Misrepresentation Boe Dube 05/12/2312

What is Misrepresentation? Misrepresentation is a false statement which is portrayed as being true with the intention to induce the other into a contract.

What it is not A mere commendation A statement of opinion A statement of future intention A statement of law

Mere commendation Dimmock v. Hallet (1866) Estate agents description of land as ‘fertile and improveable’ was held to be mere puff.

Statement of opinion Bisset v. Wilkinson (1927) ‘I guess this land holds around 2000 sheep.’ Opinion, not misrepresentation BENTLEY If you are an expert, your opinion is assumed to be based on fact.

Statements of intention Generally held to be irrelevant. If you borrow £5,000 from a bank to improve your home but later decide to go on a cruise, this is not misrepresentation as intention different at time of dealing. However, this can be actionable if it can be proved that the representor never intended to do the promised Edgington v. Fitzmaurice (1885).

A solicitor can misrepresent foreign law. Statements of law Generally cannot be misrepresentation, but can if misinformed by a lawyer – breach of professional duty, or if there is wilful misrepresentation of the law. A solicitor can misrepresent foreign law.

Silence Fletcher v. Krell (1873) No duty to disclose if not asked. Keats v. Cadogan D lets house to P without inspection. House is uninhabitable. No misrepresentation as silence does not construe this.

An act of concealment can amount to misrepresentation. Gordon v. Silicoe Painting over dry rot is misrepresentation Actions or conduct can amount to misrepresentation. Livesly v. Rathbone P applies for a part-time job and asks for a minimum of 2 days a week. Manager nods and smiles but does not speak. Held to be representation by conduct. Misrepresentation can be implied. Edinburgh Breweries v. Molleson P wishes to buy business but finds out afterwards that the accountancy books are false. Buyer was entitled to believe they were genuine as there is an implied misrepresentation.

Half truths A half truth distorts something you say. Nottingham Brick and Tyre Company v. Butler Seller: ‘ I know of no restrictive covenants on upon the land.’ But they had not checked so this was held to be misrepresentation.

Change in circumstance What you initially say is correct but before the representor relies on what you’ve said there is a change in circumstance. There is generally a duty to disclose any significant delay in the deal. This does not affect instantaneous agreements. Withe v. O’Flanagan(1936) Profitable doctors practice becomes unprofitable between the time of the agreement and the time the information is relied upon. Misrepresentation as there was a duty to inform the change in circumstance.

Misrepresentation via a third party An untrue statement passed from one to another is no longer misrepresentation, if that untruth is then passed on to another but if the first party knows that the misinformation is likely to be passed on, then there is actionable misrepresentation. Pilmore v. Wood (1838) Seller of a pub lied about the amount of takings it took knowing that the information would be passed on.

Inducement If the other party has not been induced by the misrepresentor, then they have no claim. Attwood v. Small (1838) Buyers of a mine claimed misrepresentation when the amount of minerals was found to be less than the amount stated by the seller. However, as they had relied on the results of their own private survey, there was no misrepresentation. If a person with reasonable skill makes their own enquiries, it is likely that they have relied on that information rather than that of the seller. But Redgrave v. Hurd (1881) suggests that if the representee still fails to discover the truth, they can still be regarded as having relied upon the representor’s untrue statement.

Remedies Damages – is the reward of money as compensation for the misrepresentation, and is often the amount needed to put right a defect plus an amount for inconvenience. Recission – is where the parties return to their original position, handing back to the other anything that was exchanged through the now void contract. Nowadays the plaintiff can choose the remedy but it still can be decided by the type of misrepresentation that has occurred.

Fraudulent misrepresentation Derry v. Peek (1889) Fraudulent misrepresentation is ‘knowing without belief in its truth, or recklessly as to whether it be true or false. Fraudulent misrepresentation is hard to prove due to the difficulty of obtaining the mens rea, but if proved both damages and recission are used to remedy the situation. However, recission may not be used in all cases as it could result in an unfairness, which would not be equitable.

Non-fraudulent misrepresentation Before 1963, recission was the only remedy in these circumstances, but in 1963 the house of Lords stated obiter that damages could be awarded if there was a ‘special relationship’ between the parties. Uncertain what a ‘special relationship’ is but taken as ‘the neighbour principle as defined in Donaghue v. Stevenson (1932) where it is foreseeable that a person will be affected by my actions, a duty of care is owed to them. Esso v. Mardon (1976) ‘special relationship’ deemed to exist where the representor posses relevant knowledge or skill that the other is likely to rely upon.

Misrepresentation Act (1967) Provided damages as a remedy for non-fraudulent misrepresentation for the first time in statute. Once negligence has been alleged, it is up to the accused to disprove the allegation. Howard Marine v. Ogden (1978) D took information regarding boats from respected journal, not own information and this persuaded P to hire them. Difference in information quoted and truth. Reasonable practice in industry but as they owned the records what they said was held to be misrepresentation. Heavy burden to disprove.

Indemnity An indemnity is a sum paid by A to B by way of compensation for a particular loss suffered by B. The indemnitor (A) may or may not be responsible for the loss suffered by the indemnitee (B). Forms of indemnity include cash payments, repairs, replacement, and reinstatement.

Recission Recission is to put the contract aside and return the parties to their original position. When misrepresentation occurs the contract is voidable, so the Plaintiff has the option to void or continue. If the Plaintiff wishes to rescind he must notify the other party directly or by some other act clearly showing that he no longer wishes to be bound by the terms of a contract. Car and Universal Finance Company Limited v. Caldwell (1965) notifying the police and relevant authorities would be evidence of the wish to rescind.

Bars to recission Bars to recission occur when ending the contract is deemed unfair by the court, which is not allowed as recission is based in equity. Bars to recission occur in the following circumstances…

Statutory Bar: Misrepresentation Act 1967 s2(2) the court has the right to award damages in lieu of recission as shown in Zanzibar v. British Aerospace (2000). Lapse of time: Fraudulent misrepresentation – lapse is from the time the fraud is discovered: Non-fraudulent misrepresentation – lapse is from the time of the contract, Leaf v. International Galleries (1950). Affirmation: The indication that the meisrepresentee is willing to continue with the contract, Long v. Lloyd (1958). Restitution impossible: Items cannot be returned in original condition after recission, Vigers v. Pike (1842) restitution of a mine impossible after considerable extaction had occurred. Supervening third-party rights: Recission cannot take place as a third party now has the goods, White v. Garden (1851).