Misrepresentation law of misrepresentation is concerned with the situation where a false statement is made by one party A precontractually to another

party B which induces B to enter into a contract with A 'ule ): *alse statement of fact 4 types of situations: Terms become party of ctt Statement become collateral ctt Statement fall under misrep Mere puff with no legal effect The seller of a car who says, +the engine has been fully re-conditioned, would clearly be ma-ing a statement of fact which would be actionable if manifestly false-Avon Insurance Pic v Swire Fraser Ltd- "t seems that a statement may be false if not +substantially correct, Contrast: Statement for future: will be prosperous in the ne.t five year, not misrep as there would be no present element in them at all/ in the absence of dishonesty on the part of the maker of the statements they would merely be predictionsInntrepreneur Pub Co (CPC) Ltd v Sweeney Another contrast: Statement of future intention which the ma-er did not believe about it due to contradictory factmisrep to mind was misrep to fact- d!in!ton v Fit"maurice $o Misrep- Statements of opinion or belief# A person who honestly e.presses an opinion or belief which turns out to be false where the person was in no better position to -now the true facts than the purchaser- $isset v %ilkinson Contrast# Misrep if The ma-er of the statement is in a better position to -now the true facts 0that is assertion of fact1 & Smith v Land and 'ouse Property Corporation Contrast: 2ague statement cannot be statement of fact such as the word 3fertile4 and 3improvable4, merely a mere puff- (immock v 'allett )5nless more specific one in !arlill1 Misrep if An e.pert e.press their view which turn into false statement 0negligent misrep1sso Petroleum Co Ltd v *ardon& duty could e.ist in an ordinary commercial transaction

An actionable misrepresentation will render the contract voidable, i e the contract is valid unless and until the party who has been misled into entering the contract chooses to set it aside and recover damages for any loss A!T"#$AB%& M"S'&('&S&$TAT"#$ An actionable misrepresentation may be defined as a false statement of fact made by one party to the other which induces the other party to enter the contract

*alse statement of law is misrepPankhania v 'ackney London $orou!h Council& the party had been induced to purchase in reliance upon the representation and it had been reasonable for him so to rely "f the law stated: new house charged for )66 and they -new it but however the house is not new- this is circumstance statement of fact rather than law

'ule 7: Silence or non-disclosure The general rule is that to remain silent does not amount to a misrepresentation- Fletcher v +rell The rule is a corollary of the well-nown ma.im +caveat emptor, 8let the buyer beware9 $o Misrep if only voluntary assumption of another party need to disclose 0but the party silent1 while the pre-contractual -term have been revised by both parties- 'amilton v Allied (omec, Plc $o Misrep if answer negative to the :uestion 3information which you thin- buyer might have a right to -now4- Sykes v -aylor&.ose *act show no duty to undisclosed history of the property 0it is different if undisclosed the property is defect1 A clear statement needed to cause misrep

C&C# $o misrep if !hange of circumstances: honest representation of intent 0not a statement of fact nor dishonest to representation of intent1 but changed in future 8provided no fraud9- %ales v %adham& fact that D promise not to remarry but did it in the later time

Contrast# "f the ma-er of the statement -new that the statement would be passed on the claimant& Pilmore v 'ood

materiality is <udged ob<ectively >owever, "t should be noted, that fraudulent misrepresentation is an e.ception in that the immateriality of the statement cannot be set up as a defence to an action for fraud Contrast: Still can misrep if 'epresentation is not material, provided mispresentee proved it they indeed be induced*useprime Properties Ltd v Adhill Properties Ltd Contrast: $o Misrep if true representation to the vague :uestion 0?hat you thinbuyer should -now1: no legal duty to undisclosed historical bac-ground- Sykes v -aylor& .ose

$o Misrep if the misrepresentee relies on their own <udgment- Attwood v Small Contrast# Misrep if 'epresentee relied on their investigation and original ma-er of the statement found did fraud- S Pearson 8 Son Ltd v (ublin Corporation Contrast: $o Misrep if 'epresentee relied on representation which encourage him to come into decision but does not substantial- .aiffeisen 9entralbank 4sterreich A0 v .oyal $ank of Scotland Plc

