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3. Contract Law > EXAM NOTES - Misrepresentation > Flashcards

EXAM NOTES - Misrepresentation Flashcards

1
Q

Structure for a misrep question

A
  1. parties/basis to claim
  2. misreps v mere puff
  3. misreps: actionable/classify/remedy
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2
Q

mere puff case

A

Dimmock v Hallet

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3
Q

term not representation case

A

J Evans v Andrea Merzario

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4
Q

what the requirements for a misrep? Who from?

A
  • unambiguous
  • false
  • statement of fact or law
  • addressed to misled party
  • material and induces contract
  • causes loss
    FROM POOLE
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5
Q

explain an unambiguous statement?

A
  • clear McInery v Lloyds
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6
Q

explain how a statement is classed as false

A
    • As long as a statement is substantially correct it is not false for the purposes of misrep Avon v Swire
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7
Q

what is a representation?

A

statement asserting the given current state of affairs – Kleinwort v Malaysia Mining – statement of current policy was an accurate representation of affairs at the time

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8
Q

can a false statement of law be a misrep?

A
  • yes

- Pankhania v Hackney; saying an occupant held a license not a tenancy was a misrep

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9
Q

can conduct be a misrep?

A
  • yes - misrep of fact especially attempts at concealment
  • Spice Girls v Aprilia – taking part in the photo shoot despite knowing one of them was leaving concealed the fact one of them was leaving and was a misrep
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10
Q

what is the rule on giving opinion?

A
  • not a statement of fact Bisset v Wilkinson (farm sale)
  • unless the misrepresentor is an expert and their opinion is unreasonable Smith v Land & House
  • Esso v Marden – expert opinions are more likely to be statements of fact
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11
Q

what is the rule on representations about the future?

A
  • cannot be true or false at the moment they’re made Beattie v Ebury
  • No duty to inform other party of change in future intention Wales v Wadham
  • Dishonest statement of intention is fact Edgington v Fitzmaurice
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12
Q

what is the rule on silence?

A

silence is not fact - no duty to disclose information

Keates v Earl of Cadogan

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13
Q

what are the exceptions to the silence rule

A

o Continuing misrep – initially true statements that are false at time of contracting With v O’Flanagan
o Contracts of utmost good faith e.g. insurance contracts – duty to disclose all material facts e.g. Locker v Western Australian Insurance
o Fiduciary relationships
o Half truths – statements (i.e. partial disclosures) that are true but misleading Dimmock v Hallet (all the properties were let but every tenant had given in their notice)

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14
Q

how should a misrep be addressed to the party?

A
  • either directly to C

- or indirectly through a third party e.g. Commercial Banking Co of Sydney v Brown – misrep by D’s bank to C’s bank

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15
Q

what is the test for materiality

A

objective test; would the statement influence the reasonable man in C’s position – Pan Atlantic v Pine Top

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16
Q

how is inducement decided?

A

o If statement is material then inducement is generally inferred (Smith v Chadwick) unless D can subjectively prove C was not induced Museprime v Adhill eg by showing they were induced by their independent investigation instead
o If statement is not material, lack of inducement generally inferred unless C can prove they were induced Museprime v Adhill

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17
Q

how serious must the inducement be

A
  • Statement needs to be AN inducement (JEB v Mark Bloom) but not necessarily the SOLE inducement (Edgington v Fitzmaurice)
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18
Q

when will inducement not happen?

A
  • No inducement where C did not hear or see the misrep (Horsfall v Thomas)
    or did not rely on it Smith v Chadwick
    or knew it to be untrue Redgrave v Hurd
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19
Q

What is the general rule about investigation?

A
  • No general duty to check Redgrave v Hurd
    • If misrep is fraudulent then investigation by C is ignored (S Pearson v Dublin Corp)
  • even partial reliance on misrep is sufficient, even if you have investigated in depth too Edginton v Fitzmaurice
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20
Q

when will investigation be expected?

A

the more commercial the dealings the more reasonable it is to check Smith v Eric Bush
- No inducement if C relies on his own investigation, especially if done in depth Attwood v Small

21
Q

what are the categories of misrepresentation

A
  • Fraudulent
  • Negligent
  • Innocent
22
Q

define fraudulent misrep

A
  • Derry v Peek; false rep made
    o Knowing it was untrue or
    o Without belief in truth or
    o Reckless as to truth
23
Q

how can a statement be reckless as to the truth for fraudulent misrep?

A

“a flagrant disregard for the truth” higher standard than elsewhere Thomas Whitter v TBP

24
Q

what is the main difficulty with fraudulent misrep?

A
  • Hard to prove – burden on C

o More than just balance of probabilities but less than beyond reasonable doubt

25
Q

what is the main advantage with fraudulent misrep?

