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Lecture Notes: Contract Law (Misrepresentation) (80%)
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Lecture notes on misrepresentation. Scored 80%
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Misrepresentation1. What is Misrepresentation? A pre contractual false statement of fact that induces a
contract.
The party induced to contract is the misrepresentee.
The party that makes the false statement is the misrepresentor.
The misrepresentee must rely on the statement, doesn’t have to be sole reliance.
2. A statement made during negotiations may become incorporated into the contract as a
TERM or it may be a MERE REPRESENTATION. Both can be said at the outset, but a term
appears in the contract unlike representation. A mere puff is also different it’s just sales
patter to try to persuade a party to enter a contract.
Difference between a Term and Representations:
☁ A term is a binding promise as to the truth of the statement. If a contractual term is
broken, the remedy is breach of contract.
☁ A representation is an inducement to contract. If the representation is false, this
gives rise to an actionable misrepresentation.
It is important to analyse whether any pre-contractual statement made is true or not.
3.
False statement of FACT False statement of Opinion Conduct Silence/ Omission- failure
to speak where there is a
duty to do so
A false statement must Usually statements of The misrepresentor Should speak up and
be a false statement of opinion are not statement of does something correct the statement but
fact as opposed to: a fact BUT it will be statements which leads to a chooses not to this is
statement of belief, of fact if: false understanding misrep of the situation.
opinion, future conduct of the situation.
or intention. 1) Statement maker is in Encouraging a false Half truth- if a statement is
better position to know the belief- Gordon v a half-truth (may be true
truth- Smith v Land & House Selico but misleading/doesn’t
Only a false statement of Property Corporation present the whole picture)
FACT which induces the there is a misrep- Dimmock
other to enter into the 2) Statement maker Horsfall V Thomas- v Hallett
contract, can constitute possessed special skill or a defect in a gun was
an actionable knowledge-Esso Petroleum v discoverable on Change of circumstances-
misrepresentation Mardon-He was considered inspection. No statement was true when
rendering the contract to possess special skill and inspection took made but, has become false
voidable and give rise to knowledge. The forecast was place and so there by the time it is acted upon.
, possible remedies for relied upon by the tenant. was no reliance on The failure to disclose the
misrep. The statement amounted to this change in circumstances is a
a statement of fact as misrepresentation. misrepresentation- With v
reasonable skill and care had O’ Flanagan
been used in its preparation.
4. Induces the other party to enter the contract- The C must RELY on the statement. The
subjective test is whether the misrepresentee was induced (depends on the state of mind of
the misrepresentee). The objective test is whether the matter would have influenced the
reasonable man. Attwood v Small would only be relied upon where the purchasers rely
entirely on their own experts and not at all on the misrepresentor’s statements.
Limitations:
◐ Edgington v Fitzmaurice (1885): the misrep need NOT be sole reason why claimant
entered into the contract. The misrepresentation just needs to be ONE of the
reasons. But here is a responsibility to prove the inducement.
5. Opportunity to test accuracy of statement but does not take it. Is the statement still a
misrepresentation? Redgrave v Hurd (1881)- misstatement was still an inducement and
therefore the purchaser had a remedy in misrepresentation. However, the damages award
may be reduced for the purchaser’s contributory negligence in contributing to their own
loss. The reason the misrepresentation is still considered is because it acts as an active
influence.
6. Types of misrepresentation- depends on the state of mind of the misrepresentor. The
statement must be false.
Fraudulent
Negligent
Innocent
Fraudulent Negligent
Most serious
Court takes a very harsh view, wilfully misleading you Difficult to identify
to enter a contract.
There is an absence of an honest belief that the An honest belief that the statement is true but no
statement is true. reasonable grounds for that belief. Failed duty to
use reasonable care and skill to check accuracy
(failed to appreciate it is false).
Derry v Peek (1889)- a false statement ‘made
knowingly, or without belief in its truth, or recklessly,
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