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Flashcards in EXAM NOTES - Misrepresentation Deck (48)
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Structure for a misrep question

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


mere puff case

Dimmock v Hallet


term not representation case

J Evans v Andrea Merzario


what the requirements for a misrep? Who from?

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


explain an unambiguous statement?

- clear McInery v Lloyds


explain how a statement is classed as false

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


what is a representation?

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


can a false statement of law be a misrep?

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


can conduct be a misrep?

- 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


what is the rule on giving opinion?

- 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


what is the rule on representations about the future?

- 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


what is the rule on silence?

silence is not fact - no duty to disclose information
Keates v Earl of Cadogan


what are the exceptions to the silence rule

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)


how should a misrep be addressed to the party?

- 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


what is the test for materiality

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


how is inducement decided?

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


how serious must the inducement be

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


when will inducement not happen?

- 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


What is the general rule about investigation?

- 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


when will investigation be expected?

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


what are the categories of misrepresentation

- Fraudulent
- Negligent
- Innocent


define fraudulent misrep

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


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

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


what is the main difficulty with fraudulent misrep?

- Hard to prove – burden on C
o More than just balance of probabilities but less than beyond reasonable doubt


what is the main advantage with fraudulent misrep?

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


what remedies are available for fraudulent misrep

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


what damages are available for fraudulent misrep

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


how is loss "directly flowing" decided for fraudulent misrep

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


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

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


how does contrib neg work in relation to fraudulent misrep?

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