Structure and exam notes for contract law on misrepresentation. Concise, clear and to the point, all-you-need for a misrepresentation problem question.
Definition: may be defined as a false statement of existing or past or law
made by one party to the other before or at the time of making the contract,
and which, whilst not being a term of the contract, induces the other party to
enter into the contract.
STATEMENT OF LAW:
Traditional rule was that a false statement as to what the law is, could not be
an actionable misrepresentation. The difficulty of distinguishing between a
statement of law and a statement of fact is illustrated by Solle v Butcher-
where a statement that a flat was “new” and therefore not subject to Rent
Restriction Acts, was held to be a statement of fact.
Now, a misrepresentation of law can constitute actionable misrepresentation:
Pankhania v London Borough of Hackney.
Curtis v Chemical Cleaning & Dyeing – could not rely on general
exclusion clause because it had been superseded by shop assistant‟s
misrepresentation.
STATEMENTS OF INTENTION:
Do not generally constitute an actionable misrepresentation.
Carries with it an implied statement of fact as to state of mind of
representor.
If statement of intention not genuine at time it was made, there may be an
actionable misrepresentation.
Edington v Fitzmaurice – Company directors raised money
from the public by stating that the money would be used to
expand the business. Their real intention was to use it to
pay off the company‟s existing debt. Statement of intention
was a misrepresentation of fact as to state of mind of
directors. They had lied about their intentions.
Bowen LJ “the state of a man’s mind is as much a fact as
the state of his digestion”
REPRESENTATIONS OF OPINION
Mere statement of opinion is not an actionable misrepresentation
Bisset v Wilkinson – (sheep/farm) statement of opinion which
Bisset honestly held and accordingly refused to order
rescission.
Statement of opinion may be actionable if it is contradicted by other facts
known to the person giving it.
, Smith v Land & House Property Corp – description of Mr.
Fleck as a most desirable tenant was not a mere expression of
opinion but contained an implied statement of fact that the
vendors knew of no facts leading to conclusion that he was not.
Late payment demonstrated this.
Expert knowledge = statement of fact.
Esso Petroleum v Mardon – Esso‟s statement as to the
throughput of petrol involved representation that reasonable
care had been taken to ensure estimate was correct =
misrepresentation of fact.
SILENCE:
An actionable misrepresentation cannot be made by silence.
Turner v Green – mere non-disclosure of a material fact did
not constitute a misrepresentation.
The law does not recognise a general duty to disclose material facts known to
one party but not another. No imposition of good faith.
o May arise where there has been active attempt to conceal defect.
Horsfall v Thomas – concealment was actionable.
o Partial non-disclosure may amount to actionable misrepresentation –
half-truth.
Nottingham Patent Brick and Tile Co v Butler
Clinicare Ltd v Orchard Homes & Developments Ltd
Silence will be actionable as misrepresentation if a person has made a
statement that was true at time it was made but before the contract is
concluded has, to his knowledge, become false.
With v O’Flanagan – Vendor of a medical practice truthfully
stated to a prospective purchaser that it was worth £2000 per
annum. Vendor fell ill so by the time contract signed four
months later, the receipts had fallen to almost nothing. The
change of facts should have been disclosed and that failure to
do so meant that contract could be rescinded = amounted to
representation.
o There was a duty on Flanagan to notify With of
the change of circumstances.
o Statement was a continuing representation that
became untrue.
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