A
  • Once proven motive irrelevant

o Court will ignore investigation S Pearson v Dublin Corp

26
Q

what remedies are available for fraudulent misrep

A
  • Rescission (as of right)
  • Extensive damages
  • Indemnity if relevant
  • no damages in lieu of rescision
27
Q

what damages are available for fraudulent misrep

A
  • All loss “directly flowing” from the transaction – Doyle v Olby
  • Damages for loss of profit (East v Maurer)
28
Q

how is loss “directly flowing” decided for fraudulent misrep

A

o No need for foreseeability
o Only limit – must not be rendered too remote by C’s decisions
o C must mitigate as soon as fraud discovered Smith New Court v Scrimgeour
o Damages will be reduced by any benefit accruing to C as a result of the misrep Smith New Court v Scrimgeour

29
Q

what is the rule on loss of profit for fraudulent misrep?

A

o Loss of profit can be recovered East v Maurer
 But if you have made any profit at al you are not entitled to claim for loss of profits Downs v Chappel
• Unless you can show a particular amount you have lost out on Clef Aquitaine v Laporte

30
Q

how does contrib neg work in relation to fraudulent misrep?

A
  • Contrib neg is no defence Standard Chartered v Pakistan National Shipping
31
Q

what is rescission? how does it work?

A

reversing the contract

  • Must inform of intention to rescind; contract continues until this point. Can be directly, by court order, or by taking all reasonable steps (Car v Caldwell)
  • Courts will do what is “practically just” Erlanger v New Sombrero
32
Q

what are the bars to rescission?

A 
TAIL 
o	Third party rights – Phillips v Brooks
o	Affirmation – Long v Lloyd
o	Impossibility – Clarke v Dickson
o	Lapse of time – Leaf v International Galleries
33
Q

what is an indemnity?

A
  • Protects C from obligations accrued by C as a result of the contract e.g. needed to pay business rates
  • generally not awarded if damages are available instead
    o Whittington v Seale-Hayne
34
Q

what governs negligent misrep?

A
  • Misrep Act 1967 s2(1)
35
Q

how does neg misrep work?

A
  • C must prove D made a false statement
  • D must then prove (1) their belief in the statement and (2) that they had reasonable grounds for that belief
  • must be a contract between them
  • hard for D to prove eg Howard v Ogden – D checked the Lloyd’s register to see how much weight a barge could take rather than the documents
36
Q

what remedies are available for neg misrep

A
  • Rescission (at court’s discretion) or
  • Damages in lieu of rescission s2(2), and
  • Damages s2(1) and
  • Indemnity (if relevant)
37
Q

how do damages in lieu of rescission work?

A

may be awarded with regard to:

  • the nature and seriousness of the misrep
  • loss that would be caused if contract were upheld
  • loss that rescission would cause the other party (UCB Corporate v Thomason)
38
Q

what is the general rule for neg misrep damages?

A

“Fiction of fraud”
– same damages as for fraudulent misrep Royscott v Rogerson
- except for negligent, losses flowing from the misrep are included not losses flowing from the transaction (less) – Smith New Court v Scrimgeour

39
Q

are damages reducible for contrib neg in a negligent misrepresentation?

A

o Gran Gelato v Richcliffe suggests they could be

o Royscott v Rogerson disagrees

40
Q

are damages in lieu available in neg misrep if the right of rescission has been lost by the time the contract comes to court?

A

o Zanzibar v British Aerospace suggests you cannot get s2(2) damages in lieu
o Thomas Witter v TBP suggests you may be able to get s2(2) damages in lieu as long as at some point you had the right of rescission

41
Q

can liability for neg misrep be excluded?

A
  • Cannot unless it is reasonable to do so under UCTA 1977 – MA 1967 s3
42
Q

what governs innocent misrep?

A
  • Misrep Act 1967 s2(2)
43
Q

how does innocent misrep work?

A
  • Burden on misrepresentor to prove he had reasonable grounds to believe he was telling the truth up to the time the contract was made
44
Q

what remedies are available for innocent misrep

A
  • Rescission or
  • Damages in lieu s2(2)
  • Indemnity if relevant
  • No right to substantive damages
    o But rescission or damages in lieu are available relatively easily
45
Q

What governs attempts to exclude liability for misrepresentation?

A

s3 MA 1967

- must satisfy requirements of reasonableness s11(1) UCTA 1977

46
Q

What is a negligent mistatement?

A
  • D owed C a duty of care
  • D breached that duty of care through a negligent misstatement
  • C relied on that information to his detriment
    covered by tort law under Hedley Byrne v Heller
47
Q

How is mitigation judged

A

C cannot waste more money than needed

  • but mitigation “not weighed on nice scales”
  • Banco de Portugal v Waterlow
48
Q

give an example of a misrep by conduct

A

(Spice Girls v Aprilia)

Gordon v Selico

3. Contract Law (11 decks)

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