Contrast 6# !ontracts of the utmost good faith 8uberrimae fidei9: Misrep if one party is in a strong position to -now the truth but another party failed to disclose, insurer must show that they have been induced to enter the insurance policy by the nondisclosure of a material circumstance - Lambert v Co&operative Insurance Society& such as insurance case, insurance company should have all information disclosed, !!: $o Misrep if material circumstance was one which would have an effect, not necessarily decisive, on the mind of a prudent insurer - Pan Atlantic Insurance Co Ltd v Pine -op Insurance Ltd !!: $o Misrep if insurer who is not in fact induced by the non-disclosure, cannot rely on it in order to rescind the contract- Pan Atlantic Insurance Co Ltd v Pine -op Insurance Ltd

Mirep if Misrepresentee were offered the means of verifying the truth of a statement but declined to ta-e that offer up- .ed!rave v 'urd =ran =elato %td v 'ichcliff 8=roup9 %td )/::1; the damages awarded may be reduced on the basis of the claimant4s contributory negligence

!ontrast: Misrep if a single word or a nod or a win- or a sha-e of the head or a smile which lead to party to particular fact- %alkers v *or!an "t different with Sy-es case that although they used 3a word4 to answer but historic bac-ground is not entitle for buyer to -now 0:uestion is vague1

Misrep if !laimant partly been induced by misrep and partly by errorneous belief- d!in!ton v Fit"marice !ontrast: $o Misrep- if the innocent party would have acted in the same way in any event despite the misrep- < $ Fasteners Ltd v *arks $loom 8 Co

Contrast /: Misrep if Silent but induced by conduct 8implication9Spice 0irls Ltd v Aprilia %orld Service& induce a normal person is sufficient

Contrast: $o misrep if Misrepresentee is unaware of a misrepresentation Contrast 7# *iduciary relationship 8representation9 at the time of A fiduciary relationship is one entering the contract- 'orsfall v -homas where a person has placed confidence in another, such that the latter is bound to !ontrast: $o Misrep if aware e.ercise their powers in good as well due to unaffected to faith for the benefit of the the decision ta-en- Smith v former Chadwick &.amples of such relationships include solicitor and client, trustee and beneficiary and partnership

Contrast 1: Misrep if Statement is halftruth- silent to certain fact: answering finding no evidence while fact he haven4t read yet- 2ottin!ham Patent 'ule ;: Meaning of inducement $rick and -ile Co v $utler

Contrast 3# Misrep if !hange of circumstances: true when made, become false by the time it is acted upon- %ith v 45Flana!an

The statement must be intended to be acted upon: $o Misrep if the party in Misrepresentation must be material in this case was not the target of the the sense that it would affect the statement- Peek v 0urney <udgment of a reasonable person in deciding whether to enter the contract- d!in!ton v Fit"maurice

Types of Misrep *raudulent, $egligent and "nnocent

$egligent misrepresentation under the Misrepresentation Act )@AB s 78l9

s 78l9 are as follows# %here a person has entered 2e!li!ent into a contract after a $egligent misstatement at misrepresentation has been common law made to him by another party thereto and as a result thereof $egligent misrepresentation he has suffered loss> then> if under Misrepresentation Act the person makin! the )@AB misrepresentation would be liable in damages in respect thereof had the *raudulent Misrep misrepresentation been made fraudulently> that person shall be so liable notwithstanding $o *M if Mispresentator honestly that the misrepresentation was believe his statement- (erry v Peek not made fraudulently> unless he proves that he had *M: false statement is made reasonable grounds to believe and did believe up to the time 8i9 -nowingly, or the contract was made that the 8ii9 without belief in its truth, or facts represented were true? 8iii9 rec-lessly, careless whether it be true or false (rinciples applied: Misrepresentee have to prove mispresentor had such dishonesty !laimant only need simply adduce evidence of an actionable misrepresentation and once that burden is discharged, if the defendant is not able to prove a reasonable belief in the truth/of that statement, then the Cfiction of fraudC assumed that the statement is made without reasonable grounds for believing in its truth o Different from !% ma-er of the statement to prove that they had such reasonable grounds for believing its truth Misrep have to lead entered into ctt o So, Misrep made by other party but not third party o Different from !%/ !% no need a ctt, ;rd party can be liable under !%

into a contract with A 0!% need to be establish1 innocent misrepresentation now refers to a statement made by a person who has reasonable grounds $eed fact rather than opinion believing its truth +?holly 0!% can be negligence even if for innocent, misrepresentation might opinion1 be a better label for this -ind of statement $o need to refer to an action under the )@AB Act as either negligent or fraudulent o ! at no point is re:uired to prove the negligence of the defendant

