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Contract law - Vitiating factors cases
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Contract – vitiating factors casesMisrepresentation
Walters v Morgan Misrepresentation can be made in any
form – ‘a nod or a wink or the shake of
the head… intended to induce… to
believe the existence of a non-existing
fact.’
Spice Girls v Aprilia World Service Misrepresentation can be made by
conduct.
Keates v Earl of Cadogan No general duty to disclose information
in a contractual negotiation. So, mere
silence does not generally amount to a
false statement, even if concealed facts
are significant.
Unless there is a duty to disclose, found
in contracts of ‘utmost good faith’. EG.
Insurance/shares. No damages, but can
rescind.
Bisset v Wilkinson Both parties knew of the previous use of
the land, which was the subject matter
of the contract.
An opinion generally does not give rise
to a misrepresentation.
Smith v Land and House Property However, Lord Brown: ‘if the facts are
not equally known… then a statement of
opinion by the one who knows the facts
best…involves very often a statement of
a material fact, for he impliedly states
that he knows facts which justify his
opinion.’
Esso Petroleum v Mardon A statement of opinion by an expert may
often be treated as a statement of fact.
With v O’Flanagan If a statement was true when made, but
circumstances change so it is false by
time it is acted upon – misrepresentation
can occur. Duty to bring change to
attention.
Tapp v Lee Statements which is itself true, but
which misrepresents the whole
situation, left unsaid, can be
misrepresentation.
Here, D stated property had planning
permission. It was only temporary and
due to expire. Misrepresentation.
Solle v Butcher Misstatement as to a specific, relevant
legal proposition can be actionable.
Supported in Kleinwort Benson v
Liverpool City Council.
Edgington v Fitzmaurice; Raiffeisen Zentralbank Misrepresentation must play a ‘real and
, Osterreich v RBS substantial role.’
But for the representation, C would not
have entered into contract on the terms
he did, even though there were other
matters.’
Horsfall v Thomas No inducement when representee
unaware of the existence of the
representation.
Smith v Bush No inducement when the representee
knew it was untrue.
Attwood v Small …or where he did not allow it to affect
his judgment.
Derry v Peek A fraudulent misrepresentation, per Lord
Herschell is a false statement made
1) Knowingly, or
2) Without belief in its truth, or
3) Recklessly as to whether it be true
Motive is immaterial.
Hendley Byrne v Heller Developed negligent misrepresentation
at common law.
Idea of a ‘special relationship’.
Recourse to common law needed (rather
than Misrepresentation Act 1967) when
a third party is involved.
Royscott Trust v Rogerson C financial company induced into a hire
purchase agreement with R as a result of
a misrepresentation by the defendant
car dealer.
Damages under s2(1) of the
Misrepresentation Act 1967 to be
addressed as if D had been fraudulent –
so C could recover their actual loss
directly flowing from the
misrepresentation. Reasonable
foreseeability not relevant – only
directness of loss.
Why bother using fraudulent
misrepresentation (tort of deceit) when
one can use s2(1) for same damages?
Smith New Court Securities v Scrimgeour Vickers Fraudulent misrepresentation guidelines
given by Lord Browne Wilkinson:
1) D bound for all directly
flowing loss
2) No need for foreseeability of
damage
3) C must give credit for any
benefit received.
4) Generally this will include
market value of property
acquired as at time – but not
inflexible where this would
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