Flashcards in Misrepresentation and Misleading & Deceptive Conduct Deck (25)
- False statement.
- Of fact.
- Addressed to the party misled.
- Intended to and does induce contract.
- 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.
- 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.
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
› 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
› 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
› 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  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
› 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