Misrepresentation

• Misrepresentation is a false statement of material fact made by a party to a contract that induces the other party to enter into the contract.
• FALSE, so not true. Silence is not misrepresentation (FLETCHER v KRELL) although silence in a relationship based on trust is misrepresentation (TATE v WILLIAMSON). Silence when a statement that is true when it was made but which subsequently becomes false will be seen as misrepresentation (WITH v O'FLANAGAN). Silence where there is a half-truth is misrepresentation (DIMMOCK v HALLETT). Silence where there is conduct can amount to a misrepresentation (SPICE GIRLS v APRILIA). Silence where there is an insurance contract (a contract of 'utmost good faith) can be misrepresentation if there is a failure to disclose all relevant facts relating to liability (LAMBERT v COOP INSURANCE).
• However, under the Consumer Insurance (Disclosure and Representations) Act 2012, if the consumer did not realise they should have disclosed information, the insurance is still valid but any pay-out is reduced by the amount the insurance company undercharged. Additionally, if the consumer has deliberately lied, the insurance company can avoid the contract and keep any instalments paid.
• Statement of Fact A statement of mere opinion rather than fact is not misrepresentation (BISSET v WILKINSON) whereas a statement rather than just an expression of future plans can be misrepresentation (EDGINGTON v FITZMAURICE).
• Made from one party to another:

  Induces the contract, The false statement must induce the other party to enter the contract which was not the case in ATTWOOD v SMALL where the buyer did not rely on the seller's false statement but on a surveyor's negligent report. It was the case in REDGRAVE v HURT where the buyer relied on what he was told rather than checking accounts that would have shown that the buyer's statement was false. It does not matter that the victim could have discovered the truth by taking reasonable steps if they relied on the statement (MUSEGROVE v ADHILL).
• Once a misrepresentation has been established, the MISREPRESENTATION ACT 1967 must be considered. Innocent misrepresentation is where a person makes a false statement and always believes it to be true. The remedy can be either recission or damages (subject to court's discretion) but not both.
• Negligent misrepresentation is where a person makes a false statement and has no reasonable grounds for believing it to be true even if it is not a deliberate lie. Under s2 (1) of the Misrepresentation Act 1967 this is where the misrepresentation resulted in a contract and the victim suffered loss. Here, if the claimant can prove this then the burden of proof reversed and then on the defendant since they will be liable unless they can show they had reasonable ground to believe the statement (Howard Marine v Ogden & sons). The remedy can be recission and/or damages.
• Fraudulent Misrepresentation is where a person makes a false statement and knows it to be untrue or is reckless whether it is true or not (DERRY v PEEK). The remedy is recission and damages and damages includes all losses flowing from the misrepresentation where there is a causal link, including loss of profit. Fraudulent misrepresentation can be difficult to prove whereas negligent misstatement is much easier and the measure of loss is the same (ROYSCOT TRUST v ROGERSON).
• Recission is an equitable remedy to put the parties back in the position they were in before the contract was made but this remedy may not be available if certain limits apply. It is not available as a remedy if a return to pre-contract position is impossible (CLARKE v DICKSON). It is not available if the contract has been affirmed (LONG v LLOYD) which is where the innocent party decides to carry on with the contract despite being aware of the misrepresentation. It is also not available if there has been a delay (LEAF v INTERNATIONAL GALLERIES). Finally, it is not available if a third party has gained rights over the property (LEWIS v AVERY).
• Damages may be awarded if it not possible to go back to the pre-contract position so the claimant is awarded monetary compensation.
• Finally, under s 12 of the Consumer Rights Act 2015, key information must be discussed between a trader and a consumer before a contract is signed and this includes the price and the right to cancel. Under the Consumer Protection (Amendment) Regulations 2014, any misleading statement by a trader including missing out or hiding relevant information means the contract is voidable.