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Summary Contract Law Seminar 9
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Contract Law Seminar 9 answers
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Contract seminar 91) A misrepresentation is a false statement of existing or past fact made by party X to party Y
before or at the time of contracting, on which Party Y relied in contracting.
Damages
Fraudulent Misrepresentation
Derry v Peek (1889)
Where there has been a fraudulent misrep, the innocent party is entitled to rescind the
contract and claim damages. The damages that are awarded are not based on contractual
principles but the damages available in the tort of deceit. There is thus no requirement that
the damages are foreseeable.
Negligent Misstatement
Hedley Byrne v Heller
Misrepresentation Act
Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978]
S.2(1) Misrepresentation Act 1967 states that the same remedies are available where the
statement was made negligently as if it were made fraudulently. Royscott v Rogerson
confirmed that the principle in fraudulent misrep relating to tortious damages applied also
in negligent misrep
Innocent Misrepresentation
Section 2(2) Misrepresentation Act 1967
Under s.2(2) Misrepresentation Act 1967 the remedies for an innocent misrep are rescission
or damages in lieu of rescission. The claimant cannot claim both. Damages are assessed on
normal contractual principles.
2) Fraudulent misrep
Lord Herschell defined fraudulent misrepresentation in Derry v Peek as a statement which is
made either:
i) knowing it to be false,
ii) without belief in its truth, or
iii) recklessly, careless as to whether it be true or false
The burden of proof lies on the claimant
3) For all types the remedy of rescission is available. This is putting the parties back in their pre-
contractual position. Each party gives back the benefit which they have received under the
contract. However, it is not always possible to rescind the contract and in some
circumstances the right to rescind may be lost.
4) The underlying principle of the law of contract is still caveat emptor (“let the buyer
beware”). The situations in which a contract will be avoided on the ground that one or both
parties have made a mistake will be somewhat limited.
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