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Summary Misrepresentation and Frustration
2i Contract Law notes
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Contract Law Supervision 6: Frustrationand Misrepresentation
Textbook Reading
McKendrick TCM Chpt 17: Misrepresentation
[These are outline notes only, focussing on discussion of cases – re-read TB for overview]
Requirements: Establish a misrepresentation has been made to claimant; a
misrepresentation is an unambiguous false statement of fact, made to the claimant, which
induced him to enter into a contract remedy of rescission, subject to bars to rescission
(third party rights). Whole contract set aside but alternative remedy of damages unser
S2 Misrepresentation Act 1967.
I. INTRODUCTION
Only applies where pre-contractual statement has not been incorporated into the
contract as a term (or else this would be breach of contract). S1(a) Misrepresentation Act
1967: a party who has entered into a contract after misrepresentation has been made
may rescind contract for misrep even where the misrep is subsequently incorporated
into the contract as a term, provided that he is entitled to rescind contract without
alleging fraud.
II. WHAT IS MISREPRESENTATION?
Unambiguous false statement;
Statement must usually be one of fact (not law / opinion – but these were OK in
Esso Petroleum Ltd v Maradon where there was some special skill of person giving
opinion, and Pankhania v London Borough of Hackney respectively). Statement of
intention not good enough: Edgington v Maurice
Statement must be addressed to party misled – can be via a third party where
intention of first party is that info gets to second party – Commercial Bank of
Sydney v RH Brown and Co.
Misrep must be ‘material’ – Bisset v Wilkinson [1927].
Inducement: not a but-for cause, but just a cause: Edgington v Maurice (1885)
Statements of Opinions
Bisset v Wilkinson [1927] AC 177, PC
Facts: purchase of homestead in NZ; seller said land could carry more sheep than it could
actually carry – land was derelict before sale, so carrying capacity was necessarily an
opinion or an estimation.
Lord Merrivale: Statement of opinion must arise from underlying facts – honest opinion
– but the buyer also inspected the farm and there is a requirement of due diligence – no
misrep – not actionable.
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