Misrepresentation

Question 1

Define Misrepresentation

Answer 1

• A false statement of fact
• Made by one party to the contract to the other
• That induces the other party to enter the contract

Question 2

What counts as a False Statement

Answer 2

• Statement of Law
• Not a Mere Puff
• Not a Mere Opinion
• Statement of Future Intention
• Silence

Question 3

What are some Exceptions when Silence does become Misrepresentation

Answer 3

• Conduct
• Concealing Defects
• Half true Statements
• Change in Circumstances
• Fiduciary Relationships
• Contracts unberrimae fidei

Question 4

Explain Statement of Law and Give a case

Answer 4

• A false statement about the law can amount to misrepresentation
• Pankania v LBC: Buyer was told a lease could be terminated at any time, which was incorrect legally. Held to be a misrep of law.

Question 5

Explain Not a mere puff

Answer 5

Sales talk or exaggerated advertising (“puff”) is not misrepresentation. However, giving a half truth or incomplete truth may be.
- Dimmock v Hallet: Seller described land as “fertile and desirable” (puff), but failed to mention all the tenants were leaving. This was a misleading half-truth = misrep

Question 6

Explain Not a Mere Opinion and give a two Case

Answer 6

An honest opinion is not misrep.
Bisset v Wilkinson - Seller guessed land could support 2,000 sheep. Buyer sued when it didnt. Court held this was just an opinion.
However, if the person giving the opinion has expert knowledge, may amount to misrep.
Esso v Marden - Esso estimated petrol sales for station. As experts, their opinion was treated as fact.

Question 7

Explain Statements of Future Intention and give a case

Answer 7

Statements about what someone intends to do in the future are generally not misrepresentations, unless the person knowingly lies about their intention.
Edginglington v Fitzmaurice - Company said money would be used for expansion but secretlu used to pay debts. Misrepresentation.

Question 8

Explain Silence and give a Case

Answer 8

The general rule is that silence is not misrepresentation, theres no duty to offer up information unless asked.
Fletcher v Krell - Woman didnt disclose she was divorced when applying to be a governess. No misrep.

Question 9

Expection to Silence: Conduct. Give a Case.

Answer 9

A party’s actions can imply a false statement.
Spice Girls v Aprilia - Band entered sponsorship deal knowing a member was leaving. By participating in promo events, they implied she was staying = misrep by conduct.

Question 10

Expection to Silence: Concealing Defects. Give a Case.

Answer 10

Taking active steps to hide a fault counts as misrepresentation.
Schneider v Heath - Seller deliberately submerged a defective boat to hide the damage.

Question 11

Expection to Silence: Half-true Statements. Give a Case.

Answer 11

If you give some of the truth but leave out key facts that change the meaning, its misrep.
Dimmock v Hallet - Truthfully said land had tenants, but didnt say they were leaving - this was misleading.

Question 11

Expection to Silence: Change in Circumstances. Give a Case.

Answer 11

If you make a statement which later becomes false before the contract is signed, you must correct it.
With v O’Flanagan - Seller gave income figure for a medical practice, but it dropped significantly before the deal. He didnt update the buyer - misrep.

Question 12

Expection to Silence: Fiduciary Relationships. Give a Case.

Answer 12

Where theres a special relationship of trust (financial advisor and client), theres a duty to disclose relevant info.
Nocton v Lord Ashburton - Solicitor failed to disclose relevant information to a client. Clear fiduciary relationship. Strong authority for duty to disclose

Question 13

Expection to Silence: Contracts uberrimae fidei. Give a Case.

Answer 13

Some contracts require full disclosure of all material facts - especially insurance.
Seaman v Fonnerau - Established duty to disclose material facts in good faith contracts.

Question 14

Explain Contracts uberrimae fidei in consumer insurance

Answer 14

The Consumer Insurance (Disclosure and Representations) Act 2012 now applies:
- Consumers dont have to volunteer info
- But they must take reasonable care when answering insurer questions

Question 15

Explain Contracts uberrimae fidei in buesiness insurance

Answer 15

The Insurance Act 2015 still requires disclosure of all material facts (a “fair presentation”).

Question 16

How are Consumer Contracts regulated in Misrepresentation

Answer 16

• Regulated by the Consumer Protection from Unfair Trading Regulations 2008
• Regulation 5 – prohibits misleading actions (false info, deceptive adverts)
• Regulation 6 – prohibits misleading omissions (leaving out or hiding key info)

Question 17

What are the different types of misrepresentation?

Answer 17

• Innocent Misrepresentation
• Negligent Misrepresentation
• Fraudalent Misrepresentation

Question 18

Explain Fraudulent Misrepresentation

Answer 18

• A knowingly false statement, made without belief in its truth or recklessly (not caring whether its true or false).

Question 19

What case shows not fraudalent as they believed they had a right

Answer 19

Derry v Peek - Directors claimed they has the right to use steam trams, when permission was still pending. Not fraudalent because they believed it would be granted.

Question 20

What case shows deliberate concealment can amount to fraudalent misrepresentation

Answer 20

Ticket2Final OU v Wigan Athletic - Wigan misled the claimant about financial stability to induce the investment. Fraudalent Misrep.

Question 21

What is the Standard of Proof for Fraudalent Misrepresenation

Answer 21

• Claimant must prove fraud on the balance of probabilities, but courts scrutinise (closely analyse) more closely than usual.

Question 22

What is the remedies for Fraudalent Misrep

Answer 22

• Rescission (Contract Cancelled)
• Damages in tort of deceit: Includes all losses flowing from the misrep

Question 23

Explain Negligent Misrepresentation

Answer 23

A false statement made honestly, but without taking reasonable care, within a relationship giving rise to a duty of care

Question 24

What case shows that a bank made careless statements

Answer 24

Hedley Byrne v Heller - A bank's reference caused financial loss. Althought disclaimer prevented liabilty. House of Lords established a party can be liable for carelessly made statements in a special relationship.

Question 25

What are the requirements needed to establish Negligent Misrep and what case confirms this?

Answer 25

NRAM v Steel - The representor reasonably foresaw the other would rely on the statement - It was reasonable for the claimant to rely on it in the circumstances.

Question 26

What is a Remedy for Negligent Misrep

Answer 26

- Damages in tort for reasonably foreseeable losses - Rescission

Question 27

Explain Negligent Misrep - Statutory s.2(1) Misrepresentation Act 1967

Answer 27

- False statement made without reasonable grounds for belief, and no need for a special relationship - C proves there was a misrepresentation. The burdent shifts to D to prove that they had reasonable grounds to believe it was true and genuinely believed it was until the contract was formed

Question 28

What case shows that relying on less reasonable documents can amount to Negligent Misrep under statute

Answer 28

Howard Marine v Ogden - D gave ship capacity figures from Lloyds Register which was wrong but the correct capacity was written in the ships own documents. Not reasonable to rely on Lloyds Register. Liable.

Question 29

What are the remedies for Statutory Negligent Misrepresentation

Answer 29

- Rescission - Damages: all direct losses recoverable

Question 30

Explain Innocent Misrepresentation

Answer 30

A false statement made genuiely and reasonably, with belief in its truth Statute: Misrepresentation Act 1967, s.2(2)

Question 31

What case shows that he wouldnt of purchased a car if he knew the truth.

Answer 31

Salt v Stratstone Ltd - The seller described the car as "brand new" when it was two years old, had been in an accident and already been registered. Innocent Misrep as D honestly believed the car was brand new.

Question 32

What is the Remedy for Innocent Misrep

Answer 32

- Rescission - Damages only if rescission is barred or unjust