facts were true at the time the contract was made. Therefore shifts burden of proof off claimant.

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Howard Marine Dredging

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Shows liability for negligent misrep under statute.
It was for major excavation work and had to hire barges to remove clay and the barge owners said carrying capacity was higher than it was and they had information at their head office, but didn't bother to look at it. They couldn't displace proof.

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Innocent Misrep

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Party makes statement they honestly believe to be true.

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Bars to Recision

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Restoring back to original position is not possible
Already affirmed the contract Long v Lloyd (drove with faults and complained too late)
Delay - Leaf v Internationale Galleries (5 years past)
Innocent 3rd Party - White v Garden

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Fraudulent Remedies

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Damages based on tort of deceit that puts the party back in the position he would have been had fraud not been committed - Doyle v Olby - not restricted by foreseeability

Recission - voidable - up to party to end contract unless the bars apply

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Long v Lloyd

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Affirmed K - bar to recission
Drove with faults of lorry and complained too late therefore to get out of contract he should have complained earlier on

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Doyle v Olby

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Damages for fraudulent misrep are not restricted by foreseeablity

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White v Garden

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innocent 3rd party is a bar to recission

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Leaf v Internationale Galleries

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Bar to recission - delay
Realized not a constable painting when tried to sell it 5 years later and this was too long

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Negligent Misrep Remedies

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Damages -
Statute based on tort of deceit, which is same as fraudulent
Common law based on tort of negligence - more limited

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Royscott v Rogerson

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For statutory negligence can claim remedies under tort of deceit, same as fraudulent

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Innocent Misrep remedies

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Can claim damages (very minimal) OR recission, but not both