Misrepresentation

Question 1

A representation

Answer 1

a statement asserting the truth of a given state of facts

Question 2

Induced

Answer 2

formed one of the reasons for entering into the contract

Question 3

actionable misrepresentation

Answer 3

an unambiguous false statement of fact made to the claimant, which induces the claimant to enter into the contract

Question 4

When can a statement of opinion lead to an actionable misrepresentation?

Answer 4

if it implies the existence of facts that justify the opinion, especially when the representor knows that these facts are false

Question 5

Misrepresentation, subject to limitations, renders the contract

Answer 5

voidable

Question 6

The representor will not be liable if the representee has placed its own

Answer 6

unreasonable construction on the representation

Question 7

representations must be distinguished from

Answer 7

mere puff

Question 8

To be an actionable misrepresentation, the representation must play a

Answer 8

‘real and substantial part’ in inducing the claimant to enter the contract

Question 9

the test for materiality

Answer 9

objective; based on standard of reasonable person

Question 10

How can the defendant rebut the inference that the claimant was induced?

Answer 10

by proving that the claimant was not subjectively induced

Question 11

Rule for misrepresentation from Attwood v Small

Answer 11

A party cannot bring a claim in misrepresentation when it has relied not on the misrepresentation, but on its own investigations

Question 12

the more commercial the representee is, the more likely it is that the court will consider it

Answer 12

reasonable for the representee to have investigated

Question 13

Can a claim for misrepresentation be based on a statement of opinion?

Answer 13

No unless:
(a) the statement-maker did not honestly believe their opinion; OR
(b) the statement of opinion lacks reasonable grounds from people with superior knowledge/experience

Question 14

Can a claim for misrepresentation be based on a statement of future intention?

Answer 14

No

Question 15

When could a statement of future intention amount to misrepresentation?

Answer 15

If at the time of making the representation, they know that they cannot do what they state, or they do not intend to do it

Question 16

General rule on silence

Answer 16

there is no duty to disclose facts which, if known, might affect the other party’s decision to enter the contract.

Question 17

Recognised exceptions to the general rule on silence

Answer 17

Half-truths
Continuing representations
Contracts uberrimae fidei

Question 18

A half-truth is

Answer 18

technically true but misleading, which amounts to a misrepresentation

Question 19

Example of a half-truth

Answer 19

Saying an apartment is “fully let” when the tenants have already served a notice to quit

Question 20

For continuing representations, there is a duty to

Answer 20

disclose the change in circumstances and the consequent change in income

Question 21

Duty under contracts uberrimae fidei (utmost good faith)

Answer 21

There is a duty to disclose material facts in contracts uberrimae fidei in which one party is in a particularly strong position to know the material facts which form the basis of the contract eg disclosing all info to your car insurer

Question 22

to find fraud, the level of recklessness required is a

Answer 22

‘flagrant disregard for the truth’

Question 23

For fraudulent misrepresentation, the motive of the person guilty is

Answer 23

immaterial

Question 24

Derry v Peek established that to sustain an action of deceit:
there must be

Answer 24

1) proof of fraud
2) a false representation has been made:
- knowingly;
- without belief in its truth; - recklessly
3) if fraud is proved, the motive of the defendant is immaterial

Question 25

Can a failure to disclose a change in circumstances be held as fraudulent?

Answer 25

The Court would need to be satisfied that the failure to disclose was deliberate or dishonest, and not just due to inadvertence or a failure to realise the requirement of disclosure.

Question 26

Who bears the burden of proof in a claim for fraudulent misrepresentation?

Answer 26

the claimant

Question 27

Burden of proof for negligent misrepresentation

Answer 27

the burden is on the defendant to prove that he had reasonable grounds to believe his statement and that he did believe it

Question 28

An innocent misrepresentation is a statement made where the representor proves

Answer 28

they had reasonable grounds for belief in the truth of their statement; and did believe it up to the time of contracting

Question 29

To rescind, the representee must

Answer 29

communicate the intention to do so to the representor

Question 30

What kind of remedy is rescission?

Answer 30

Rescission is an equitable remedy awarded on a discretionary basis

Question 31

The right to rescind is lost if 'restitutio in integrum'

Answer 31

if it is no longer possible to restore the parties to their previous position before the contract was made

Question 32

at any time prior to rescission, a person acquiring goods under such a contract is able to pass good title to those goods to

Answer 32

an innocent third party who purchases the goods without notice of the misrepresentation. This would prevent restitution.

Question 33

What remedies are potentially available for an innocent misrepresentation?

Answer 33

Rescission, damages in lieu of rescission and indemnity (damages are not available as of right so an indemnity is more likely to be awarded.)

Question 34

How are damages for fraudulent misrepresentation calculated?

Answer 34

on the 'tortious' basis - the court will award damages necessary to place the innocent injured party in the position he would have been in had the misrepresentation not been made.

Question 35

What factors could reduce damages for fraudulent misrepresentation?

Answer 35

Claimant must mitigate as soon as the fraud is discovered; and any damages awarded to the claimant will be reduced by the value of any benefit the claimant has acquired as a result of the contract

Question 36

Which defence is not available for a claim for fraudulent misrepresentation?

Answer 36

Contributory negligence

Question 37

For damages for negligent misrepresentation, the claimant is entitled to recover

Answer 37

all losses even if those losses are unforeseeable

Question 38

For negligent misrepresentation, damages may be reduced for

Answer 38

contributory negligence where the loss was in part the fault of the representee

Question 39

Is it possible for a representor to exclude or restrict their liability for misrepresentation?

Answer 39

Yes, as long as the clause satisfies the requirement of reasonableness as stated in s. 11(1) UCTA 1977

Question 40

When does negligent misstatement apply?

Answer 40

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 41

Negligent misstatement is a claim under what law?

Answer 41

tort of negligence, not contract

Question 42

why are negligent misstatement claims less favourable?

Answer 42

Negligent misstatement claims are generally harder to establish and likely to lead to a less favourable calculation of damages

Question 43

Presumption in a face-to-face transaction

Answer 43

in a face-to-face transaction, the presumption is that the seller intended to deal with the person physically present. This makes the contract voidable for misrepresentation, not void for mistake, as per the ruling in Lewis v Averay (1972)

Question 44

Presumption in face-to-face transactions

Answer 44

it is presumed that the seller intended to deal with the person in front of them identified by sight and hearing and that is what had happened. The contract will not be void for mistake, although can be voidable for misrepresentation. This presumption will only be rebutted, and the contract held void for mistake, if the seller is able to establish that identity, rather than attributes, was of ‘vital importance’ eg they signed a false name.