Contract Law Exam Terms (Misrepresentation)

What are the two basic points considered when deciding what constitutes an operative misrepresentation?

(1) Which statements are capable of being misrepresentations; and (2) under what circumstances is the appropriate sort of statement operative.

What are the 4 types of misrepresentation?

1. Fraudulent misrepresentation 2. Misrepresentation which is also a negligent misstatement 3. Misrepresentation for which damages are available 4. Innocent misrepresentation

Define Statement of intention'

A statement of intention cannot constitute a misrepresentation. A statement of intention carries with it an implied statement of fact as to the state of mind of the representer.

Definition of Misrepresentation

An operative misrepresentation is a false statement of existing or past fact made by one party to the contract to the other before or at time of contracting.

How can a statement be misleading?

Because, although there is no general duty to disclose relevant facts in pre-contract negotiations, there are some circumstances in which a misrepresentation is found to occurred because of something which the represent or has omitted to say or write. It is possible to base a misrepresentation on physical appearance rather than on an oral or written contract.

What is meant by Misrepresentation which is also a negligent misstatement?

Damages are available for the tort of negligence misstatement.

What is Fraudulent Misrepresentation?

Damages available under the tort of deceit. For fraudulent misrepresentation to take place, 6 criteria must be met. 1) A representation was made, 2) It was false, 3) when made, the representation was known to be false or made recklessly without knowledge of its truth, 4) it was made with the intention that the claimant would rely on it, 5) the claimant did rely on it; and 6) the claimant suffered damages as a result.

Case to highlight statement of intention

Edgington v. Fitzmaurice (1885).

What did the European Union do?

Implemented the Unfair Terms in Consumer Contracts Directive, which impacted English contract law and then adopted Common European Sales Law.

What is Reliance?

In order for misrepresentation to be operative, it must have been relied upon. It must have induced the contract. No remedy lay for a misrepresentation. (Smith v. Chadwick 1884).

What does s.2(1) of the Misrepresentation Act 1967 state?

It states that 'where a person has entered into a contract after a misrepresentation has been made to him by another party, and as a result thereof he has suffered loss, then if the person making the misrepresentation would be liable to damages in respect, made fraudulently, that person shall be so liable unless he proves that he had reasonable grounds to believe and did believe at the time of the contract was made that the facts represented were true'.

Concept of inequality of bargaining power

Major influence in decline of freedom of contract philosophy was the emergence of consumer as contractual force.

What is innocent misrepresentation?

Misrepresentations falling within certain categories. No damages are available for innocent misrepresentation but s.2(2) allows the courts to award damages in lieu of rescission where the misrepresentation is non-fraudulent.

Definition of Representor

Person making the misrepresentation

Definition of Representee

Person to whom misrepresentation is made

Why was the Misrepresentation Act 1967 s.2(1) developed?

Resulted from the 10th report of the Law Reform Committee in 1962 which recommended that damages should be available for negligent misrepresentation. The courts did provide a damages remedy for negligent misstatement in Hedley Byrne & Co. Ltd v. Heller and partners Ltd (1964).

Which section of the Act covers damages in lieu of rescission?

S.2(2) - sometimes referred to as a statutory bar to rescission. It permits the court to prevent rescission for non-fraudulent misrepresentation and award damages in lieu of rescission.

Misleading Practices

The Law Commission took the view that s.2 of the Misrepresentation Act 1967 should not apply to situations falling within their proposed simpler regime to provide remedies for consumers in relation to misleading and aggressive commercial practices.

When is a misrepresentative operative?

The parties to the contract and reliance.

The parties to the contract

The person making the misrepresentation must become a party to the contract with the person to whom it was made. (Hasan v. Wilson 1977). Agency is relevant and it may suffice if the misrepresentation is conveyed by a third party to the misrepresentee if the misrepresenter intended that to happen to induce the misrepresentee to contract.

Case to highlight the operation of the general rule

Turner v. Green (1895)

What is meant by Misrepresentation for which damages are available?

Under s.2(1) Misrepresentation Act 1967, the misrepresent or cannot prove that he or she believed the truth of what was misrepresented and that there were reasonable grounds for doing so, up until the time the contract was made.

What Act regulates the use of exclusion damages?

Unfair Contract Terms Act 1977.