Misrepresentation and Misleading & Deceptive Conduct Flashcards Preview

LAWS1001 Advanced Contract Law > Misrepresentation and Misleading & Deceptive Conduct > Flashcards

Flashcards in Misrepresentation and Misleading & Deceptive Conduct Deck (25)
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misrepresentation elements

- False statement.
- Of fact.
- Addressed to the party misled.
- Intended to and does induce contract.


misrepresentation characteristics

- Common Law
- Applies to anyone
- Silence is not misrepresentation
- Intention is relevant
- Inducement is relevant
- Reliance is relevant
- Damages are generally more
- Rescission and damages.
- More difficult and costly


M/D conduct elements

- ‘Person’ (Corporation or business).
- In trade or commerce
- Must not engage in conduct
- This is M/D or likely to M/D.


M/D characteristics

- Statutory
- Applies to businesses
- Silence can be M/D.
- Intention is not relevant.
- Inducement is not relevant.
- Reliance is not relevant
- Injunction, damages, ancillary remedies (e.g. apology, correction).
- Less difficult and cheaper.


representation and puff

- ‘Puff’ is a flourishing description’ or ‘general praise’
- Test may be what a reasonable person would believe to be puff/hyperbole/representation/fact/term.
- Look at the statement in context, taking into account all of the circumstances
› Carlill v Carbolic Smokeball
- Experience, skill and knowledge.


edington v fitzmaurice

- E invested 1500 pounds in F’s company pursuant to a prospectus stating:
› They had acquired a property, mortgaged for 21,500 paid at 500 half yearly
› Funds were intended to be used to make alterations, purchase horses and vans and marketing
› Did not disclose financial difficulties, that entire mortgage was actually due and that money was to be used to pay off liabilities
- P brought action in Deceit – successful.
- Set out prima facie elements of misrepresentation (Bowen 481-482).
› P must prove:
 Statement of fact which was false
 False to the knowledge of the defendants (or careless, reckless)
 Defendant intends the statement to be relied upon
 Plaintiff has acted upon it and sustained damages (sole or material cause), (causation and reliance)
- Representation of fact (483).
› Must be a misstatement of an existing fact
› The state of a man’s mind is a fact (although hard to prove).
› A misrepresentation of a man’s mind is a misrepresentation of fact.


misrepresentation - false statement

- Silence is not misrepresentation
› Different approach in legislation.
- Must be positive conduct or statement (not an omission).
- ‘Caveat Emptor’
› Buyer beware.
› Seller doesn’t have to disclose.
- There is no positive duty of good faith or fair dealing.


misrepresentation - exception to silence rule

- Distortion of a positive representation (half-truth)
› Krakowski v Eurolynx Properties Ltd.
- Subsequent discovery that a statement was false
› Positive duty to correct.
› Lockhart v Osman
- Statement becomes untrue
› Positive duty to correct
› With v O’Flanagan
- Parties in a fiduciary relationship
› Hill v Rose
- Contract ‘uberrimae fidei’
› Contracts of goof faith.
› Strong position of knowledge
› Typically contracts of insurance and family arrangements.
› Gordon v Gordon


krakowski v Eurolynx properties

 Dodgy tenant – makes place look good before selling.
 Misrepresented to Krakowski as a good tenant. Krakowski brought property. This was not true, failed to pay rent.
 Refund of purchase price rescind original agreement.
 Half-truth: there was a tenant, but he wasn’t a strong tenant.


Hill v Rose

- Failed to disclose business was seriously insolvent.
 Businesses had been in previous relationships.
 Needed to have disclosed these things to each other.


statement of opinion

- Would a reasonable person be expected to enquire further?
› If they do not, then the risk is theirs.
› Bissett v Wilkinson


statement of intention

- Does not apply if the maker of the statement did not intend or did not have the ability to put that intention into effect.
› Edgington v Fitzmaurce


misrepresentation - addressed party misled

- Communicated to directly
› Peek v Gurney
- Communicated to indirectly
› Must be intended that the information is passed on to AND acted upon by representee.
› Commercial Banking Co (Sydney) Ltd v RH Brown & Co


misrepresentation - intended to induce

- Intended to induce and did induce.
- Does not have to be the sole inducement but should be a significant factor.


