Contract Law - Misrepresentation

Question	Answer
Keats v Earl of Cadogan 1851	No duty to disclose. No misrepresentation. the landlord knew that tenant wants the property for immediate habitation, did not disclose that property was uninhabitable.
Sykes v Taylor-Rose 2004	No misrepresentation when house sellers answered no to: " is there information which the buyer should know?". They did not disclose a murder at the house previously.
Behn v Burness 1863; definition of representation	Representation is a statement made by one party to the other, before or at the time of the contract, of some matter or circumstance relating to it.
Exceptions to duty to disclose	- Active concealing; Gordon v Selico 1986 (covering up dry rot by painting over them) - Subsequent falsification; With v O´Flanagan 1936 (seller said taking were 2000 pounds but it fell to 5 pounds later - Custom; Jones v Bowden 1813 - Contracts of utmost good faith; insurance contracts or fiduciary relationships
If the statement is untrue, then it is a misrepresentation	TRUE
There is no general rule of liability for silence	TRUE
FORMS OF MISREPRESENTATION	Different forms
Forms; Words	Curtis v Chemical Cleaning co (Reference to specific risks instead of a general clause) Misrep can be implied from the express words used by the representor. IFE Fund SA v Goldman Sachs Intern ( the test: what a reasonable person would have inferred was being implicitly represented.
Forms; Conduct	May amount to misrep if a statement can be impied from the conduct. Spice Girls v Aprilia 2002 (Group signed deal as 5 when 1 had given notice to leave)
Forms; Changed circumstances	Representor must notify other party if a true statement later becomes true. (With v O´flanagan) Representor may escape liability if correction is before contract. Peekay Intermark v Australia and New Z banking 2006; misrep made over phone, but contract documents were accurate.
Forms; Half-truth	Dimmock v Hallett 1866 (vendor said farms fully let but not that tenants had given quit notice) Vague statements/sales puff are not normally misrep. (dimmock v hallett)
Forms; statement of law	A statement as to how the law applies to a specific situation can amount to misrep. Kleinworth Benson v Lincoln CC 1998. Pankhania v London Borough of H (statement that premises occupiers were contractual licenses when they were protected tenants)
Forms; Statement of opinion	Is not normally misrep even if wrong. Bisset v Wilkinson 1927 (farm seller said the farm could carry 2000 sheep. But it could not) BUT, a person with a special skill may be held to have warrented his opinion. Esso Petroleum v Mardon 1976 (estimate of petrol throughput at 200k gpa but reality 78k gpa. Smith v Land & House property 1884 (tenant said to be "a most desirable tenant" had been irregular with rent.
Forms; statement of intention	May be misrep if representor had no intention as represented or had a different intention. Edgington v Fitzmaurice 1885; prospectus siad loan was to improce buildings: in fact it was intended to pay off existing loans. Bowen LJ: "the state of a man´s mind is as much a fact as the state of his digestion".
Misrep must be a factor which induced the other party to enter the contract	BUT, it does not need to be the sole inducement. Edgington v Fitzmaurice: false statement of loan´s purpose and buyer´s wrong belief about security.
If a misrep is made fraudulenty it .....	would be takes as material and an inducement; Dadourian Group v Simms 2009.
Courts are not likely to find inducement if:	-Misrepresentee was not aware of it (Horsefall v Thomas 1862; gun seller concealed defect, buyer did not insepct) - Misrepresentee knew that the statement was untrue (cf. JEB Fasteners v Marks Bloom 1983; claimant had reservations about accounts prepared by accountants) - Misrepresentee did not allow the misrep to influence him, even tho he was aware of it (Smith v Chadwick 1884)
TYPES OF MISREPRESENTATION	Fraudulent, negligent at common law, negligent under s.2 of misrep act 1967, innocent misrep
Fraudulent Misrepresentation	Derry v Peek 1889; a false statement made knowingly, or without belief in its truth, or recklessly, without caring, whether it be true or false. Constitutes the tort of deceit. Derry v Peek (prospectus said company had statutory right to use steam power but Board of Trade did not grant approval.
Negligent Misrepresentation at common law	In the past, action was not possible for negl. misrep unless there was a contractual or fiduciary relationship between the parties. E.g. Candler v Crane, Cristmas 1951 (investor in a business after accountants´ negligence could not recover) Hedley Byrne v Heller confrimed that: A false statement may lead to liability for negl. misrep even in the absence of a pre-existing contractual or fiduciary relationship. the situations would involve some special relationship and voluntary assumption of responsibility by the maker of the statement.
Negligent misrepresentation under s.2 of Misrep Act 1967	Party who makes a negligent misrep is liable; if he would be liable had the statement been made fraudulently. UNLESS he proves; that he had reasonable grounds to believe, and did believe up to the time that the contract was made that his statement was true. No need to prove special relationshop as under Hedley Byrne.
Innocent Misrepresentation	A non-fraudulent false statement which the maker had reasonable grounds to believe and did believe to be true. Oscar Chess v Williams 1957. Following the developments in Hedley Byrne and S.2, it follows that an innocent misrep is one which os made in the belief that it is true and that there are reasonable grounds for that belief.
REMEDIES FOR MISREPRESENTATION	Innocent & negligent misrep; resciossion and/or damages Fraudulent misrep; Rescission OR damages
Rescission	Setting aside of the contract. rescinded contracts are terminated from the very start. Mutual return of payments and benefits. When rescission is granted, no damages may be awared (to avois unjust enrichment).
Rescission; limitations (Bars)	* Affirmation (Long v Lloyd 1958) * Supervening third party rights (Lewis v Averay) * Lapse of Time (Leaf v Intern. Galleries) * Restoration not possible (Clarke v Dickson)
Damages for fraudulent misrep	Doyle v Olby 1969; ".. whether or not the D could have foreseen the loss". To compensate for the amount the claimant is 'out of pocket' as a result of the contract. Claimant can recover for all direct loss incurred resultet of the misrep; Doyle v Olby, Smith New Court v Scrimgeor
Damages for negligent misrepresentation at common law	put the claimant in the position he would have been in if the tort had not been committed. The claimant can ONLY recover damages for losses whihch were reasonable foreseeable by the defendant.
Damages for negligent misrepresentation under s.2 (1)	Damages as for fraud, but do not need to prove fraud. No need to prove Hedley Byrne special relationship. Royscot trust v Rogerson 1991; claimant can recover all losses suffered as a result of the agreement, even if they were unforeseeable. Note: it´s controversial.

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