A misrepresentation can be a statement made before a contract or in a contract. It may be a term.
Misrepresentation gives the right to void the contract. This right can sometimes be lost/
Damages for misrepresentation vary according to the nature of the misrep – fraudulent or negligent or innocent. Damages may be available for the tort of deceit or negligent misstatement.
Misrepresentatyion Act 1967.
A contract may be rescinded for misrepresentation even if the misrep is a term of the contract.
If the misrep was a promise and not a statement of fact then probably no remedy will exist..
STATEMENT OF EXISTING LAW OR FACT WHICH INDUCES A CONTRACT.
A misrep must misstate the law or a fact to be actionable. Statement of opinion is not actionable Bisset v Wilkinson 1927.
A statement of opionion which cannot be supported MIGHT be a misrep.
Smith v Land House Corporation 1884 – someone said a man was a most desirable tenant when the tenant was in arrears.
Edgington v FitzMaurice 1885. A man who expresses an opinion that he does not hold is committing misrep.
Kleinwort Benson Ltd v Lincoln City Council 1999. A misrep can lead to restitutionary remedies for mistake in law.
For a misrep to be actionable it must help induce a party to contract. It does not need to be the predominant or only reason why a party signed the contract. Ity must have been reasonably important in persuading him to sign.
redgrave V Hurd 1881. A party might have been able to find out that the misrep was wrong. The misrepresentee can still claim misrep even though he had the chance to find out that he was misled and failed to take the opportunity.
The misrepresentee must show that the misrep induced him to sign the contract. A court will ask if the said misrep would persuade a reasonable man/.
MISREPRESENTATION BY SILENCE.
Misre usually requires a statement – oral or written.
Silence can SOMETIMES be seen as a statement. Spice Girls Ltd v Aprilia World Sergic BV 2000.
A statement which true must be corrected if it later becomes false due to a change in situation. 1936. With v O’Flanagan 1936.
A statement which is literally true can be a misrep if it is misleading. Dimmock v Hallett 1866.
uberrimae fidei contarcts require the disclosure of relevant info such as for insurance contracts. Lambert v CO-OPERaTIVE INsurance Society 1975.
CATEGORIES OF MISREP
Negligent or at common law. A special relationship gave riseu to duty of care to the representee. Hedley Byrne v Heller 1964.
Statutory misrep – no reasonable grounds for belieivng the statement was true under the Misrep Act 1967.
Innocent – no grounds for believing it was false.
Different remedies depending on the category.
REMEDIES FOR MISREP
These vary under common law in contract and in tort. They also vary under the Act. Rescission and damages are the two remedies.
Under common law is a contract is induced by misrep then rescission is frequently used as a remedy. Whether the misrep was innocent, negligent or Fraudulent rescission can be used in all three cases.
The court will then try to put the parties in the position in which they would have been ahd the contract never taken place. Return of goods and monies.
Rescission must be sought by the claimant it does not occur automatically.
Misrep renders a contract VOIDABLE and NOT void!!!!!!
Rescission is claimed by notifying the other party.
LIMITATIONS ON RESCISSION.
The right to rescind may be lost.
If a party was aware of the misrep and carries on anyway then he is affirming the contract. Long v Lloyd 1958.
If there has been a great space of time between signing the contract and the decision to rescind then this right to rescind may be deemed to have been waived. Leaf v International Galleries. 1950. 5 years after the contract the misrep was found. It was too late to rescind.
In fraudulent misrep a wronged party would be allowed much longer to find the misrep and rescind.
If restitution is impossible then the right to rescind may be lost. If the property has been destroyed, consumed or inextricably mixed with other party then this may be the case. Clarke v Dickson 1858.
Pecuniary payback MIGHT be ordered in the case of the property being consumed.
If rescission would impact on a third party then there MIGHT be no right to rescind. In the case of a rogue who sold goods to an innocent third party the misrepresentee will probably seek to have the contract declared void for mistake because thus gives him a better chance of recovering the goods.
Under Misrep Act the court may grant damages instead of rescission if this is equitable.
There are damages for non-fraudulent misrep.
Fraudulent misrep – there are damages for tortious deceit. For this the misrepresentee must show that the misrep was made knowing that this was a lie or that the misrep was reckless. Derry v Peek 1889.
Damages for tortious deceit – put the innocent party where he would have been had it not been for the contract. This is NOT the same as putting him in the position he would have been if the misrep had been true
East v Mauruer 1991. The claimant got damages for misrep. He bought a business which was not as profitable as he was told. He got damages taking into account the profit he should have made.
Damages cannot be too remote.
Hedley Byrne v Heller 1964. Negligent misstatement that caused economic loss MIGHT be actionable.
A statement of opinion can sometimes be negligent misstatement.
A representor will be open to action if he makes a statement which he does not have reasonable grounds for believing – this can be negligent.
BURDEN OF PROOF
The claimant must prove that the misrep was made and induced the contract. Defendant will then be liable for damges unless he can prove that there were reasonable grounds for making the statement.
Howard Marine Dredging and Co v Ogden and Sons 1978. The defendants made statament relying on a register of ships. The statement turned out to be wrong. Their consulation of the Register did NOT make their belief reasonable. It was about the barge’s capacity. In the ships documents the true figure was there.
MEASURE OF DAMAGES.
Royscott Trust Ltd v Rogerson. 1991. Court of Appeal – damages will be awarded for all loss. This means that losses need not have been reasonable forseeable to be recoverable.
Nigligent misrepresentor treated the same way as a fraudulent misrepresentor.
Misrep Act says damges can be awarded in lieu of rescission.