Misrepresentation

• A misrepresentation is a false statement of material fact made by a party to the contract which induces the other party to enter a contract

  • Only occurs during formation
• 1. False statement

  • Statement must be untrue or inaccurate, usually verbal or written but it doesn't have to be
  • A person must always state the truth - Fletcher v Krell
  • Information must be corrected if the situation changes before acceptance - With v O'Flanagan
  • Silence can be a misrepresentation if it is a half truth - Dimmock v Hallett
  • Silence can be a misrepresentation if the relationship is based on trust - Tate v Williamson
  • All material facts must be disclosed in a contract made of 'utmost good faith' - Lambert v Co-op
  • Can be through conduct - Spice Girls v Aprilia
• 2. Material fact

  • The statement would have led a reasonable person to make the contract and it influenced C to enter the contract
  • The statement must be of fact not opinion - Bisset v Wilkinson
  • A statement of future intention is not a fact and is not a misrepresentation, but if there was no intention to do what was stated then this will be a misrepresentation - Edgington v Fitzmaurice
  • If the person did not believe their opinion was honest, the court will regard this statement as a fact (if you intentionally lie, you cannot say this was an opinion)
• 3. Made by a party to the contract

  • Only parties to the contract and agents are liable for statements made
• 4. Induces the other party to enter the contract

  • The statement must lead the other party to make the decision to enter the contract
  • The statement must have been relied upon by the person entering the contract - Atwood v Small
  • Even if C could have discovered the truth about the statement by taking reasonable steps, this will still be misrepresentation if the statement was relied upon - Redgrave v Hurd
• Types of misrepresentation:

  • Innocent - A false statement made honestly, the parties must have had reasonable and genuine belief that their statement was true; The remedy available will either be recission OR damages
  • Negligent - A false statement made by a person who has no grounds to believe it was true, it will be negligent if the maker of the statement has no knowledge/skill (Howard Marine v Ogden); The remedy available will be recission AND damages
  • Fraudulent - A false statement which you know is not true (Derry v Peek); The remedy available will be recission AND damages
• Recission - Puts the parties back in their pre-contractual positions. Recission is unavailable when:

  • Returning the parties back to the pre-contractual position is impossible - Clarke v Dickson
  • The contract is affirmed (innocent party decide to carry on the contract despite the misrepresentation)
  • Claim is delayed - Leaf v International Galleries
  • A third party has gained rights over the property - Lewis v Averay
• Damages - Awarded at the courts discretion

  • Can be reduced as a result of the Law Reform (Contributory Negligence) Act 1943