Application &ven relied on standard boo- still cannot unprove misrep under statute'oward *arine 8 (red!in! Co Ltd v A 4!den 8 Sons ( @cavations) Ltd A 0>owever no misrep under !%1 Assurance to future did not under statute- vans (<) 8 Sons (Portsmouth) Ltd v Andrea *er"ario Ltd A >owever promise for future can be under collateral ctt 0(ick $entley Productions Ltd? v? 'arold Smith (*otors) Ltd;

$# *M if Misrepresentator honestly believe on where statement is made negligence- -homas %itter Ltd v -$P Industries Ltd& this is negligent misrep $egligent Misrepresentation negligent misstatement at common law and a statutory claim for damages under s 78l9 of the Act of )@AB

!ommon law $M if A party with special s-ill and give false statement without -nowing- 'edley $yrne v 'eller&Duty of care $M if Survey done and end up in false statement- sso Petroleum Co Ltd v *ardon& party holding himself out as having special e.pertise in circumstances which gave rise to the duty to ta-e reasonable care to see that the representation was correct= &.pert advice, such as accountants, solicitors or surveyors and also ma-er of the statement need not be in business to give advice 8eg survery9

$o need to establish duty of care- only need to sow A has made a false statement of fact to $ that has induced B to enter "nnocent Misrep

'emedies Type ): 'escission !ontract voidable, then the contract will continue to bind the parties until the innocent party see-s to have the contract set aside 8or avoided9 'escission is generally available regardless of the type of misrepresentation that has occurred

Type: Affirmation %apse of time "mpossibility o !onsume o !hange in condition o ;rd party right A**"'MAT"#$

'escission is not possible, especially where goods that have passed under a contract have either perished or been destroyed The ca-e is consumed and not possible to be rescind- Clarke v (ickson !ontrast: &ven alteration in item sold still able to rescind if can be paid by money- rlan!er v 2ew Sombrero Phosphate Co

once it has been discovered that the was entered into as a result The remedy of rescission is therefore contract of a misrepresentation, the claimant one way in which the innocent party should ta-e action to remedy the can see- to have the contract set (such as seekin! to rescind aside as a result of an actionable mis- situation the contract)? representation "f goods have passed under the contract then these goods are to be returned "f money has passed in e.change for those goods then the money must also be returned

Fact: purchaser had already

Affirm when ! refuse to rescind when found out misrep as accept the offer from misrepresentator but later want to rescind& Lon! v Lloyd& fact show that the lorry purchased is different "f "nvolve T>"'D-(A'TF '"=>TS from statement [misrep] but accept such as the item already sold to the offer from D to repair ;rd party then court deny an award %A(S& #* T"M&

extracted a quantity of phosphate from the mine but the require the purchaser to make a payment in view of the profit he had made, but which also reflected the mine's decline in value

'e:uirements: The remedy of rescission must be sought by the claimant: it does not occur automatically

of rescission if to ma-e the award would disturb those third-party rights

=enerally spea-ing the right of rescission will be e.ercised by giving notice to the other party $ote: !ontrast: $otice to authority third party still valid Car 8 "f discover misrep, time be the Bniversal Finance Co v Caldwell& issue to decide whether he where the seller of a car affirm the misrep wished to rescind the contract when the purchaserEs che:ue bounced, it was held that "f not discover, it depend notifying the police and the whether he had the chance to Automobile Association was discover out in the time being sufficient- purchaser had absconded and was untraceable

%apse when discover the misrep after five year as he had ample time to $ote: chec- but failed to do so 0must reasonable1- Leaf v International 0alleries& fact is picture from famous The fundamental principle artist here is that the remedy of

rescission is generally available for all types of misrepresentation

>owever, as rescission is an e:uitable remedy it will not always be available as of right

Bars to rescission

"M(#SS"B"%"TF #* '&S!"SS"#$

Damages for Misrep Damages are also available for a misrepresentation, although the measure and basis of their award will differ depending on the type of misrepresentation Damages ): *or *raud Misrep (oyle v 4lby (Ironmon!ers) Ltd that damages for a fraudulent misrepresentation are to be awarded on the tortious basis the compensatory aim of an award of damages for fraudulent misrepresentation is to put the claimant into the position he would have been in had the misrepresentation not been made All conse:uential loss included reasonably foresee loss *raud Misrep to the selling of business property but in fact continuing another same business competitive to the purchaser 0fraud misrep1liable for purchaser4s business loss and also profit that the claimants might have made had they purchased another hairdressing business for a similar sum- ast v *aurer !ontrast: loss of prospective business profits will not be recoverable in an action for misrepresentation 0as if can, then damages given based on the representation is truesame to B#!1, unless they fall into the category of conse:uential losses as in the case of ast v *aurer as the loss direct conse:uence of misrep?

