CONTRACT LAW L4 - Misrepresentation - Remedies for misrepresentation

Question 1

What are the remedies available in relation to misrepresentation? (3)

Answer 1

Rescission, damages and indemnity.

Question 2

Why may the representee refuse further performance of the contract? (1)

Answer 2

To plead the representor’s misrepresentation as a defence in the event of his being sued for breach of contract by the representor.

Question 3

What is the effect of misrepresentation? (1)

Answer 3

To render the contract voidable but not void.

Question 4

What is the process of rescission in regard to misrepresentation? (2)

Answer 4

In order to rescind the representee must communicate the intention to do so to the representor. The representee may initiate proceedings for the rescission of the contract, the object being to obtain from the court an order that the contract is rescinded.

Question 5

Why may rescission not be awarded? (4)

Answer 5

Affirmation, lapse of time, if restitution is possible and / or third party rights accrue.

Question 6

What may be awarded as part of the equitable process of rescission? (1)

Answer 6

An indemnity may be awarded to cover expenses for obligations assumed as a direct result of the contract.

Question 7

Where would damages for misrepresentation potentially be the greatest? (1)

Answer 7

Where the misrepresentation is a fraudulent one.

Question 8

What will damages for an action of negligent misrepresentation under S2(1) MA 1967 often match? (1)

Answer 8

Those available for fraudulent misrepresentation.

Question 9

What may be available under S2(2) for an action brought under S2(1)? (1)

Answer 9

Damages in lieu of rescission.

Question 10

Does innocent misrepresentation afford damages? (2)

Answer 10

No but damages in lieu of rescission may be available under S2(2).

Question 11

What is the measure of damages for misrepresentation? (1)

Answer 11

It is necessary to place the innocent injured party in the position he would have been in had the misrepresentation not been made.

Question 12

Is contributory negligence available as a defence to a claim for fraudulent misrepresentation? (1)

Answer 12

No.

Question 13

What has the court confirmed that the effect of S2(1) MA 1967 is? (1)

Answer 13

The correct measure of damages for negligent misrepresentation must be based on the tort of deceit.

Question 14

When is the remedy of damages in lieu of rescission available? (2)

Answer 14

It is only available at the discretion of the court and is only available for negligent and innocent misrepresentation.

Question 15

What does S2(1) state in terms of the intention of damages? (1)

Answer 15

Damages are intended to compensate the claimant for the loss directly flowing from the negligent misrepresentation.

Question 16

What does S2(2) state in terms of the intention of damages? (1)

Answer 16

Damages are intended to compensate the representee where the court has decided, at its discretion, not to award rescission.

Question 17

What must the court regard when exercising its discretion for the remedy of damages? (2)

Answer 17

It must regard to the nature and seriousness of the misrepresentation, the loss of that would be caused if the contract were upheld and the loss that rescission would cause to the other party.

Question 18

What would be an example of a non-reliance clause? (2)

Answer 18

The parties agree and confirm that neither party had made any representations to the other in relation to this contract or its subject matter, and neither has any party relied on any representation from the other in entering this contract.