ACTIONABLE MISREPRESENTATION
Unambiguous, false, statement of fact, addressed to C, induced C (need not be the only reason but material) |
C to prove objective inducement AND D to prove C was not induced, OR C to prove subjective inducement. |
No duty to check misrepresentor's statement. If unreasonable not to check/negligent check done - possible contributory negligence. |
Mere Puff - Not Misrepresentation
E.g. 'desirable residence', 'fertile and improvable', 'a fantastic investment opportunity' |
Silence - Not Misrepresentation
No duty to disclose facts which, if known, might affect other party's decision to contract. |
Impossible to know precisely what should be disclosed. |
Statement of Future Intent. - Not Misrep
Cannot be true or false at the moment it is made. |
Representor makes a promise and then it is prevented/circumstances alter so they change their mind. |
E.g. wife says she will not remarry and this is her intention. Later, changes her mind and remarries. She did not misrepresent her current intention. |
Statment of Opinion - Not Misrepresentation
Same facts held by D & C. Honestly held by D. |
E.g. D said his 'idea was that the land would carry 2000 sheep' (when land has never been used for sheep before). |
Statement of Fact - Misrepresentation
E.g. statements of law, statement asserting a given state of affairs. |
Contracts uberrimae fidae - Misrepresentation
Some contracts necessitate one party in particularly strong position to know material facts and disclose those. |
E.g. insurer must disclose material facts in a contract of insurance.
E.g. fiduciary relationships like, company & directors; trustee & beneficiaries. |
Half-Truths - Misrepresentation
Statement that is technically true but misleading. |
E.g. selling property as 'fully let' knowing all tenants have given notice to quit. |
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Statement of Opinion > Fact - Misrepresentation
Representor has superior knowledge/experience than representee. |
E.g. 'This will make 200,000 gallons of petrol per year' - said when representor had enough experience to know it can't be true. |
Statement of FI > Fact - Misrepresentation
Where X states they intend to do something but know they cannot do it/do not intend to do it. |
E.g. 'I will buy it next month for £1000', knowing they cannot afford it or having no intent to buy it. |
Continuing Misrepresentation - Misrep
If statement is made initially which is true but becomes false before contracting, representor must correct misrepresentation. |
Existing fact which was true but later becomes false. |
E.g. selling a shop stating income of £1000p/m. If income falls to £100p/m, must disclose. |
CATEGORIES OF MISREPRESENTATION
Remedies available depend upon the category of the misrepresentation in question. |
Categories - Fraudulent
Proof of fraud: false representation made knowingly or without belief in its proof or made recklessly careless whether it be true or false. |
Deliberate/dishonest failure to disclose |
Motive = immaterial |
Burden of proof on C (extremely difficult) |
Categories - Negligent
Where representor cannot prove that they had reasonable grounds to believe (and continued to believe) the statement was true up to time of contract. |
Burden of proof on D to prove they had reasonable grounds in believing their statement. |
E.g. X told Y £100 cost taken from Doc 1. True cost was found in Doc 2. X failed to show objectively reasonable grounds for disregarding figure in Doc 2 and relying instead on Doc 1. |
Categories - Innocent
Representor had reasonable grounds for belief in the truth of their statement and believed it up to time of contracting. |
Burden on neither; innocent is simply a statement not made fraudulently/negligently. |
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Rescission
Representee must communicate intention/initiate proceedings for rescission |
Only awarded where parties can be restored to original position pre-contract. |
Bars to Rescission
Affirmation |
Contract was affirmed through words/conduct |
Lapse of time |
Action for rescission must be brought promptly |
Third party rights accrue |
If at any time prior to rescission, person acquiring goods under contract passes good title of those goods to an innocent third party, cannot rescind. |
Impossibility |
If it is no longer possible to restore parties to previous position.
E.g. change in nature/status of shares after being induced to take shares. |
REMEDIES FOR MISREPRESENTATION
Voidable but not void. |
Rescission, damages, indemnity |
Indemnity
Covers expenses for obligations assumed as direct result of contract |
Where action for misrepresentation gives damages, indemnity NOT awarded |
E.g. If representee induced into buying leasehold property, obligations arising from this (council tax, service charge etc.) would be covered by indemnity |
Damages for Fraudulent Misrep
Places innocent party in position they would have been but for the misrepresentation |
C must mitigate losses as soon as fraud discovered |
Contrib. not available as defence |
Damages reduced by value of any benefit C acquired as a result of contract |
Damages for Negligent Misrepresentation
Places innocent party in position they would have been but for the misrepresentation |
Damages can also be given in lieu of rescission |
Contrib available where loss was partly fault of representee |
Damages for Innocent Misrepresentation
Only entitled to rescission and indemnity (if applicable) |
No automatic right to damages |
Court has discretion to award damages in lieu of rescission |
EXEMPTING MISREPRESENTATION
Cannot exclude/restrict liability unless it satisfies requirement of reasonableness. |
ALTERNATIVE CLAIMS TO MISREPRESENTATION
Claim for breach: |
Where misrepresented statement is incorporated into contract |
Claim in negligent misstatement: |
Where duty of care exists in tort |
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