vitiating factors (misrepresentation)

• Vitiating Factor


  Something that makes a contract void or voidable
• Void


  A contract that is declared to be a nullity i.e., it never had legal effect. A void contract is said to be void from the beginning.
• Voidable


  A contract that can be made void in certain circumstances.
• Vitiating Factors 


  • Misrepresentation
  • Economic duress
• Misrepresentation


  A false statement made during the formation of a contract that influences the decision to make the contract. Misrepresentation can make the contract voidable.
• A misrepresentation only occurs during the formation of a contract
• To find a misrepresentation, we need to look for:

  • A False Statement
  • Material Fact
  • Made By A Party to the Contract
  • Induces the Other Party to Enter the Contract
• False Statement


  • A statement is usually written or verbal, but it could be anything that would influence the other's decision. (Spice Girls v Aprilia World Service)
  • There is no obligation on a person wishing to enter a contract to make any statement about what is being offered (Fletcher v Krell)
• Material Fact


  The misrepresentation must be of a material fact. This means that it would have led a person to make the contract.

  The material must be a statement of fact, which includes looking at:

  • Statements of Opinion
  • Statements of Intention
• Material fact - Statement of Opinion

  An 'opinion' is not 'fact'. Therefore, if an opinion proves to be false, this is not a misrepresentation. (Bisset v Wilkinson)

  However, if an opinion is not honestly held by the person stating it, it is regarded as a statement of fact. (Edgington v Fitzmaurice)
• Material Fact - Statement of Intention

  A promise to do something in the future - is generally not one of fact. This is because a fact relates to something in the past or of current existence.

  However, a statement of intention can amount to a fact if the statement maker has no intention of carrying it out. This would mean that there is a misrepresentation of the fact that they possess the intention.
• The nature of misrepresentation - Consumer Rights Act 2015 - Section 12


  Requires traders to provide certain information to the consumer before the contract becomes binding, and any change to that information must be expressly agreed between the consumer and trader.
• The nature of misrepresentation - Consumer Protection (Amendment) Regulations 2014


  A misleading omission is where a trader deliberately misses out key information that the consumer might need to make an informed decision about the purchase of goods or services.

  All consumer information must be displayed clearly.
• Types of Misrepresentation


  • Innocent Misrepresentation
  • Negligent Misrepresentation
  • Fraudulent Misrepresentation
• Remedies - Rescission


  An equitable remedy that puts the parties back into the positions they were in before the contract was made, as if the contract had never existed
• The remedy of rescission is discretionary, meaning the courts will only award it when it is fair to do so in all circumstances
• Rescission is not available in certain situations:

  • Restitution to the original pre-contract position is impossible. (Clarke v Dickson)
  • The contract is affirmed - where the innocent party decides to carry on the contract despite the misrepresentation (Long v Lloyd)
  • Delay - any delays in bringing the claim to court may mean recission is refused (Leaf v International Galleries)
  • A third party has gained rights over the property (Lewis v Averay)
• Remedies - Damages


  An alternative remedy to rescission that can be awarded if the courts believe it would be equitable to do so (Sindall v Cambridge County Council)
• Damages


  Can be awarded instead of recission "if [the Courts are] of opinion that it would be equitable to do so" (S.2(2) of the Misrepresentation Act 1967)
• False statement


  • Even if a statement was initially true, if it becomes false before the contract is made, it can be classed as misrepresentation. Therefore, a person must correct information where there has been a change in circumstances (With v O'Flanagan)
  • If a statement is made in 'half-truth', this can amount to a misrepresentation. What is not said is a non-disclosure, and the Courts can enforce a duty to reveal the whole truth (Dimmock v Hallett)
• False statement


  • Where a relationship is based on trust (i.e. confidential relationships), silence may be a misrepresentation if it breaches that trust. (Tate v Williamson).
• False statement


  Where a contract is in 'utmost good faith', then all material facts must be disclosed, whether asked about or not. (Lambert v Co-operative Insurance Society)
• Made by a party to the contract

  A misrepresentation can only be filed against the statement maker. A person is not liable for statements made by others unless they are their agent.
• Induces the other party to enter the contract

  The statement must lead the other into making the contract. The statement must be important to the person making the contract and they must have relied on the statement, rather than their own judgement of other information (Atwood v Small).

  It does not matter if the victim could have discovered the truth by taking reasonable steps. All that matters is that the untrue statement was relied upon (Redgrave v Hurd).
• The nature of misrepresentation - the Consumer Protection (Amendment) Regulations 2014 


  It is considered misleading if the trader does not do the following:

  • Omits material information that the average consumer needs to make an informed decision.
  • Hides or provides material information in an unclear or untimely manner.
  • Fails to identify the commercial intent of the commercial practice.
• Innocent misrepresentation


  • Misrepresentation Act 1967 - it is a false statement made honestly, meaning the person making the statement always believed it to be true.
  • Remedies - S.2(2) Misrepresentation Act 1967 - the Courts have the discretion to award a recission or damages.
• Negligent misrepresentation


  • A false statement made by a person who believed the statement was true but had no reasonable grounds for believing it to be true.
  • Remedies - s.2(2) misrepresentation act 1967 - the courts have discretion to award recission or damages.
• Fraudulent Misrepresentation


  • When a statement is made without belief in the truth, whether done purposely or recklessly. (Derry v Peek)
  • Remedies: Recission or damages in the tort of deceit. You can also recover damages for loss of profit.