Misrepresentation

Question 1

What are the 6 elements of an actionable misrepresentation?

Answer 1

1. Unambiguous (i.e., must clearly mean what the person relying on the representation believed them to mean)
2. False
3. A statement of fact (may include conduct)
   Not:
   - mere puff,
   - opinion (unless the representor has some special knowledge of skill)
   - future intention
4. No silence (silence cannot give rise to a representation)
   Exceptions:
   - half-truths
   - continuing representations (duty to correct)
   - contracts of utmost good faith (e.g., insurance contracts)
5. Addressed to the claimant (can include conduct)
6. The misrepresentation must have induced/caused the claimant to enter into the contract, i.e.,
   - the claimant relied on the statement; and
   - believed it was true

test for causation: real and substantial cause (not only cause)

Question 2

What are the three categories of misrepresentation?

Answer 2

1. Fraudulent misrepresentation
2. Negligent misrepresentation
3. Innocent misrepresentation

Question 3

Fraudulent misrepresentation - defintion

Answer 3

Requirements:
1. False representation
2. Made:
- knowingly;
without belief in its truth; or
recklessly
3. Motive is irrelevant

Burden of proof is on the claimant to show the representor made a fraudulent misrepresentation.

Question 4

Fraudulent misrepresentation - remedy

Answer 4

• Rescission AND damages under s2(1) MA

Question 5

Negligent misrepresentation definition

Answer 5

Two actions available:
1. Common law (negligent misstatement)
2. Statute (s2(1)MA)
(use where there is a contract between parties)

Requirements under statute:
1. False statement
2. D believes it is true
3. D made the statement carelessly or without reasonable grounds for believing it is true
4. C, relying on this statement, has suffered loss

Relevan test for knowledge:
Representor fails to show reasonable grounds to believe it is true and/or not believing true up until contract was made

Question 6

Negligent misrepresentation - remedies

Answer 6

Rescission (or damages in lieu (s2(2) MA)) and damages (s2(1)MA)

Question 7

Innocent misrepresentation

Answer 7

Representor has proven show reasonable grounds to believe and actual belief up until the contract was made

Question 8

Innocent misrepresentation

Answer 8

Rescission (or damages in lieu (s2(2) MA))

Question 9

Rescission

Answer 9

Available for all types of misrepresentation.

• An equitable remedy which allows parties to cancel the contract
• Only used when parties can be restored to original position (i.e. returning all property to original owners)
• C must communicate to D they intend to rescind or commence proceedings
• Rescission cannot be barred

Question 10

Bars to rescission

Answer 10

1. Claimant chooses to continue the contract even though they know there has been a misrepresentation
2. Lapse of time
   Note:
   - Fraudulent misrep - time starts from date of discovery of fraud)
   - Negligent/innocent misrep - time starts from date the contract is entered into
3. Restitution is impossible, e.g.,
   - goods/property have been destroyed or changed in nature
   - new contract has been entered into
   - bona fide party (without notice) has rights in the property

Question 11

Damages under s2(1) Misrepresentation Act 1967

Answer 11

Available for fraudulent and negligent misrepresentation.

Aim:
to put the representee in the position they would have been in had the misrepresentation not been made.

Generous remoteness rules:
can recover all losses directly flowing from the misrepresentation regardless of foreseeability.

Restrictions:
- representee must mitigate as soon as fraud is discovered
- any damages awarded will be reduced by the value of any benefit the claimant has acquired as a result of the contract

Question 12

Damages in lieu of rescission under s2(2) Misrepresentation Act 1967

Answer 12

Available for negligent and innocent misrepresentation.

Aim is to compensate where the court has decided not to award rescission.