In the case of Esso Petroleum Ltd v Mardon, what was the main issue regarding Esso’s representation?
Esso assured the defendant that planning permission would not affect petrol throughput
The defendant incurred losses due to Esso’s misrepresentation about the petrol station’s potential.
What happens to a contract if the representee makes it clear they refuse to be bound by its provisions?
The contract is rescinded and terminated ab initio
This means the contract is treated as if it never existed.
True or false: A contract is valid until it is set aside by the representee due to misrepresentation.
TRUE
The effect of a misrepresentation makes a contract voidable, not void.
What is the definition of innocent misrepresentation?
Misrepresentation that is neither fraudulent nor negligent
Liability may be imposed if the statement was made with the intention for the representee to rely on it.
In the context of misrepresentation, what must the representee do to rescind the contract?
Communicate the decision to the representor within a reasonable time
Exceptions exist if the representor disappears or if possession of property is delivered.
What is the general rule regarding the right to rescind a contract?
Lost by affirmation after discovering the truth
The right to rescind is also lost if substantial restoration is impossible.
In Long v Lloyd, why was the plaintiff not entitled to rescind the contract?
He accepted the lorry as it was before attempting to rescind
Acceptance of the contract can lead to loss of the right to rescind.
What is the significance of time lapse in relation to rescinding a contract?
Right to rescind is lost if a reasonable time has elapsed without action
Time starts running from the date of the contract for non-fraudulent misrepresentation.
What is negligent misrepresentation?
A false statement made without reasonable grounds for believing it to be true
Liability often depends on a special relationship between the parties.
In Derry v Peek, what constitutes fraudulent misrepresentation?
A false statement made knowingly, without belief in its truth, or recklessly
If a statement is made with honest belief, it cannot be considered fraudulent.
What must a statement be to constitute an actionable misrepresentation?
A statement of fact, not merely an opinion
Opinions or sales talk do not create actionable misrepresentation.
In Museprime Properties v Adhill Properties, what was the court’s view on misrepresentation?
Any misrepresentation inducing entry into a contract should ground for rescission
The onus is on the representor to show that the representee did not rely on the misrepresentation.
What is the difference between a promise and a representation?
A representation is a statement of fact inducing action, while a promise is a commitment to act
Misrepresentation leads to remedies aimed at restoring the injured party.
What is indemnity in the context of misrepresentation?
Payment for expenses accrued in complying with contract terms
Courts may order indemnity in cases of misrepresentation.
In Whittington v Seale-Hayne, what was the outcome of the misrepresentation regarding the property?
The contract was rescinded, and the plaintiff could recover certain expenses
The representation about the property’s sanitary condition was false.
What does damages refer to in the context of misrepresentation?
Compensation recoverable for misrepresentation made fraudulently or negligently
Damages may also be claimed if the misrepresentation is incorporated into the contract.
What is a misrepresentation?
An untrue statement of fact by one party which has induced the other to enter into the contract
Defined by the Court of Appeal in Thomas Sinkala v Engen Petroleum Zambia CAZ Appeal 208/2019.
For a misrepresentation to be actionable, it must fulfill three requirements: 1. There must be an untrue statement; 2. It must be a statement of fact, not mere opinion; and 3. It must have _______.
induced the innocent party to enter the contract
See Pulse Financial Services Limited (t/a Entrepreneurs Financial Centre)v Elaine Munga and Others.
True or false: A statement of opinion can constitute a misrepresentation.
FALSE
A false statement of opinion does not generally constitute a misrepresentation.
What are the vitiating factors that can invalidate a contract?
- Misrepresentation
- Mistake
- Duress
- Undue influence
- Illegality
These factors undermine genuine consent in a contract.
In the case of Doyle v Olby (Ironmongers) Ltd, what was stated about damages in contract versus fraud?
Damages in contract are limited to what may reasonably be supposed to have been in the contemplation of the parties; in fraud, they are not so limited
The defendant must make reparation for all actual damage directly flowing from the fraudulent inducement.
What does Section 3 (1) and (2) of the Act provide for?
Recovery of damages for misrepresentation
This includes provisions for both negligent and wholly innocent misrepresentation.
In Smith v Hughes (1871), why did the court hold that the action based on misrepresentation had to fail?
Because silence cannot amount to misrepresentation
The plaintiff delivered new oats instead of old oats, which the defendant had contracted for.
What is the aim of damages for fraudulent misrepresentation?
To put the claimant in the position which he would have been in had the tort not been committed
The person defrauded can claim for all actual damages resulting from the fraud.
