Week 6 (misrepresentation)

Question 1

What is a representation in contract law?

Answer 1

A statement asserting the truth of a given state of facts.

Representations are crucial in establishing the basis of a contract.

Question 2

What is a misrepresentation?

Answer 2

An unambiguous false statement of fact made to the claimant which induces them to enter into the contract.

Misrepresentation can lead to legal consequences if proven.

Question 3

What are the categories of misrepresentation?

Answer 3

• Fraudulent
• Negligent
• Innocent

Each category has different implications for legal remedies.

Question 4

What remedies are available for misrepresentation?

Answer 4

• Rescission
• Damages (depending on category)

Remedies vary based on the type of misrepresentation.

Question 5

Who is the representor and representee?

Answer 5

• Representor: party who made the statement
• Representee: party who received it

Understanding these roles is essential in misrepresentation cases.

Question 6

What makes a misrepresentation actionable?

Answer 6

• Unambiguous (clear)
• False (not substantially correct)
• Statement of fact
• Addressed to the claimant
• Induces the claimant to contract

These elements must be proven for a claim of misrepresentation.

Question 7

Case: McInerny v Lloyd’s Bank

Answer 7

No liability if claimant places unreasonable construction on the statement.

This case highlights the importance of reasonable interpretation.

Question 8

Case: Avon Insurance v Swire Fraser

Answer 8

Statement not false if substantially correct.

This case emphasizes the significance of substantial accuracy in statements.

Question 9

Case: Kleinwort Benson v Malaysia Mining Corp

Answer 9

Representation = assertion of fact, not a promise.

This distinction is crucial in understanding the nature of representations.

Question 10

Case: Gordon v Selico

Answer 10

Concealment of dry rot = misrepresentation by conduct.

Conduct can also lead to actionable misrepresentation.

Question 11

What is the test for inducement?

Answer 11

Objective: Would a reasonable person be influenced? (Pan Atlantic v Pine Top)

Inducement is a key factor in determining the validity of a misrepresentation claim.

Question 12

Case: JEB Fasteners v Marks Bloom

Answer 12

Representation did not play a real part in decision — no inducement.

This case illustrates the necessity of proving inducement.

Question 13

Case: Edgington v Fitzmaurice

Answer 13

Even if claimant had other motives, misrepresentation may still induce.

This case shows that multiple motivations do not negate inducement.

Question 14

Case: Attwood v Small

Answer 14

No claim if claimant relied on own investigations.

Claimants must demonstrate reliance on the misrepresentation.

Question 15

Case: Redgrave v Hurd

Answer 15

No duty to verify — failure to investigate doesn’t defeat inducement.

This case clarifies the expectations regarding verification of statements.

Question 16

When does contributory negligence apply?

Answer 16

If claimant fails to investigate reasonably — but not in fraudulent misrepresentation.

This principle affects the outcome of misrepresentation claims.

Question 17

Case: Smith v Eric S Bush

Answer 17

Commercial parties may be expected to investigate.

The expectations for investigation can vary based on the relationship between parties.

Question 18

What types of statements are usually not actionable?

Answer 18

• Opinion
• Future intention
• Silence

These categories are generally excluded from actionable misrepresentation.

Question 19

Case: Bisset v Wilkinson

Answer 19

Seller’s opinion about sheep farming = not actionable.

Opinions do not constitute misrepresentation.

Question 20

Case: Smith v Land and House Property Corp

Answer 20

“Most desirable tenant” = false statement of fact due to arrears.

Misleading statements can lead to actionable misrepresentation.

Question 21

Case: Esso Petroleum v Mardon

Answer 21

Expert estimate treated as factual representation — misrepresentation found.

Expert opinions can sometimes be construed as representations.

Question 22

What is the general rule for intention?

Answer 22

Must be a statement of fact — future promises are not actionable.

Intention is a critical aspect of misrepresentation.

Question 23

Case: Wales v Wadham

Answer 23

Genuine intention to not remarry — later change ≠ misrepresentation.

Changes in intention do not always constitute misrepresentation.

Question 24

Exception: False present intention

Answer 24

Edgington v Fitzmaurice — loan intended for debt, not expansion = misrepresentation.

Present intentions can be actionable if proven false.

Question 25

Case: **Keates v Earl of Cadogan**

Answer 25

No duty to disclose unless fraud. ## Footnote Disclosure obligations depend on the presence of fraud.

Question 26

Exception 1: **Half-truths**

Answer 26

* Nottingham Patent Brick v Butler — solicitor misled by omission * Dimmock v Hallett — “fully let” misleading due to tenant notices ## Footnote Half-truths can lead to misrepresentation claims.

Question 27

Exception 2: **Continuing representations**

Answer 27

* With v O’Flanagan — income collapse during negotiations = misrepresentation * Wales v Wadham — no duty to disclose change of intention if original was honest ## Footnote Continuing representations can create liability.

Question 28

Exception 3: **Contracts uberrimae fidei**

Answer 28

* Insurance contracts — duty to disclose material facts * Fiduciary relationships — duty to disclose due to trust and loyalty ## Footnote Certain contracts impose higher disclosure standards.

Question 29

What are the **three categories of misrepresentation**?

Answer 29

* Fraudulent (tort of deceit) * Negligent (s.2(1) Misrepresentation Act 1967) * Innocent (s.2(1) Misrepresentation Act 1967) ## Footnote These categories define the nature of the misrepresentation and the legal implications.

