Misrepresentation and Economic Duress

• Misrepresentation


  A false statement of fact or law which induces the represented to enter a contract.

  Makes the contract voidable

  Remedies: rescission and or damages

  Law relating = mainly found in common law with the Misrepresentation Act 1967 providing further details
• Misrepresentation - 3 requirements

  There was a false statement of fact;

  This induced the other party to enter the contract;

  The type of misrepresentation must be determined
• Misrepresentation - of fact, Edgington v Fitzmaurice 


  A statement of future conduct or intention is not usually a misrepresentation of fact, unless it is a wilful lie
• Misrepresentation - of fact, Bisset v Wilkinson


  A false of opinion is not a misrepresentation of fact

  -> a farmer (who had never had sheep) told a prospective buyer that he thought the land would house 2000 sheep.

  = statement of opinion, not fact
• Misrepresentation - of fact, Thomas v Roscorla


  The statement must be made before the time of contracting
• Misrepresentation - of fact, Peyman v Lanjani


  Must be made from one party to another
• Misrepresentation - of fact, Smith v Hughes


  Remaining silent doesn’t amount to misrepresentation
• Misrepresentation - Induced, Attwood v Small 


  C must have relied on the statement
• Misrepresentation - Induced, JEB Fasteners v Marks, Bloom & Co


  The misrepresentation must play a had not a ‘real and substantial’ pat in inducing the claimants into entering the contract
• Misrepresentation - innocent 


  Misrepresentation Act 1967

  -> a statement made with reasonable belief in its grounds.

  -> means that a false statement is made honestly - the person believed it to be true and they were not negligent.
• Misrepresentation - innocent, remedies

  Main: rescission (void the contract)

  Under s.2(1) of the Misrepresentation Act 1967 damages are available INSTEAD, but the C cannot have both
• Misrepresentation - negligent

  2 types:

  1. under the common law tort of negligence (Hedley Byrne v Heller)
  2. under the Misrepresentation Act 1967
• Misrepresentation - negligent, Hedley Byrne v Heller 


  Held that damages might be recovered for a negligent misrepresentation where:

  -> the party making the statement has specialist skill;

  -> there is proximity between the 2 parties;

  -> the party making the statement is aware that the statement will be relied on
• Misrepresentation - negligent, MA1967


  s.2(1) - no need for a special relationship.

  There is a misrepresentation which results in a contract and the C suffers loss.

  Once C proved there was a misrepresentation the burden of proof is reversed to the person making the statement to prove they had reasonable grounds for believing it was true.

  Remedies: damages and/or rescission
• Misrepresentation - fraudulent 


  Origins in the tort of deceit.

  derry v Peek

  -> Lord Herschell defined it. A statement which is made either: knowing it to be false, without belief in its truth, or recklessly, careless as to whether it be true or false.
• Misrepresentation - fraudulent, remedies

  Rescission and damages.

  Spice Girls v Aprilia

  -> damages and costs of £1 million were awarded to Aprilia after the Spice Girls were found to have made a fraudulent misrepresentation
• Economic Duress - definition 


  Where a person enters an agreement as a result of threats. 5 conditions:

  1. pressure was exerted on the contracting party
  2. the pressure was illegitimate
  3. the pressure induced the C to enter the contract
  4. the C had no choice but to enter the contract
  5. the C protested at the time or shortly after the contract was made
• Economic Duress - 1st requirement

  North Ocean Shipping v Hyundai Construction (The Atlantic Baron)

  -> a contract was made to build a super tanker for an agreed price. The seller then refused to complete unless the buyer promised to pay and extra 10%. The buyer agreed and made the payments as ship was needed to fulfil a charter. There was ED where pressure was put on the buyer to pay extra payments
• Economic Duress - 2nd requirement


  Atlast Express v Kafco

  -> C underestimated the spice of the baskets required, and subsequently ordered the D’s to pay more. The D’s would have gone bankrupt if they had not delivered, therefore agreed the higher price. This was held to be illegitimate pressure
• Economic Duress - 3rd requirement

  Barton v Armstrong

  -> held that a contract could be set aside where death threats had been received. They were at least one cause of the entering into the contract
• Economic Duress - 4th requirement


  Universe Tankships v International Transport Workers’ Federation

  -> The International Transport Workers Federation blacked the C’s ship and prevented them from leaving dock unless they signed new contracts for their employees. Contracts were void - there was no choice but to enter the contract
• Economic Duress - final requirement

  North Ocean Shipping v Hyundai Construction (The Atlantic Baron)

  -> the C protested shortly after the contracted was made