misrepresentation Flashcards
Define a representation.
A representation is a statement asserting the truth of a given state of facts.
Define actionable misrepresentation.
“An unambiguous false statement of fact made to the claimant and which
induces the claimant to enter into the contract with the statement maker.”
What are the 5 elements of misrepresentation (same as definition)?
1- unambiguous
2- false
3- statement of fact
4- addressed to claimant
5- induces claimant to enter into contract with statement maker
What is meant by ‘statement of fact’ in the definition of misrepresentation?
‘a representation is not an undertaking to do, or not to do something.
- It is a statement asserting a given state of affairs’
For misrepresentation, representation must have been ‘material’ to induce claimant, what is the test for deciding that a statement is material?
1- did misrepresentation relate to material that contracting party would want to know before deciding to enter into contract?
2- if there was requirement to make disclosure, had that been waived by other party?
3- did misrepresentation actually induce other party to enter into contract?
4- was right to wait affirmation or estoppel still available?
What is a material representation and/or its test?
Objective test- A statement that relates to an issue that would have influenced a reasonable person.
What does statements of fact include? (3)
- statements of fact
- some conduct
- statements of law
What does statements of fact not include? (3)
- statements of opinion
- statements of intention
- silence
What is the exception for statements of opinion not being included for misrepresentation claims?
statements of opinion which lack reasonable grounds from people with
superior knowledge / experience
- so these statements are included under statements of fact
In what situation will a statement of opinion be elevated to a statement of fact?
Where it is proved that the opinion expressed was not one which the representor believed.
What is an exception for statements of intention not being included under statements of fact?
statements of future intention
- it is not a misrepresentation if the representor makes a promise regarding a future intention, but is prevented from following that course of conduct or if circumstances alter so that they change their mind about that intention.
What are the 3 exceptions to silence not giving rise to action for misrepresentation?
- half-truths
- continuing representations
- contracts uberrimae fidei (utmost good faith) = duty to disclose material facts in some contracts i.e fiduciary duties
What are the 3 categories of misrepresentation?
- fraudulent misrepresentation
- negligent misrepresentation
- innocent misrepresentation
What is the definition of fraudulent misrepresentation?
Action for deceit (?)
- knowingly or recklessly false statement
** burden of proof on C
What is the leading case for fraudulent misrepresentation and its 3 factors to prove it?
Derry v Peek
a false representation must be proved to have been made:
1. knowingly;
2. without any belief in its truth; or
3. recklessly
Define recklessly.
deliberately not investigating the truth.
What is negligent misrepresentation?
Where party has no reasonable grounds to believe statement was true
** burden of proof on D
Define innocent misrepresentation.
where party making statement proves they believed statement was true and had reasonable grounds for believing in its truth upto time of contract.
Between fraudulent and negligent misrepresentation, which is easier to bring a claim under?
negligent misrepresentation because the burden of proof is with defendant (representor)
What are the remedies for misrepresentation & its effect?
effect= voidable, NOT VOID!
remedies=
- rescission
- damages
- indemnity
Define rescission and how it works for misrepresentation?
contract is still valid and subsisting until the representee decides to set it aside (rescind the contract).
- representee must communicate the intention to do so to the representor.
- available for all types of misrepresentation.
What are the ‘bars’ for rescission of misrepresentation that prevent contract being ended & their definitions (4)?
- affirmation–> intention is affirmed by representee / their conduct
- lapse of time–> any delays may affect intention
- restitution is impossible–> right to rescission lost if no longer possible to restore parties to original position
- third party rights accrue–> because contract isn’t immediately void, during this time title of goods can pass to third party not aware of rescission.
What are the damages for fraudulent misrepresentation?
all losses flowing directly from transaction, even if not foreseeable
What are the damages for negligent misrepresentation?
- all loses flowing directly from negligent statement
- damages in lieu of rescission at court’s discretion