Question 30

In the case of **Derry v Peek**, what constitutes fraud?

Answer 30

Fraud = false statement made knowingly, without belief in truth, or recklessly. Honest belief defeats fraud. ## Footnote This case established key principles regarding fraudulent misrepresentation.

Question 31

In the case of **Thomas Witter Ltd v TBP Industries**, how is recklessness defined?

Answer 31

Recklessness = “flagrant disregard for the truth.” ## Footnote Courts are cautious about labeling conduct as fraud.

Question 32

What does the case **Howard Marine v Ogden** illustrate about negligent misrepresentation?

Answer 32

Negligent misrepresentation — reliance on incorrect source despite accurate documents. ## Footnote This case highlights the importance of verifying information sources.

Question 33

In the case of **Royscot Trust v Rogerson**, how is negligent misrepresentation treated?

Answer 33

Negligent misrepresentation treated as if fraudulent — “fiction of fraud.” ## Footnote This case blurs the lines between negligent and fraudulent misrepresentation.

Question 34

Who bears the **burden of proof** under s.2(1) MA 1967?

Answer 34

The representor — must prove reasonable grounds for belief in the statement’s truth. ## Footnote This shifts the burden to the party making the representation.

Question 35

What **remedies** are available for misrepresentation?

Answer 35

* Rescission * Damages (in lieu of rescission or direct) * Indemnity (only for innocent misrepresentation) ## Footnote These remedies provide options for the injured party to seek redress.

Question 36

Is misrepresentation considered **void or voidable**?

Answer 36

Voidable — contract remains valid until rescinded. ## Footnote This means the contract can be enforced until the injured party chooses to rescind.

Question 37

How is **rescission** effected?

Answer 37

* Communicate intention to rescind * Or apply to court for rescission order ## Footnote These steps are necessary to formally cancel the contract.

Question 38

What are the **bars to rescission**?

Answer 38

* Affirmation * Lapse of time * Restitution impossible * Third party rights ## Footnote These factors can prevent a party from rescinding a contract.

Question 39

When is **indemnity** available?

Answer 39

For innocent misrepresentation — covers obligations directly arising from the contract. ## Footnote This provides compensation for specific expenses incurred.

Question 40

In the case of **Whittington v Seale-Hayne**, what was indemnity granted for?

Answer 40

Indemnity granted for expenses like rates and repairs — not for loss of bargain. ## Footnote This case clarifies the scope of indemnity in misrepresentation.

Question 41

In **fraudulent misrepresentation**, what does the case **Doyle v Olby** establish about damages?

Answer 41

Damages awarded for all losses flowing from fraud — foreseeability not required. ## Footnote This case emphasizes the broad scope of recoverable damages.

Question 42

In the case of **Standard Chartered Bank v Pakistan Shipping**, what is noted about contributory negligence?

Answer 42

No defence of contributory negligence in fraud. ## Footnote This reinforces the strict liability associated with fraudulent misrepresentation.

Question 43

In **negligent misrepresentation**, what does the case **Royscot Trust v Rogerson** state about damages?

Answer 43

Damages same as fraud — but contributory negligence may reduce award. ## Footnote This indicates a difference in liability between negligent and fraudulent misrepresentation.

Question 44

Is there an **automatic right to damages** in innocent misrepresentation?

Answer 44

No — may receive rescission or damages in lieu under s.2(2) MA 1967. ## Footnote This highlights the limitations on recovery for innocent misrepresentation.

Question 45

When does **s.2(2)** apply?

Answer 45

If misrepresentation is not fraudulent and rescission is available. ## Footnote This section provides an alternative remedy when rescission is not feasible.

Question 46

What does the court consider under **s.2(2)**?

Answer 46

* Seriousness of misrepresentation * Loss to representee if contract upheld * Loss to representor if rescission granted ## Footnote These factors guide the court's decision on damages.

Question 47

How does **s.2(2)** differ from **s.2(1)**?

Answer 47

* s.2(1): Compensates for direct loss * s.2(2): Provides remedy when rescission is denied ## Footnote This distinction clarifies the types of compensation available.

Question 48

What governs the **exclusion of liability** for misrepresentation?

Answer 48

* s.3 Misrepresentation Act 1967 * s.8 Unfair Contract Terms Act 1977 * Reasonableness test under s.11(1) UCTA ## Footnote These laws regulate how liability can be limited in contracts.

Question 49

Who bears the **burden of proving reasonableness**?

Answer 49

The party relying on the clause. ## Footnote This places the onus on the party seeking to limit liability.

Question 50

What is a **non-reliance clause**?

Answer 50

A clause stating parties did not rely on representations — treated as exclusion clause. ## Footnote This clause can limit the ability to claim misrepresentation.

Question 51

When can a **representation** become a term?

Answer 51

If it’s incorporated into the contract — then breach of contract may apply. ## Footnote This highlights the importance of how representations are treated in contract law.

Question 52

What is **negligent misstatement**?

Answer 52

Tort claim for false statements causing loss — requires duty of care and proximity. ## Footnote This is a separate legal concept from misrepresentation.

Question 53

How does **negligent misstatement** compare to misrepresentation?

Answer 53

* Harder to establish * Less generous damages * Slower route — misrepresentation preferred if available ## Footnote This outlines the differences in legal claims and their implications.