Misrepresentation

Question 1

Define misrepresentation

Answer 1

A statement of material fact made by one party to a contract to the other party during the negotiations leading up to the formation of contract which was intended to operate and did operate as an inducement under the contract, and which was untrue or incorrectly stated

Question 2

What 3 things cant a misrepresentation be

Answer 2

A mere opinion - Bissett v Wilkinson
An expression of future intent - Edgington v Fitzmaurice
A mere trade puff - Carlill v Carbolic smoke ball

Question 3

Fraudulent misrepresentation

Answer 3

If a person makes a false statement which he or she does not believe to be true at the time, this is a fraudulent misrepresentation - Derry v Peak

Question 4

Negligent misrepresentation

Answer 4

Negligent misrepresentation is a statement that is false and made without reasonable care, but doesn’t intend to deceive the other party.
Damages may be recovered where there has been a financial loss and where there is a special relationship between parties (Hedley Byrne v Heller).
Damages will be applied according to the standard tort measure of negligence or under S.2(1) misrepresentation act 1967

Question 5

Innocent misrepresentation

Answer 5

Historically any misrepresentation which was not fraudulent, regardless how it was made - Atwood v small
However with the emergence of Hedley Byrne and the passing of the misrepresentation act 1967, the only misrepresentation that can be innocent are those where a party makes a statement with honest belief in its truth.
The main remedy is the equitable remedy of rescission; that is to void the contract as if it never happened. Damages are also available under S.2(1) misrepresentation act 1967

Question 5

Remedy of rescission

Answer 5

Rescission is an equitable remedy that means parties no longer need to complete the obligations under the contract.

Question 6

SPICE GIRLS LTD V APRILIA WORLD SERVICE

Answer 6

If one party knows facts that make the representation false and fails to disclose them, liability can follow.

Question 7

Bissett v Wilkinson

Answer 7

A statement of opinion cannot be considered a misrepresentation unless the person making the statement knows it to be untrue

Question 8

Edgington v Fitzmaurice

Answer 8

A statement of present intentions can constitute an actionable misrepresentation

Question 9

Carlill v Carbolic smoke ball

Answer 9

A mere trade puff can be binding if it is made to the world at large and the offeree performs the requested act

Question 10

Derry v Peek

Answer 10

Lord Herschell defined fraudulent misrepresentation as a statement which is made either:
1. Knowing it to be false,
2. Without belief in its truth, or
3. Recklessly, careless as to whether it be true or false.

Question 11

Hedley Byrne

Answer 11

A negligent misstatement can give rise to liability for pure economic loss in certain circumstances where there is a Special Relationship and Reasonable Reliance

Question 12

Attwood v Small

Answer 12

By getting his own experts to check out the reports he had not relied on the accounts but his own judgment.