Misrepresentation Flashcards
(25 cards)
What is the definition of an 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 is the effect of an actionable misrepresentation on a contract?
It makes the contract voidable, not void. The wronged party may seek rescission.
What are the essential elements of an actionable misrepresentation?
Unambiguous
False
Statement of fact
Addressed to the claimant
Induces the claimant to contract
Can a claimant rely partly on the misrepresentation and partly on another factor?
Yes
What if the representee did not rely on the misrepresentation?
There is no inducement
Must the representee investigate the truth of a statement?
No general duty to check, but contributory negligence may apply in some negligent misrepresentation cases.
Is a statement of opinion a misrepresentation?
No, unless it implies facts which do not exist or the speaker lacks reasonable grounds for the opinion
Can a statement of intention be misrepresentation?
Only if the speaker did not truly have that intention
Is silence generally misrepresentation?
No. There is no duty to disclose unless an exception applies
What are exceptions to the silence rule?
Half-truths
Continuing representations
Contracts uberrimae fidei
What are the three types of misrepresentation?
Fraudulent (tort of deceit)
Negligent
Innocent - where the representor had reasonable belief
What is the test for fraudulent misrepresentation?
Statement made knowingly, without belief, or recklessly
Is contributory negligence a defence to fraudulent misrepresentation?
No
What must the representor prove to avoid liability for negligent misrepresentation?
That they had reasonable grounds to believe and did believe their statement was true.
What is an innocent misrepresentation?
One made with reasonable grounds and actual belief in its truth at the time of contracting.
What is rescission?
A remedy that voids the contract from inception, restoring both parties to their pre-contractual positions.
What are the bars to rescission?
Affirmation
Lapse of time
Restitution impossible
Third party rights acquired in the meantime
What is an indemnity in misrepresentation?
A secondary remedy awarded with rescission to cover obligations arising directly from the contract
What is the measure of damages for fraudulent misrepresentation?
All losses directly flowing from the fraud, even if not foreseeable
What is the measure of damages for negligent misrepresentation?
Same as fraud, but contributory negligence may reduce damages.
Can damages be awarded for innocent misrepresentation?
Not automatically. However, damages in lieu of rescission may be granted
What is the effect of an exemption clause excluding liability for misrepresentation?
such clauses are only valid if they pass the reasonableness test.
Can liability for fraudulent misrepresentation be excluded?
No. Courts will not allow liability for fraud to be excluded by any clause.
When does a representation also become a term?
If incorporated into the contract. A false term gives rise to a claim in breach of contract as well as misrepresentation.
