Misrepresentation

Question 1

What is misrepresentation?

Answer 1

A false statement of material fact made by a party to the contract that induces the other party to enter the contract

Question 2

What are the three types of misrepresentation?

Answer 2

Fraudulent, Negligent, Innocent

Question 3

What are the 4 key elements of misrepresentation? There must be:

Answer 3

-A false/untrue statement
-Untrue statement of material fact
-Made by a party to the contract
-Induces the other party to enter into the contract

Question 4

What is a false/untrue statement?

Answer 4

A statement made that must be false/untrue

Question 5

What case shows that mere silence doesn’t usually amount to misrepresentation? Briefly explain the case

Answer 5

Fletcher v Krell - a woman applied for a job and didn’t mention that she was divorced because she wasn’t asked

Question 6

In what case can silence amount to a misrepresentation and why did it amount to misrepresentation?

Answer 6

Tate v Williamson - the relationship between the parties was based on trust

Question 7

What happened in the case of Tate v Williamson?

Answer 7

The financial advisor asked his client to sell some land for half its value to enable the client to clear his debts. The advisor then bought the land himself, but didn’t tell the client.

Question 8

What is subsequent falsity and what case is an example of it?

Answer 8

If a true statement becomes false before the contract is made, then it is misrepresentation. The party who made the statement is obliged to correct the info before the contract is made - With v O’Flanagan

Question 9

What happened in the case of With v O’Flanagan?

Answer 9

A Dr accurately stated the profits of his practice with a view to induce purchasers to buy it. Between the statement being made and the contract being made the Dr fell ill and many patients left - this made the original statement inaccurate and false

Question 10

What is partial revelation/ half truths and what case covers this?

Answer 10

What isn’t said is a non-disclosure and may be a representation as the statement maker has a duty to reveal the whole truth - Dimmock v Hallett

Question 11

What happened in the case of Dimmock v Hallett

Answer 11

A seller of land told the purchaser truthfully that there were tenants on the land which is what the purchaser wanted. However, the seller didn’t say that the tenants were all leaving

Question 12

Why was Spice GirlsLtd v Aprilla World Service held to be a half-truth?

Answer 12

They signed a sponsorship agreement with Aprilla. Whilst the agreement was being negotiated Geri Halliwell decided to leave the SG but this was not communicated to Aprilla. Promotional material was filmed with all of the girls but when Geri left it meant that these were now worthless for promotional purposes. By all of the Spice Girls attending the filming etc. the court decided that the group were representing that non of them intended to leave and none of them were aware that one member intended to. This was misrepresentation by conduct

Question 13

What is a contract requiring utmost good faith? What case is an example of this?

Answer 13

Where a contract is a contract of ‘utmost good faith’ then all material fact must be disclosed whether asked about or not - Lambert v Co-Op Insurance Society

Question 14

What happened in the Lambert v Co-Op Insurance Society?

Answer 14

A woman renewed her jewellery insurance policy but didn’t tell the company her husband had recently been convicted of conspiracy to steal. This was an important fact which would have affected the decision by the insurers on whether to renew, and is so, at what premium.

Question 15

What is a statement of material fact?

Answer 15

The statement must be a fact, merely stating an opinion will not create an actionable misrepresentation

Question 16

What happened in Bisset v Wilkinson? Was there misrepresentation?

Answer 16

A seller of farm land, who had never farmed sheep on it was asked by the buyer how many sheep would fit on the land. The seller stated that he thought it would support about 2,000 sheep. This turned out to be false but because he genuinely believed his opinion to be accurate, it wasn’t a misrepresentation

Question 17

What happened in Smith v Land and House Properties Corp?

Answer 17

Claimants said that Mr Fleck was a ‘desirable tenant’ but they knew he wasn’t as he hadn’t paid his rent, therefore it wasn’t their honest opinion it was a representation that was false

Question 18

What happened in Edgington v Fitzmaurice?

Answer 18

IDK GIRL. next question.

