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Laws 1015 Misrepresentation Notes
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7/12/16 Contract ReginaMisrepresentation
I. Actionable Misrepresentation
II. Remedies
1) Rescission
2) Damages
Actionable Misrepresentation
A misrepresentation is a false statement of fact, made to the claimant, which induced him/her to
enter into a contract.
1. Statement
2. False
3. Made to the other party
4. Inducement
You have to prove these 4 to show there is misrepresentation.
Statement
a) Silence
Keates v Earl of Cadogan (1851) 20 LJCP 7
Silence is not a statement. The Earl let a house to Keates and he knew he wanted to live in this
house immediately. He knew it was a wreck, he still rented it out to him. Keates found out and
wanted to rescind the contract.
The Court held that silence was not a statement.
Caveat emptor - let the buyer beware, if the buyer wants information, they have to inquire
(you have to remember however that in modern legislation, there are implied terms).
Exception: contracts of utmost good faith (uberrimae fidei)
b) Conduct
Spice Girls Ltd v Aprilia World Service BV [2002] EWCA Civ 1
Had contact with motorbike manufacturer. They said they would sponsor the girls on their tour. At
the time they entered the contract, they thought the group would stay together. The sponsors
wanted to sponsor the whole group but they were going to split up. The spice girls said that they
never said they would stay together because they went to photo shoot as a group. It was therefore
a misrepresentation
Gordon v Sellico (1986) 18 HLR 219
Rot on rented apartment. The buyers said they would never have rented if they knew there was rot.
The buyer painted over it so by doing this, it was a statement showing it was a nice wall. So there
was misrepresentation.
c) Mere Puff
‘Redbull gives you wings’
Dimmock v Hallett (1866-67) LR 2 Ch App 21
‘land is fertile and improvable’ but it was shit.
d) Opinion
Bisset v Wilkinson [1927] AC 177
Sale of a farm. Both knew the land hadn’t been used for sheep before. The seller said in his
opinion, there could be 2000 sheep on the land. This was obviously just an opinion, not based on
any expertise or experience.
, 7/12/16 Contract Regina
Exception:
1) Expertise
Esso Petroleum Co Ltd v Mardon [1976] 2 All ER 5
Representative of Esso said they thought there would be an annual selling 200.000 gallons of
petrol every year. They had overlooked some planning restriction. Because of this, they lost a lot of
customers. In the end, they did not sell as much.
Mardon said it was a misrepresentation. Esso said it was just an opinion and that there was no
promise. The Court of Appeal said it was a valid statement beaches they had expertise in the field.
Mardon was justified in relying on this statement.
2) No contradiction
Smith v Land and House Property Corp (1884) LR 28 Ch D 7
The seller said the property was let to a most desirable tenant but they knew the tenant did not pay
rent on time. The Court said that the opinion was just an opinion, however, since the maker of the
statement knew of contradicting facts, it would count as a statement. This opinion was contradicted
by other facts. If they are not equally known to both parties then a statement made by the one who
knows will constitute a fact.
e) Statement of future intention
Edginton v Fitzmaurice (1885) 29 Ch D 459
Said the company was issuing shares to get money to invest in the company (refurbish building,
buy more horses etc). This however turned out to be wrong, they actually wanted to raise money to
pay out debts. Was this a statement?
The Court said it had to be a statement of an existing fact.
False
a) Change of circumstances
With v O’Flanagan [1936] Ch 575
Selling medical clinic. He said he was taking in £2000. However, later he lost a lot of patients and
the practice declined considerably. When it was actually sold, it had already become shit.
The Court of Appeal held that the failure to tell buyer about change of circumstances rendered the
representation false.
b) Half-truths
Dimmock v Hallet (1866) LR 2 Ch App 21
Selling land. Seller said that they had a tenant who’s paying £290. He was not saying that the
tenant had already put a notice to leave and new tenant would be paying a lot less.
Nottingham Patent Brick & Tile v Butler (1866) 16 QBD 778
Guy asked lawyer if there were any restrictions on land and lawyer said ‘Not to my knowledge’ but
he hadn’t checked.
Made to the other party
Commercial Bank Co of Sydney v RH Brown & Co (1972) 126 CLR 337
One bank gave information to other bank because they knew this bank would inform their own
customer.
Inducement
You have to show that it was one of the reasons for other to enter into contract
Peel v Gurney (1873)
Appellant bought shares in a company. There was a misrepresentation in prospectors. However,
the buyer did not actually rely on it when he bought the shares. Therefore, the misrepresentation
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