What is misrepresentation? (Poole)
an untrue statement of fact by which one party has induced the other party to enter into the contract
What is the effect of misrepresentation?
Renders the contract voidable
What must a misrepresentation have?
- Untrue statement
- Statement of fact
- Inducement of innocent party into the contract
Spice Girls v Aprilia
misrepresentation through conduct
Fletcher v Krell
silence does not amount to a misrepresentation
With v O’Flannagan
- There is a duty to disclose a change in circumstances
- Keeping silent about a change of circumstances can amount to misrepresentation
Bisset v Wilkinson, Smith v Land and House, Edgington v Fitzmaurice
- Merely delivering an opinion will not create an actionable misrepresentation
- Facts equally known = expression of opinion
Attwood v Small (inducement)
Misrepresentation will not be liable if the innocent party does not rely on the other’s statement or simply relies on their own judgment
Redgrave v Hurd
even if the innocent party had the chance to verify the statement, this does not change the fact that the statement was still untrue
What are the 3 types of misrepresentation?
- Fraudulent
- Negligent
- Innocent
What is fraudulent misrepresentation (Derry v Peek)?
A false statement which is made ‘(i) knowingly, or (ii) without belief in its truth, or (iii) recklessly as to whether it be true or false’
What can you claim for fraudulent misrepresentation?
damages for tort of deceit and rescission
What is negligent misrepresentation (incl. legislation)?
s.2(1) MA - a false statement made by a person who believes is true, but has no reasonable ground for such a belief
What can you claim for negligent misrepresentation?
damages for tort of deceit OR rescission
What is innocent misrepresentation?
A false statement made honestly believing it to be true
What can you claim for innocent misrepresentation?
rescission, unless the courts award damages in lieu of rescission under s.2(2) MA
What is rescission?
restores parties to pre-contractual position; available for all types of misrepresentation
What are the bars to rescission (Car and Universal Finance v Caldwell)?
- Affirmation
- Lapse of time
- Impossibility to return to pre-contractual position
- 3rd party has acquired rights under the contract
s.1 MA
Individuals entering a contract on the basis of misrepresentation, whether it has become a term of the contract, or if it has been performed, individuals would be able to rescind the contract.
s.2 MA
Damages are available for all types of misrepresentation except innocent; however under s.2(2), innocent misrepresentation are also frequently liable to pay damages in lieu of rescission
s.3 MA
Exclusion clauses or limitations for misrepresentation shall no longer have effect