Question 19

What element of misrepresentation does ‘A person isn’t liable for statements made by others unless they are their agent’ define?

Answer 19

Made by a party to the contract

Question 20

What element of misrepresentation does ‘ Statement must lead the other party into making the contract and must be a critical part of making the decision’ define?

Answer 20

Induces the other party to enter the contract

Question 21

Was Attwood v Small held as misrepresentation or not? and why?

Answer 21

The buyer relied on the statement of the surveyor not the seller therefore it wasn’t a misrepresentation

Question 22

What happened in the case of Attwood v Small?

Answer 22

The seller of a mine made a false statement to the purchaser about the earnings from a mine. The buyer instructed a surveyor to confirm this statement, which he did (incorrectly). The purchaser bought the mine and then discovered the statement to be untrue

Question 23

If the untrue statement was relied upon it’s enough to amount to misrepresentation; it doesn’t matter if the claimant could have discovered the truth by taking reasonable steps. What case demonstrates this?

Answer 23

Redgrave v Hurd

Question 24

What happened in Redgrave v Hurd?

Answer 24

The purchaser of a solicitors practice was given a set of accounts to look at. The seller verbally misled the purchaser as to the true earnings. He relied on the statement and didn’t look at the accounts. Had he done so, he would have seen that the sellers statement was false

Question 25

What the reasonable person would or wouldn’t have done is irrelevant. What case demonstrates this?

Answer 25

Museprime Properties v Adhill Properties

Question 26

What happened in the case of Museprime Properties v Adhill Properties?

Answer 26

The purchaser of property relied on inaccurate statements about rents made in auction particulars. The defendant argued that the ‘reasonable’ purchaser wouldn’t have relied on these statements and would have made other enquires. However, as the purchaser relied on the statement, there was reliance and there could be a misrepresentation

Question 27

What does s.12 Consumer Rights Act 2015 state?

Answer 27

-Traders have to provide certain information to the consumer before the contract becomes binding
-A change to any of this information made before entering the contract, or later, isn’t effective unless expressly agreed between the consumer and the trader

Question 28

What is fraudulent misrepresentation? What two cases show this?

Answer 28

When the statement is made knowingly that it is untrue or reckless whether or not it is true
-Derry v Reek
-Greenridge Luton One Ltd v Kempton investments Ltd

Question 29

What are the remedies for fraudulent misrepresentation?

Answer 29

To sue for damages under the tort measure and/or seek recission to the contract in equity

Question 30

What is negligent misrepresentation? What case is an example of this?

Answer 30

A false statement made by a person who had no reasonable grounds for believing it to be true although it isn’t a deliberate lie - Howard Marine v Ogden & Sons

Question 31

What are the two types of negligent misrepresentation?

Answer 31

-Negligent misrepresentation at common law, Recoverable under the tort of negligent misstatment
-Under the Misrepresentation Act 1967

Question 32

What does S.2(1) of the Misrepresentation Act 1967 state?

Answer 32

No special relationship is required between the two parties, all that is needed is for there to be a misrepresentation which results in a contract and the victim suffers loss

Question 33

What are the remedies for negligent misrepresentation?

Answer 33

Both types of negligent misrepresentation are recession and/or damages

Question 34

What is innocent misrepresentation?

Answer 34

A misrepresentation which is genuinely held on reasonable grounds. This is a false statement made honestly with the party always believing the statement to be true

Question 35

What are the remedies for innocent misrepresentation? What Act are they set out in?

Answer 35

They are set out under S.2(2) of the Misrepresentation Act 1967 - Recission OR damages in lieu of recession

Question 36

What is recession?

Answer 36

A drastic remedy as it brings the whole contract to an end.

Question 37

Under what 4 circumstances will the wronged party lose the right to recission?

Answer 37

-The innocent party affirms the contract
-There is a lapse of time
-The parties can’t go back in their original, pre-contractual position
-Recission would deprive an innocent third party of rights acquired over the property which is the subject of the contract