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Flashcards in Remedies for Misrepresentation Deck (47)
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What is the relationship between the type of misrepresentation and the relevant remedy given?

If there is an actionable misrepresentation then the type need be established so as to determine the appropriate remedy to prescribe.


What are the four key types of remedies a party may seek after an actionable misrepresentation?

(1) Rescission
(2) Indemnity
(3) Damages
(4) Claim for breach of contract


What is rescission as a remedy for misrepresentation?

Rescission is the 'basic' or 'standard' type of remedy, it is an equitable remedy available for all types of misrepresentation that gives the innocent party the opportunity to set-aside the contract and return the parties to their pre-contractual positions.


What choice does the remedy of rescission give to the innocent party? (1)

It gives the innocent party the choice of whether they affirm the contract - leading to it being treated as a 'good contract' - or reject the contract - leading to it being set aside.
Authority - Lord Atkinson in Abram Steamship Co


What must be given following an actionable misrepresentation?

Where an actionable misrepresentation has occurred notice of this must be given to the other (generally offending) party.


What are the three exceptions to the requirement to give notice? (1)

There is no requirement to give notice;
(1) Where it is impossible to trace the other party and provide notice
Authority - Carr & Universal Finance Co Ltd v Caldwell
(2) Commencement of legal proceedings is sufficient to imply notice
(3) Repossession of property is sufficient to constitute notice


What are the five potential bars to rescission?

(1) Affirmation
(2) Lapse of time
(3) Impossibility of rescission
(4) Third Party Rights
(5) Discretion of the courts under the MA 1967


How is affirmation a bar to rescission? (1)

If the claimant has affirmed the contract after becoming aware of the misrepresentation he will lose the right to rescind it.
Authority - Long v Lloyd


What actions may a potential claimant take to avoid loss of the right to rescind following affirmation?

The right to rescind is not lost if corrective action is taken following discovery of the misrepresentation.


Is a successful sale necessary for affirmation to have occurred? (1)

No a successful sale is not necessary.
Authority - Re Hop and Malt Exchange and Warehouse Co Ex Party Briggs


How is a lapse of time a bar to rescission? (1)

Where a significant period of time has lapsed the courts may refuse to grant rescission.
Authority - Leaf v International Galleries


Why is the distinction between fraudulent and non-fraudulent misrepresentations important in relation to lapse of time as a bar to rescission?

For non-fraudulent misrepresentations the time period begins from the date of the contract whereas for fraudulent misrepresentations it begins from the date the fraud could reasonably have been discovered.


Is there a specific time limit/requirement to prevent loss of rescission through lapse of time?

No, the courts determine what constitutes a reasonable period of time on a case-case basis.


How is impossibility of rescission a bar to rescission?

Rescission generally requires that the parties are put back into their pre-contractual positions, in some cases, however, this is not possible and thus rescission is impossible/inappropriate/unavailable.


In what instances may impossibility of rescission arise? (2)

(1) Where the exchanged goods have perished or been destroyed.
Authority - Clarke v Dickson
(2) Where the value or condition of the exchanged goods has changed.
Authority - Vigers v Pike and Erlanger v New Sombrero Phospate Co


What discretion do the courts have when dealing with impossibility of rescission?

The courts have the discretion, in some cases, to order rescission while allowing for financial adjustments to take account of the inability to make full restitution.


How are third party rights a bar to rescission?

A misrepresenee may be prevented from claiming the return of property via rescission where that property has subsequently been acquired by a third party.


What are the two requirements the third party must meet in order to avoid loss of property through rescission? (1)

(1) The third party must be bona fide - meaning they provided some form of consideration.
(2) They must have been unaware of the earlier misrepresentation.
Authority - Crystal Palace Football Club Ltd v Dowie


Why do third party rights overrule the right to rescission?

Rescission is a personal right against the representor and so cannot be used to defeat the rights of a third party.


How is the discretion of the courts under the 1967 MA a potential bar to rescission?

Under s 2(2) of the 1967 MA the courts have the ability to exercise discretion to award damages in lieu of rescission, hereby forfeiting the party's right to rescission.


How may rescission be used in conjunction with other remedies? (1)

(1) Where there is additional loss suffered beyond that solvable by returning the parties to their pre-contractual positions the remedy of damages for wasted expenditure may be available under s 2(1) of MA 1967
(2) In accordance with the objective of rescission to restore the parties to their original position rescission may be claimed alongside indemnity so as to end any existing obligations incurred through the contract.
Authority - Newbigging v Adam


What is indemnity and a remedy for misrepresentation?



Where may be indemnity be available as a remedy?

In cases of innocent misrepresentation where the right to rescission has been lost and damages are unavailable there is the possibility of indemnity as a remedy.





What are damages as a remedy for misrepresentation?



When may damages be considered as a remedy for misrepresentation?

They, like indemnity (and all other remedies), should only be considered if rescission is found to be unavailable or inappropriate.


What does the measure of damages available to a party depend on?

The type of misrepresentation.


What damages are available following fraudulent misrepresentation?

As it is grounded in the tort of deceit claimants are entitled to 'tortious damages' i.e. out of pocket expenses - the aim of these damages is to restore the party's to the position they would have been in had the misrepresentation not been made.


What is the nature of the remoteness test applied to fraudulent misrepresentation in regards to damages? (2)

A remoteness test is applied to determine what damages can be awarded, it is, however, a fairly unrestrictive one - the misrepresentee can recover for all the direct loss incurred as a result of the misrepresentation regardless of foreseeability.
Authority - Doyle v Olby Ltd
Authority - Smith New Court Securities Case Ltd


Which case saw it established that negligent misrepresentations at common law may also be recoverable as tortious damages? (1)

Hedley v Byrne - up to this point it was believed on fraudulent damages could be recovered.