Misrepresentation Law: Types, Consequences, and Exceptions, Study notes of Law

Download Misrepresentation Law: Types, Consequences, and Exceptions and more Study notes Law in PDF only on Docsity! 1 Misrepresentation Principle Case (1) A false statement Exception to a false statement: if a true representation is falsified by later events, the change in circumstances should be communicated With v O’Flanagan [1936] Ch 575 Implied representations: half-truths lead to actionable misrepresentation Dimmock v Hallett (1866) LR 2 Ch App 21; Spice Girls Ltd v Aprilia World Service BV [2002] EWCA Civ 15 (2) Existing or past fact An opinion is not usually a statement of fact and therefore not an actionable misrepresentation Bisset v Wilkinson [1927] AC 177; Hummingbird Motors v Hobbs [1986] RTR 726 An opinion which is either not held or could not be held by a reasonable person with the speaker’s knowledge is a statement of fact Smith v Land and House Property Corporation (1884) 28 Ch D 7 If there is an unequal skill, knowledge, and bargaining strength, there is misrepresentation Esso Petroleum Co Ltd v Mardon [1976] 2 All ER 5 An actionable misrepresentation is a false statement of existing fact (i.e. statement of intention) Edgington v Fitzmaurice (1885) 29 Ch D 459; East v Maurer [1991] 1 WLR 461 Misrepresentations of law amount to actionable misrepresentations Kleinwort Benson v Lincoln CC [1999] 2 AC 349; Pankhania v Hackney LBC [2002] EWHC 2441 (Ch) (3) Made by one party to another If a misrepresentation is made to a third party and, objectively, it is likely that the misrepresentation will be passed to the other contracting party, it will be actionable Cramaso LLP v Ogilvie-Grant [2014] AC 1093 (4) Induces the contract The false statement should be the main reason for entering into the contract Attwood v Small (1838) 6 LC & Fin 232 Actual and complete knowledge of the true facts will defeat the representee’s claim Redgrave v Hurd (1881) 20 Ch D 1 2 The misrepresentation need not be the sole reason why the representee entered into the contract Edgington v Fitzmaurice (1885) 29 Ch D 459 If it is proven that the representee would have entered into the contract notwithstanding the misrepresentation, the misrepresentation claim will fail JEB Fasteners v Marks, Bloom & Co [1983] 1 All ER 583 Bars to rescission If the property is in a reduced state, the returning party may be ordered to pay an allowance Erlanger v New Sombrero Phosphate (1838) LR3 App Cas 1218 Where the representee has expressly or impliedly affirmed the contract the right to rescind is lost Long v Lloyd [1958] 1 WLR 753 Where there has been a lapse of time between the making of the contract and the decision to rescind the right to rescind is lost Leaf v International Galleries [1950] 2 KB 86 Types of misrepresentation and damages Fraudulent misrepresentation is a statement made: (1) knowingly; or (2) without belief in its truth; or (3) recklessly, careless whether it be true or false Derry v Peek (1889) 14 App Cas 337 The claimant may claim all losses stemming from having entered into the contract (not only reasonably foreseeable losses, as is the case in respect of the tort of negligence) Smith New Court v Scrimgeour Vickers [1997] AC 254 Negligent misrepresentation Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 645 A right to damages for loss-causing negligent misstatements where there was a ‘special relationship’ Esso Petroleum Co Ltd v Mardon [1976] 2 All ER 5 As it is far easier for a claimant to succeed under s. 2(1) of the Misrepresentation Act 1967, common law negligent misrepresentation is rarely used Howard Marine & Dredging v Ogden & Sons [1978] QB 574 Assessment is based on the tort of deceit so losses need not be reasonably foreseeable Royscot Trust Ltd v Rogerson [1991] 2 QB 297 Suggests that the defence of contributory negligence ought to apply to actions for damages under MA 1967 s. 2(1) Gran Gelato Ltd v Richliff (Group) Ltd [1992] Ch 560