Misrepresentation: The Fundamentals

Question 1

What are the different types of pre-contractual statements?

Answer 1

• Statements of opinion: no legal significance (“mere puff”)
• Statements of fact: failure to comply; misrepresentation which innocent party can claim (mere representation)
• Term of contract: failure to comply; breach of contract

Question 2

What is the difference between contract terms and representations?

Answer 2

• Contract terms are contractual promises –> binding
• Representations are statements of past or existing fact, not part of the contract (if false = misrepresentation)

Question 3

How to distinguish when we have oral statements? (for terms vs representations) {Heilbut, Symons & Co v Buckleton [1913]}

Answer 3

Intention of the party making the statement objectively assessed based on three principles:
- Importance (more important means statement more likely to be treated as term)
- Whether party told to verify (less likely to be treated as term)
- Special knowledge (more likely to be treated as term)

Question 4

How would you define a Misrepresentation? (3 elements)

Answer 4

• Unambiguous false statement
• Induces other party (misled)
• Made by one party to another (representor –> representee)

Question 5

What impact is made of an actionable misrepresentation?

Answer 5

To make the contract voidable, giving the innocent party the right to rescind the contract and/or claim damages.

Question 6

Representation must be a statement of past or existing fact, so what does this not include?

Answer 6

• Statement of mere opinion
• Statement of future intention
• Mere puff
• Silence

Question 7

Until 1999, what was misrepresentation as to Law?

Answer 7

• A false statement as to the state of the law is not actionable misrepresentation because everyone is presumed to know the law and have equal access to it
• Now, misrepresentation can be found a cause of action {Pankhania v Hackney London Borough Council [2002]}

Question 8

Why do statements of opinion not constitute a misrepresentation?

Answer 8

• Factual nature of a representation can be verified, whereas an opinion is partial/subjective
• Case: Bisset v Wilkinson [1927]
• Exceptions: opinions from those with greater knowledge of special skills

Question 9

What is the significance regarding statement of intention and misrepresentation?

Answer 9

• Statement must be of an existing fact and not of a future intention/action
• Promise to do something in the future may be a term of the contract, BUT if not, there is no misrepresentation
• Case: Edgington v Fitzmaurice [1885]

Question 10

Why do mere puffs not constitute a misrepresentation?

Answer 10

• Used for advertisements that can be very vague with no legal significance
• Not binding as there is no intention on the seller’s part to be bound
• BUT the more specific the statement, the less likely it is to be treated as a mere puff {Carlill v Carbolic Smoke Ball Co)

Question 11

What is the general rule of silence?

Answer 11

• Silence does not amount to misrepresentation (the other party has no duty to disclose relevant facts voluntarily)
• However if you do disclose info, you must provide accurate information and in good faith {Keates v Cadogan (1851)

Question 12

What are the exceptions to the rule of silence?

Answer 12

• Change of circumstances
• Half-truth (partial non-disclosure)
• Uberrima fides (utmost good faith)
• Fiduciary/professional relationships
• Representation by conduct

Question 13

What can we learn from the case of With v O’Flanagan [1936]?

Answer 13

• Representation inducing the other party to enter contract is regarded as continuing until contract is signed
• If change of circumstance makes previous representation untrue, the representor must disclose the change to the representee (or this would constitute a misrepresentation)

Question 14

What can we learn from the case of Dimmock v Hallet [1866]?

Answer 14

• The statement that the farms were led was misleading and amounted to a misrepresentation
• Calms LJ: “The statement as to rent was calculated to mislead”

Question 15

Why is representation and inducement significant to misrepresentation?

Answer 15

• To claim for misrepresentation, the representee must have relied and acted on the representation made to them

Question 16

What exceptions can be made regarding representation and inducement?

Answer 16

• If representee acted in same way in absence of misrepresentation = no inducement {Versloot case}
• The misrepresentation must play a “real and substantial part … in inducing the claimant to act” {JEB Fasteners case}
• But for the representation claimant wouldn’t enter the contract {Raiffeisen case}

Question 17

What happens if there is no reliance in the misrepresentation?

Answer 17

• If representee was unaware of the misrepresentation Horsfall case}
• If representee doesn’t allow misrepresentation to affect their judgement {Attwood case}
• If a misrepresentation was corrected before relied on {Peekay Intermark Ltd case}

Question 18

What is materiality?

Answer 18

• Misrepresentation that would affect the decision of a reasonable person in deciding whether to enter into a contract on the terms of the contract.
• Distinction between materiality and inducement is blurred
• Case: Museprime Properties v Adhill Properites [1991]