Misrepresentation

Question 1

Define misrepresentation

Answer 1

an unambiguous false statement of fact made to the claimant and which induces the claimant to enter into the contract with the statement maker

Question 2

Define representation

Answer 2

statement asserting the truth of a given state of facts

Question 3

5 elements of actionable misrepresentation

Answer 3

1. unambiguous
2. false
3. statement of fact
4. addressed to the claimant
5. induces the claimant to enter into the contract with statement maker

Question 4

Unambiguous (misrepresentation)

Answer 4

representation must be clear and will only form the basis of a misrepresentation claim if it unambiguously has the meaning put forward by the representee

Question 5

Inducement (misrepresentation)

Answer 5

‘Induced’ means formed one of the reasons for entering into the contract. If the statement is material, inducement will be inferred. If not material, then inducement must be
proved.

Question 6

What is a material representation and/or its test?

Answer 6

Objective test- A statement that relates to an issue that would have influenced a reasonable person.

Question 7

What do statements of fact include?

Answer 7

• statements of fact
• statements of law
• conduct

Question 8

What is the exception for statements of opinion not being included for misrepresentation claims?

Answer 8

statements of opinion which lack reasonable grounds from people with superior knowledge / experience
- so these statements are included under statements of fact

Question 8

what do statements of fact NOT include

Answer 8

• statements of opinion
• statements of intention
• silence

Question 9

In what situation will a statement of opinion be elevated to a statement of fact?

Answer 9

Where it is proved that the opinion expressed was not one which the representor believed.

Question 10

What is an exception for statements of intention not being included under statements of fact?

Answer 10

statements of future intention - it is not a misrepresentation if the representor makes a promise regarding a future intention, but is prevented from following that course of conduct or if circumstances alter so that they change their mind about that intention.

Question 11

What are the 3 exceptions to silence not giving rise to action for misrepresentation?

Answer 11

1. half-truths
2. continuing representations
3. contracts uberrimae fidei (utmost good faith) = duty to disclose material facts in some contracts i.e fiduciary duties

Question 12

Meaning if half-truths

Answer 12

statements that are technically true but misleading

Question 13

3 categories of misrepresentation

Answer 13

1. fraudulent
2. negligent
3. innocent

Question 13

What is the definition of fraudulent misrepresentation?

Answer 13

• knowingly or recklessly (deliberately not investigating the truth.) false statement
  ** burden of proof on C

Question 14

Negligent misrepresentation

Answer 14

a representation made carelessly and in breach of duty owed by Party A to Party B to take reasonable care that the representation is accurate.
** burden of proof on D

Question 15

Innocent misrepresentation

Answer 15

a statement made where the representer:
a. proves that they had reasonable grounds for belief in the truth of their statement

b. proves that they believed up to the time of the contract that what they were saying was true

Question 16

3 remedies for representation

Answer 16

1. rescission
2. damages
3. indemnity

Question 17

Recession general rule

Answer 17

in order to rescind, the representee must communicate the intention to do so to the representer

Question 18

What type of remedy is rescission

Answer 18

an equitable remedy
- and is given entirely at the discretion of the court

Question 19

Damages for fraudulent representation

Answer 19

all losses flowing directly from transaction, even if not foreseeable

Question 20

What are the ‘bars to rescission’ - why rescission will not be awarded

Answer 20

1. affirmation - a contract is affirmed if the represented declares their intention to proceed with the contract
2. lapse of time - an action for rescission must be brought promptly
3. restitution is impossible - right to rescind is lost if it is no longer possible to restore the parties to their previous position before the contract was made
4. third party rights accrue - contract remains valid up until the time notice is given of the intention to rescind

Question 21

Damages for negligent representation

Answer 21

• all losses flowing directly from negligent statement
• rescission of the contract

Question 22

damages for innocent misrepresentation

Answer 22

representee is only entitled to the remedy of rescission

Question 22

What is an alternative claim to misrepresentation & definition?

Answer 22

negligent misstatement - Where there is a relationship of sufficient proximity between two parties, the court might find that one party owes a duty of care to the other to take reasonable care that statements made are accurate.

Question 23

A representation which is false is incorporated into a contract as a term gives rise to which potential claim/s?

Answer 23

Misrepresentation and breach of contract

Question 24

An accountancy firm provides negligent advice to a client. The advice induces the client to enter into a contract to purchase a business. The client suffers a significant loss as a consequence of entering into this contract. What claim/s may be brought against the accountancy firm by the client?

Answer 24

Negligent misstatement