misrepresentation - non inducing statement

› Representee is not aware of representation
› Representee knows the representation is false
 Actual knowledge, not means to discover.
 The innocent party isn’t obliged to fact check a persons statement.
 Redgrave v Hurd
› Representee does not act on the representation
 Attwood v Small
› Were given advice.
› Went and sought 3rd party advice from another expert.
› Expert advice was wrong.
› Court found that Attwood relied on expert.
 Corrections
 Holmes v Jones.
› Misstatement was corrected. Tried to buy and claim misrepresentation. Not true.
› The representation is not material to the contract
 Nicholas v Thompson.


3 categories of misrep



fraudulent misrep

› Deliberate untruth (knowingly, without belief, recklessly).
› Derry v Peek
› Rescission and damages in tort of deceit (not contract).
 Difference – Holmes v Jones
› Contract – position if contract had been performed.
› Deceit – position if contract had not been entered into.
Gould v Vaggelas


negligent misrep

› Duty to ensure correct information.
 Breach of this duty.
› Consequential loss or damage.
› Recission and damages in tort of negligence (not contract).
› L Shaddock & Associates Pty Ltd v The Council of the City of Paramatta [No 1] (1981) 150 CLR 225


innocent misrep

› Genuinely believed truth
› No common law remedy because there is no culpability
› Rescission but no damages.


misrep - limitations on recission

- Notice of recission must be communicated before recission.
- Restitution should be possible.
› Parties should be restored at least substantially to original positions.
› Restoration plus financial adjustments may be used.
- Effect of affirmation
› Actual or implied affirmation once aware.
- Lapse of time
› Generally, not barring, can be if aware and does nothing
› Or, an inordinate amount of time passes
› Leaf v International Galleries [1950] 2 KB 86
- Third party contracts
› Cannot rescind of title has validly passed to a third party who took in good faith, for value, without notice of defect
- Executed contracts (fraudulent misrepresentation only)


M/D effect of legislation

› Australian Consumer Law (Sch 2) prohibits misleading and deceptive conduct or conduct that is likely to mislead or deceive (ss18, 29-34, 37)
› Silence can be misleading (though not a ‘misrepresentation’)
 But not where parties are dealing ‘at arms length’ e.g. negotiating commercial transactions
› It is the deliberate withholding of information where there is a positive duty to disclose it
 ‘Duty’ here means where there would be a ‘reasonable expectation’ that the information would be disclosed


dislcaimer CCA

› Entire Agreement clauses, Parol Evidence Rule, Signature
› Generally misrepresentation would not be actionable
› But pursuant to legislation a positive misrepresentation can still be misleading or deceptive
 LezamPty Ltd v Seabridge Australia Pty Ltd (1992) 35 FCR 535
› To be effective, a disclaimer must be presented in such a way that the other party is not misled or deceived when looked at as a whole (context, representations, contract)


S 18 ACL

› A ‘person’ (usually a corporation)
 S19, Fair Trading Act 2010 (WA)
› Engages in conduct in trade or commerce
 What is ‘conduct’?
 What is ‘trade or commerce’
› Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594
› Does not include purely private transactions
› That is misleading or deceptive or is likely to mislead or deceive


what is m/d

- Capable of leading someone to into error
- Objective test - Taco Co v Taco Bell (1982) 42 ALR 177 (‘Taco Bell’ test)
› Who is the target audience?
› Consider everyone in the target audience - Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
› Has someone (or could someone have) formed an erroneous conclusion?
› Why has the misconception arisen? (causation) (not just confusion)
 McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 49 FLR 455
 Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45
› Intention is irrelevant (compare to common law misrep)
› Someone actually being misled is not necessary


remedies M/D

- Injunctions (ACL, s 232)
- Damages (ACL, s 236)
- Ancillary remedies (ACL, s 243)
› Declaration that contract is void
› Varying the contract
› Refusing enforcement
› Directing refunds
› Return of property
› Payment for loss or damage
› Directing repair, replacement or provision of services