Misrepresentation

By Bobby Mitchell

What is a Misrepresentation?

• Believe it or not, a Misrepresentation is the opposite of a Representation.

• A Representation is a statement of facts which will induce a party to enter into a contract.

• If this statement becomes untrue or misleading, then that Representation would become a Misrepresentation.

What are the types of Misrepresentation?

• There are THREE types:

• FRAUDULENT Misrep.

• NEGLIGENT Misrep.

• And,

• INNOCENT Misrep.

Fraudulent Misrep.

• This is where a party will “DELIBERATELY” or “RECKLESSLY” make another party go in for a contract whether the subject matter is true or false.

• Cases for this are, Clef Aquitaine v Le Port, Kar Sales v Wallace and most famously, Derry v Peek.

Kar Sales v Wallace

Wallace was deceived into buying a car from this dodgy dealer which wasn’t up to scratch. Wallace believed everything was fine and purchased what he thought was a great car. This was the case until he realised that there was no engine in the car and he was stitched up by the company as they knew for well that the car was missing this vital part. The lesson for Wallace…don’t buy cars off of companies who can’t even spell…

Fraudulent Misrep. Ctd.

• In this type of Misrep., damages can be decided in the “Tort Of Deceit”.

• They are decided under the “Misrepresentation Act” of 1967 (MA 1967 for short).

• The sections that they are governed under is Section 2 (1) and Section 2 (2).

Negligent Misrep.

• In this case, there is a possibility of an action in Hedley Byrne v Heller Partners (Tort of Deceit), where the innocent party will get the repudiation provided that it is made in a special fiduciary relationship where a party seeks advice from someone and you pay for his/her services.

• This is governed under Section 2 (1) of MA 1967

Hedley Byrne v Heller Partners

• Heller WBankers gave assurances of creditworthiness to Hedley Byrne concerning a mutual deceit, Easipower. The bank were the only people who held this information, so they were deemed to be in a position of trust. When Easipower defaulted on payments, a claim of Misrep was maid against Heller. This would have succeeded, because of the relationship, had it not been for a technical clause in the letter of assurance (it was given “without responsibility”). So the principle of law from this case is obiter (not technically binding) but is respected as the current legal position.

Innocent Misrep.

• Traditionally, the only remedy for Innocent Misrepresentation was rescission.

• Now however, there is an additional action for damages in lieu of rescission under the Misrepresentation Act 1967, Section 2 (2).

• Innocent purely means that the breakdown is of no fault of either party. Cases for this are; Williams Sindal PLC v Cambridgeshire CC and Thomas Whitter Ltd v TBP Industries.

Other points for Misrep.

• A Misrepresentation is a statement of fact. This excludes;

• Opinion

• Advertisers puff

• A statement of intention

• A legal term (a statement of law)

Other points for misrep. ctd

• The statement MUST be false.

• The statement is one which is made by one to another (e.g a third party).

• The Representation must have induced the party to enter into the contract.

The General Rule for Misrep.

• Silence will NOT amount to Misrep.. However there are THREE exceptions:

1. Where there is a positive duty to disclose. A) Contracts for Insurance B) Fiduciary Relationships

2. Where what has been said is true but it only amounts to half a truth. (Dimmock v Hallett)

3. Where the original statement was true when made but has subsequently become untrue. (With v O’Flannaghan)

Remedies

• If there is a Misrepresentation, a remedy will be available under these THREE headings;

1. A statement must be made by one party to another.

2. The Statement must be one of fact. A false statement of intention can amount to a Misrep. (Eddington v Fitzmorris)

3. It has got to induce the party into the contract – JEB Fasteners V Bloom

Remedies

• Remedies will depend on the state of mind of the Misrepresentor?

• What capacity is he in?

• What kind of Misrepresentation is he in?

Remedy of Rescission

• The principle remedy of rescission is to restore them to their original position. Rescission will be lost in 4 ways;

1. Affirmation – Long v Lloyd

2. Lapse of Time – Ramsgate Victoria hotel v Montefiori and Leaf v International Galleries

3. Impossibility – Clarke v Dickman

4. Involvement in 3rd Party Rights – Cundy v Lindsay, Ingram v Little, Lewis v Avery, Phillips v Brooks and the Shogun case.

The remedy of Common Law is DAMAGES. Example cases for this are

Doyle v Olbey Ironmongers and East v Maurier

Thank You for Listening

• Let me remind you, that Exeter City FC are playing in the FA Trophy Semi-Finals this Saturday and following Saturday against Grays Athletic. Please look out for the result. Just humour me.

• Peace out