Misrepresentation

Question 1

A representation

Answer 1

a statement asserting the truth of a given state of facts

Question 2

Induced

Answer 2

formed one of the reasons for entering into the contract

Question 3

actionable misrepresentation

Answer 3

an unambiguous false statement of fact made to the claimant and which induces the claimant to enter into the contract with the statement maker

Question 4

Misrepresentation, subject to limitations, renders the contract

Answer 4

voidable

Question 5

The representor will not be liable if the representee has placed its own

Answer 5

unreasonable construction on the representation

Question 6

representations must be distinguished from

Answer 6

mere puff

Question 7

To be an actionable misrepresentation, the representation must play a

Answer 7

‘real and substantial part’ in inducing the claimant to enter the contract

Question 8

the test for materiality

Answer 8

objective; based on standard of reasonable person

Question 9

How can the defendant rebut the inference that the claimant was induced?

Answer 9

by proving that the claimant was not subjectively induced

Question 10

Rule for misrepresentation from Attwood v Small

Answer 10

A party cannot bring a claim in misrepresentation when it has relied not on the misrepresentation, but on its own investigations

Question 11

the more commercial the representee is, the more likely it is that the court will consider it

Answer 11

reasonable for the representee to have investigated

Question 12

Can a claim for misrepresentation be based on a statement of opinion?

Answer 12

Generally no; however, it will be a misrepresentation if either the opinion expressed is not one which the representor held OR the statement of opinion lacks reasonable grounds from people with superior knowledge/experience

Question 13

Can a claim for misrepresentation be based on a statement of future intention?

Answer 13

No

Question 14

When could a statement of future intention amount to misrepresentation?

Answer 14

If at the time of making the representation, they know that they cannot do what they state, or they do not intend to do it

Question 15

General rule on silence

Answer 15

there is no duty to disclose facts which, if known, might affect the other party’s decision to enter the contract.

Question 16

Recognised exceptions to the general rule on silence

Answer 16

Half-truths
Continuing representations
Contracts uberrimae fidei

Question 17

A half-truth is

Answer 17

technically true but misleading, which amounts to a misrepresentation

Question 18

For continuing representations, there is a duty to

Answer 18

disclose the change in circumstances and the consequent change in income

Question 19

Duty under contracts uberrimae fidei (utmost good faith)

Answer 19

There is a duty to disclose material facts in contracts uberrimae fidei in which one party is in a particularly strong position to know the material facts which form the basis of the contract eg disclosing all info to your car insurer

Question 20

to find fraud, the level of recklessness required is a

Answer 20

‘flagrant disregard for the truth’

Question 21

For fraudulent misrepresentation, the motive of the person guilty is

Answer 21

immaterial

Question 22

Derry v Peek established that to sustain an action of deceit:
there must be

Answer 22

1) proof of fraud
2) a false representation has been made:
- knowingly;
- without belief in its truth; - recklessly
3) if fraud is proved, the motive of the defendant is immaterial

Question 23

Can a failure to disclose a change in circumstances be held as fraudulent?

Answer 23

The Court would need to be satisfied that the failure to disclose was deliberate or dishonest, and not just due to inadvertence or a failure to realise the requirement of disclosure.

Question 24

Who bears the burden of proof in a claim for fraudulent misrepresentation?

Answer 24

the claimant

Question 25

Burden of proof for negligent misrepresentation

Answer 25

the burden is on the defendant to prove that he had reasonable grounds to believe his statement and that he did believe it

Question 26

An innocent misrepresentation is a statement made where the representor proves

Answer 26

they had reasonable grounds for belief in the truth of their statement; and did believe it up to the time of contracting

Question 27

To rescind, the representee must

Answer 27

communicate the intention to do so to the representor

Question 28

What kind of remedy is rescission?

Answer 28

Rescission is an equitable remedy awarded on a discretionary basis

Question 29

The right to rescind is lost if 'restitutio in integrum'

Answer 29

if it is no longer possible to restore the parties to their previous position before the contract was made

Question 30

at any time prior to rescission, a person acquiring goods under such a contract is able to pass good title to those goods to

Answer 30

an innocent third party who purchases the goods without notice of the misrepresentation. This would prevent restitution.

Question 31

What remedies are potentially available for an innocent misrepresentation?

Answer 31

Rescission, damages in lieu of rescission and indemnity

Question 32

damages for fraudulent misrepresentation

Answer 32

Fraudulent misrepresentation is part of the tort of deceit so damages are calculated on the 'tortious' basis. The measure of damages is that which is necessary to place the innocent injured party in the position he would have been in had the misrepresentation not been made.

Question 33

What factors could reduce damages for fraudulent misrepresentation?

Answer 33

Caimant must mitigate as soon as the fraud is discovered and any damages awarded to the claimant will be reduced by the value of any benefit the claimant has acquired as a result of the contract

Question 34

Which defence is not available for a claim for fraudulent misrepresentation?

Answer 34

Contributory negligence

Question 35

Damages for negligent misrepresentation must be based on

Answer 35

the tort of deceit

Question 36

For damages for negligent misrepresentation, the claimant is entitled to recover

Answer 36

all losses even if those losses are unforeseeable

Question 37

For negligent misrepresentation, damages may be reduced for

Answer 37

contributory negligence where the loss was in part the fault of the representee

Question 38

Is it possible for a representor to exclude or restrict their liability for misrepresentation?

Answer 38

Yes, as long as the clause satisfies the requirement of reasonableness as stated in s. 11(1) UCTA 1977

Question 39

When does negligent misstatement apply?

Answer 39

where there is a relationship of sufficient proximity between two parties, the court might find that one party owes a duty of care to the other to take reasonable care that statements made are accurate

Question 40

why are negligent misstatement claims less favourable?

Answer 40

Negligent misstatement claims are generally harder to establish and likely to lead to a less favourable calculation of damages