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contract law misrepresentation notes
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MisrepresentationWhat is misrepresentation?
a pre-contractual false statement of fact that induces a contract
the false statement of fact can also cover conduct, silence or omission
the party induced to contract is the misrepresentee
the party that makes the false statement is the misrepresentor
Terms and representations
a statement made during negotiations may become incorporated into the contract as a TERM
or it may be a MERE REPRESENTATION
Contractual term - is a binding promise as to the truth of the statement
If a contractual term is broken, the remedy is breach of contract
Mere representation - is an inducement to contract
If the representation is false, this gives rise to an actionable misrepresentation. The
remedies are pursuant to the law of misrepresentation.
Terminology
if the contract is void, it is automatically of no effect from the very beginning - it is
treated as if it has never been made
if a contract is voidable, it is liable to be set aside by one party - the setting aside is
not automatic but it requires action by one party. When this is done, the contract is
treated as if it had never been made
False Statement of fact, conduct or silence
It is important to analyse whether any pre contractual statement made is true or not
Also, a statement can be true when made but become true before the contract is entered into.
There may be a misrepresentation in failing to disclose a change in circumstances
silence can amount ot a misrepresentation when there is a duty to speak up
1- False statement of fact
a false statement must be a false statement of fact as opposed to a statement of belief,
opinion and statement of future conduct or intention.
2 - Conduct
Gordon v Selico - This was held to constitute a representation that the property did
not suffer from dry rot
Horsfall v Thomas - no inspection took place and so there was no reliance on this
misrepresentation
, 3 - Silence or omission to speak
general rule - as a general rule, silence does not amount to misrepresentation. There is
no general duty during pre-contractual negotiations to disclose material facts
unknown.
Half truth - if a statement has a half -truth there is a misrepresentation
Dimmock v Hallett 1866 - property that was the subject of negotiation was described
as fully let, there was a failure to disclose that the tenants had given notice to quit.
This was considered a misrepresentation.
change of circumstances - statement was true when made but, has become false by the
time it is acted upon. The failure to disclose the change in circumstances is a
misrepresentation.
With v O'Flanagan 1936 - the defendant did not disclose the change in circumstances.
The failure to correct the original information amounted to misrepresentation
Spice Girls v Aprilia 2002 - it was held that there was a duty to correct the
representation by conduct
Crystal Palace FC v Dowie 2007 - falsely representing that wanted to move north for
family reasons and that there had been no contact with Charlton Athletic
Duty to disclose and statements of intention
Wales v Wadham 1997 - no duty to correct statement of intention if honestly held at
the time
Inclusive Technology v Williamson 2009 - if it is a continuing statement of intention
into the future - and then there is a change of mind - then there is a duty to disclose
change of intention
False statement of fact
statement of belief or opinion are not statements of fact (so not a misrepresentation if
false)
Bisset v Wilkinson 1927 - the fact that the land did not have such capacity did not
result in the statement amounting to misrepresentation
BUT statements of opinions will be statement of fact if
1- Statement maker is in better position to know the truth
Smith v Land and House Property Corporation 1884 - it was held that he was
impliedly stating that he knew of facts to justify his opinion
2- Statement maker possessed special skill or knowledge
Esso Petroleum v Mardon 1976 - the statement amounted to a statement of fact as
reasonable skill and acre had been used in its preparation
Statements of future conduct or intention
Statement of future conduct or intention is not a statement of fact and so not a
misrepresentation if turns out to be false.
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