4 - mistake and misrepresentation

• mistake

  • renders contract void
  • 2 types: 1 (mutual, common, unilateral) 2(identity vs quality)
  • quality mistakes don't lead to the contract being void
• mutual mistake (parties make different assumptions about what's being said

  • Raffles v Wichelhaus - 2 separate ships called 'Peerless' both carrying cotton and going from Bombay, buyer refused to take his cotton and pay for it on the later ship to arrive, sued for breach. Defence was the buyer didn't break the contract but the seller failed to deliver the cotton from the first ship. At the time the contract was made, the buyer was referring to the quicker ship and seller agreed to the later ship. Held, no true agreement as talking about different things
• common mistake (both parties know what they are talking about but both make the same error)

  • Couturier v Hastie - shipment of corn purchased whilst being shipped, when the contract was made the corn had spoiled, in a stop off port seller sells corn to regain some money, this was unknown to the seller and buyer. Seller argues that the contract was not one to get corn but was the chance of getting corn so the buyer should take on the loss, rejected
• unilateral mistake (one party makes a mistake and there must be knowledge by the advantaged party that a mistake has been made)

  • Hartog v Colin & Shields - buying hare skins, in the contract there is a typo and they are sold by pound rather than by piece (3 pieces to a pound), H immediately accepts the offer, the error is discovered and C&S refuse to pay
• • identity mistakes are operative mistakes - contract void
  • quality mistakes are not operative mistakes - contract valid
• mistaken identity

  • Ingram v Little - a crook impersonating someone wants to buy a car advertised in a newspaper, he pays by cheque (which was a forgery) and the seller of the car ends up in a dealership in Blackpool, the seller asked for compensation from the dealership as the car never transferred ownership from them, a unilateral mistake, car dealership claimed quality mistake as they didn't care who was selling the car, they just wanted the car. Held, it was an identity mistake and the sisters won
• Phillips v Brooks

  • crook looks at jewellery for his 'wife' and pays by cheque, says that he will wait for the cheque to clear before picking up the jewellery but asked to take a piece with him now as it it 'his wife's birthday', he sells them at pawn shop. Court decided it was a quality mistake and found in favour of the pawn broker (rather than the jewellery shop owner)
• the great peace

  • Solle v Butcher - contract for a ship to come alongside another ship that was unnavigable, leash to it and keep it safe until it could be salvaged, mistake made about which ships were nearest, the owners of the stricken ship didn't want to pay fees and had someone go sooner. Held, quality mistake to the attribute of nearness, they argued back it was an equitable mistake and court disagreed
• elements of misrepresentation

  • a statement
  • of present fact
  • that induced the claimant to enter the contract
  • the statement is false
  • and it results in a loss to the claimant
  • it may be done fraudulently, negligently or innocently
  • misrepresentation renders the contract voidable
  • you can rescind the contract (complete undoing of it)
• conduct can count as a statement

  • spice girls v Aprilia world service BV - aprillia want spice girls to endorse their motorbikes, contract signed when SG have the knowledge that they are going to break up, after signing, ginger spice left and A wanted to leave contract as no longer a group. SG claimed in the contract it mentions the group being those currently in the spice girls so nothing was wrong. Held, in favour of Aprillia as A had no reason to believe SG were splitting up
• statement of present fact

  • Bissett v Wilkinson - father and son looking to buy a sheep farm, found a farm being sold that wasn't used to farm sheep, farmer said the land could hold 2000 sheep, farm was bought and no way could 2000 sheep fit, claimed misrepresentation, defence was that farmer was making a statement of opinion not fact. Held, the farmer didn't farm sheep and so it was obviously a guess, and so not misrepresentation
• fact or opinion

  • smith v land & house property corp - hotel property being sold, smith said it was being left to a desirable tenant, L&HP sent someone to look at the property, who came back and said they shouldn't buy, they bought and found difficulties with the rent from the tenant, tried to claim misrepresentation due to the 'most desirable tenant'. Defence said it was a matter of opinion. Held, some opinions imply knowledge which justify that opinion and so went in favour of L&HPC
• timing matters

  • With v O'Flanagan - sale of house with the associated GP, he reports to get £2,000 a year from the practice (true at the time of the statement), long delay before contract signed as doctor got ill and different doctors took over the GP, patients moved GP's and by the time the contract went through they were down to £5 or £10 a week. claimed misrepresentation. Held, if circumstances changed from the time of the contract you should let the other party know and if you make a statement, it's as is you constantly repeat that statement up until the contract is signed
• inducing the claimant

  • Museprime Properties v Adhill Properties - sale of some houses that were subdivided and let out, rent review due, rent people gave the impression that the rent review was over when it in fact wasn't, other party wants out for misrepresentation. Held, enough for it to be one factor for the contract to be induced rather than the main or a major factor
• fraudulent misrepresentation

  • Derry v Peek - a deliberately dishonest statement, you may know the statement was untrue or you didn't know it was untrue but had no reason to believe that it was true. Can also be reckless to whether the statement is true or not (when you don't care if it is true or not)
• measure of damages for deceit

  • Doyle v Olby - measure of damage is all losses caused by the misrepresentation as long as the chain of causation is true towards the misrepresentation
• negligent misrepresentation

  • misrepresentation act 1967 - have to show and prove state of mind of breacher
  • when a party fails to take reasonable care in making the statement it can be easy to prove a state of mind as they have been negligent by not providing evidence for their claims
• innocent misrepresentation

  • when you take reasonable care but still get it wrong
• damages and rescissions

  • Salt v Stratsone - salt bought brand new car, years later found trouble with it as it was in an accident, salt sought to rescind but the car now had miles on it.
  • If the right to rescind has been lost, you are still entitled to damages