A Level Law - Misrepresentation

What is misrepresentation?

False statement of material fact made by a party to induce the other party to enter the contract.

What can the person who has suffered from misrepresentation do with the contract?

Misrepresentation does not automatically end the contract but they can take action to end it, however do not have to (recission of contract - return to pre contractual position)

What must a false statement be?

A statement must be untrue or inaccurate.

How is the truth of a statement determined?

It is determined based on the person's knowledge.

Can a false statement be non-verbal?

Yes, it can be written or verbal, but doesn't have to be.

What case illustrates misrepresentation through painting over dry rot?

Gordon v Selico.

What must a person ensure about their statements when offering something?

What they say must be truthful (Fletcher v Krell).

Is complete silence considered misrepresentation?

No, complete silence is not misrepresentation.

What happens if a statement is true when made but false when the contract is formed?

It must be corrected or this is misrepresentation (With v O'Flanagan).

When can silence be considered a misrepresentation?

When it is a half-truth, meaning not telling the whole story (Dimmock v Hallett).

In what type of relationship can silence be a misrepresentation?

Where the relationship between the parties is based on trust (Tate v Williamson).

What must be disclosed in a contract made in 'utmost good faith'?

All material facts must be disclosed whether they have been asked for or not.

What does the Consumer Insurance (Disclosure and Representation Act 2012) clarify?

It clarifies that all material facts must be disclosed in utmost good faith, as seen in Lambert v Co-operative Insurance.

What case illustrates that a statement does not have to be written or verbal?

Spice Girls v Aprilia.

Material fact

- This means it would've led a reasonable person to make the contract and it influenced C to enter the contract

- Statement must be of fact, not opinion (Bisset v Wilkinson)

- Statement of future intention is not a fact and is not misrepresentation however if they had no intention to do what was stated, this will be misrepresentation (Edgington v Fitzmaurice)

- If the person did not believe their opinion was honest, the court will regard this as fact not opinion i.e. if they intentionally lie, they will be liable even if they aren't an expert

Made by a party to the contract

Only the party to the contract and agents are liable for statements made

Induces the other party to the contract

- Statement must lead the other party to enter the contract

- Statement must have been relied on by the person entering, their own opinion or information they found elsewhere will not suffice (Attwood v Small)

- Even if C could have discovered the truth by taking reasonable steps, there will still be misrepresentation if the statement was relied upon (Redgrave v Hurd)

- Irrelevant if the RM would not have relied on the statement, as long as C relied on it, it is misrepresentation (Museprime Properties Ltd v Adhill Properties Ltd)

Omissions in consumer context

- s.12 Consumer Rights Act 2015: seller must provide certain pre contractual information to the consumer for the contract to be legally binding, if there is a change to this information it must be expressly agreed between the parties

- Consumer Protection (Amendment) Regulations 2014: If a trader deliberately misses out information, this is a misleading omission - consumer information must be displayed clearly. Obscure presentation of consumer information is treated as a misleading omission. Information is misleading if it: omits material information that the average consumer needs according to the context to make an informed transactional decision, hides or provides material information in an unclear unintelligible ambiguous or untimely manner, failed to identify the commercial intent of the commercial practice if it is not already apparent from the context

Innocent misrepresentation

- Misrepresentation Act 1967 defined this as a 'false statement made honestly'

- The party must have had reasonable and genuine belief that their statement was true

- Remedy is recission or damages, but not both (Zanzibar v British Aerospace (Lancaster House) Ltd

When is recission unavailable?

- Returning the parties to their pre contractual position is impossible (Clarke v Dickson)

- The contract is affirmed - the innocent party decides to carry on with the contract despite the misrepresentation, so they lose the right to rescind it - Long v Lloyd

- Delay - if the claim is delayed, C will not be able to rescind - Leaf v International Galleries

- A third party has gained rights over the contract - recission will not be granted if it will be unfair to do so on an innocent third party - Lewis v Averay

Negligent misrepresentation

- False statement made by a person who has no grounds to believe it was true. There are two types:

- Under negligence through common law - Hedley Byrne & Co Ltd v Heller & Partners Ltd

- Under statute through s.2(1) Misrepresentation Act 1967 - there must not have to be a special relationship between the parties, V just needs to suffer a loss. Once V proves there has been misrepresentation, the burden of proof lied with the person who made the statement to prove they have reasonable grounds to believe it was true - Howard Marine v Ogden & Sons

Remedies for negligent misrepresentation

- Recission and damages - C can claim for both

- Hedley Byrne principle: damages are calculated based on the tort committed, and can be reduced with the Law Reform (Contributory Negligence) Act 1945

- Misrepresentation Act 1967: damages are calculated based on the tort as in Royscot Trust Ltd v Rogerson where as D was fraudulent, damages awarded would be the same as in a fraud case

Fraudulent misrepresentation

- Derry v Peek defined this as a statement which the person making the representation knows is untrue, or is reckless as to whether or not it is true

- Can be an incorrect answer/statement or an overly rose tinted view

- Greenridge Luton One v Kempton Investments - buyer entitles to deposit and damages due to reliance on untrue representation when he wanted to buy a property

Remedies for fraudulent misrepresentation

- Can claim for recission and damages under tort of deceit

- Smith New Court v Scrimgeour Vickers - courts awarded difference between sale price and price paid

- East v Maurer - calculation of damages included profit which the business should have made

Misrep plan

Representation - Statement made to induce a party to the contract
False statement:
Can be written or verbal - Spice Girls
Cannot be by silence - Fletcher v Krell
Material fact:
Must be fact not opinion
Will usually be opinion if genuinely believed - Bisset v Wilkinson
Made by a party to the contract:
Induces the other party:
Representation must be a critical part of the decision - Attwood v Small
Types
Innocent - Genuinely believed with rg
Negligent - Genuinely believed with no rg
Fraudulent - Not believed, Derry v Peek
Remedies:
Damages and recission put parties in situation as if contract never existed