EXAM NOTES - Misrepresentation

Question 1

Structure for a misrep question

Answer 1

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

Question 2

mere puff case

Answer 2

Dimmock v Hallet

Question 3

term not representation case

Answer 3

J Evans v Andrea Merzario

Question 4

what the requirements for a misrep? Who from?

Answer 4

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

Question 5

explain an unambiguous statement?

Answer 5

• clear McInery v Lloyds

Question 6

explain how a statement is classed as false

Answer 6

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

Question 7

what is a representation?

Answer 7

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

Question 8

can a false statement of law be a misrep?

Answer 8

• yes

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

Question 9

can conduct be a misrep?

Answer 9

• 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

Question 10

what is the rule on giving opinion?

Answer 10

• 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

Question 11

what is the rule on representations about the future?

Answer 11

• 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

Question 12

what is the rule on silence?

Answer 12

silence is not fact - no duty to disclose information

Keates v Earl of Cadogan

Question 13

what are the exceptions to the silence rule

Answer 13

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)

Question 14

how should a misrep be addressed to the party?

Answer 14

• 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

Question 15

what is the test for materiality

Answer 15

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

Question 16

how is inducement decided?

Answer 16

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

Question 17

how serious must the inducement be

Answer 17

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

Question 18

when will inducement not happen?

Answer 18

• 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

Question 19

What is the general rule about investigation?

Answer 19

• 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

Question 20

when will investigation be expected?

Answer 20

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

Question 21

what are the categories of misrepresentation

Answer 21

• Fraudulent
• Negligent
• Innocent

Question 22

define fraudulent misrep

Answer 22

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

Question 23

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

Answer 23

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

Question 24

what is the main difficulty with fraudulent misrep?

Answer 24

• Hard to prove – burden on C

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

Question 25

what is the main advantage with fraudulent misrep?

Answer 25

- Once proven motive irrelevant | o Court will ignore investigation S Pearson v Dublin Corp

Question 26

what remedies are available for fraudulent misrep

Answer 26

- Rescission (as of right) - Extensive damages - Indemnity if relevant - no damages in lieu of rescision

Question 27

what damages are available for fraudulent misrep

Answer 27

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

Question 28

how is loss "directly flowing" decided for fraudulent misrep

Answer 28

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

Question 29

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

Answer 29

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

Question 30

how does contrib neg work in relation to fraudulent misrep?

Answer 30

- Contrib neg is no defence Standard Chartered v Pakistan National Shipping

Question 31

what is rescission? how does it work?

Answer 31

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

Question 32

what are the bars to rescission?

Answer 32

``` 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 ```

Question 33

what is an indemnity?

Answer 33

- 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

Question 34

what governs negligent misrep?

Answer 34

- Misrep Act 1967 s2(1)

Question 35

how does neg misrep work?

Answer 35

- 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

Question 36

what remedies are available for neg misrep

Answer 36

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

Question 37

how do damages in lieu of rescission work?

Answer 37

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)

Question 38

what is the general rule for neg misrep damages?

Answer 38

"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

Question 39

are damages reducible for contrib neg in a negligent misrepresentation?

Answer 39

o Gran Gelato v Richcliffe suggests they could be | o Royscott v Rogerson disagrees

Question 40

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

Answer 40

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

Question 41

can liability for neg misrep be excluded?

Answer 41

- Cannot unless it is reasonable to do so under UCTA 1977 – MA 1967 s3

Question 42

what governs innocent misrep?

Answer 42

- Misrep Act 1967 s2(2)

Question 43

how does innocent misrep work?

Answer 43

- Burden on misrepresentor to prove he had reasonable grounds to believe he was telling the truth up to the time the contract was made

Question 44

what remedies are available for innocent misrep

Answer 44

- 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

Question 45

What governs attempts to exclude liability for misrepresentation?

Answer 45

s3 MA 1967 | - must satisfy requirements of reasonableness s11(1) UCTA 1977

Question 46

What is a negligent mistatement?

Answer 46

- 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

Question 47

How is mitigation judged

Answer 47

C cannot waste more money than needed - but mitigation "not weighed on nice scales" - Banco de Portugal v Waterlow

Question 48

give an example of a misrep by conduct

Answer 48

(Spice Girls v Aprilia) | Gordon v Selico