would have been in had the misrepresentation not been made9 =enerally, the claimant in such a situation will relied on s 7 of the Misrepresentation Act )@AB, since this has advantages in terms of the burden of proof and damages recoverable The one situation where the >edley Byrne action may be needed is if the statement cannot be categorised as a statement of fact 0what the Act need but not !%1 A negligently given opinion can, for e.ample, be the basis for an action for negligent misstatement under >edley Byrne, without the need to show that it meets the strict re:uirements of being a misrepresentation 4verseas -ankship (B+) Ltd v *orts (ock 8 n!ineerin! Co (-he %a!on *ound)> it was confirmed that a claimant may only recover the damages that were Creasonably foreseeableC as a result of such negligence

Award of damages for fraudulent misrepresentation will not be sub<ect to reasonably foreseeable test but the claimant is able to recover Call conse:uential lossC as a result of a fraudulent misrepresentation(oyle v 4lby (Ironmon!ers) Ltd .eason# &ssentially, Denning is saying that since the defendant induced the other party to enter into a contract by deliberately misleading them, the defendant cannot turn round and claim that they should only be liable for damages that were Creasonably foreseeableC Differ from damages for breach of contract which false statement this means awarding damages on the basis that the statement had been true

But in &ast v Maurer although similar to B#! damages, but the award is less than damages to B#!, this award is 0ran 0elato Ltd v .ichcliff 0roup Ltd +opportunity costC of relying 0)@@71 confirms that damages for on the misrepresentation negligent misstatement will also be sub<ect to such a reduction having to the contributory negligence Damages can be claimed if the regard of the claimant transaction will be more favourable if not fraud misrep even though no loss- Clef A,uitaine v Laporte *aterials

All conse:uential loss from the result of misrep 8but not only loss if no misrep9 A propose to buy share with price ), B fraud misrep the share valued price 7, later price drop slump very low 0price ;1- B liable for loss differ from price 7 and price ; 0all conse:uential loss1 rather than only loss for differ from price ) and price 7 0loss if misrep not ta-en place1- Smith 2ew Court Securities Ltd v Scrim!eour Cickers (Asset *ana!ement) Ltd Damages 7: !% $egligence damages

Application:

based on the tortious principles 8to put the claimant into the position he

Damages ;: Misrep Act )@AB damages Award the claimant damages on the same basis as if the statement had been made fraudulently Appropriate measure of damages under s 78)9 is the tortious measure (to put the claimant into the position he would have been in had the misrepresentation not been made)& Sharneyford Supplies Ltd v d!e Assessment of an award of damages under s 78)9 the appropriate measure is the same as for fraudulent misrepresentation- .oyscot -rust Ltd v .o!erson $o contributory negligence applied& Alliance 8 Leicester $uildin! Society v d!estop Ltd !ontrast: !ontributory negligence can be raised where there is concurrent liability in negligence under the Act if claim for misrep based on breach of duty of care in order to reduce the damages claim- 0ran 0elato Ltd v .ichcliff

Damages instead of rescission s 7879 allows the court to award damages in lieu 8in place of, or instead of9 rescission based on e:uity on the misrep other than fraudulently Different views: -homas %itter Ltd v -$P Industries Ltd- 'ather, the ability to rescind the contract must have been available to the party in the past, but not necessarily at the time the court has to consider an award of damages under s 7879 o "f they affirm then right e.tinguished Different view: 'ight must subsist when reach court rather than in the past9an"ibar v $ritish Aerospace (Lancaster 'ouse) Ltd 'ight to rescind must e.ist, not intended to provide damage where there was none G Pankhania v 'ackney Differences btw damages under 78)9 and 7879 S 78;9 Damages under subsection 879 shall be ta-en into account in assessing his liability under the said subsection 8)9 Difference ): lesser value in s7 7 >offmann % H thought that since s 78;9 contemplates that damages under s 7879 may be less than under s 78l9 -%illiam Sindall plc v Cambrid!eshire County Council Difference 7: conse:uential and not conse:uential 'offmann L?<? thou!ht that since s 78;9 contemplates that damages under s 7879 may be less than under s 78l9 this means that the measure under s 7879 must be different from the measure under s 78l9 D)S1ection 78)) is concerned with the damage flowing from having entered into the contract 0include conse:uential loss1> while section 7879 is concerned with the damage caused by the property not being what it was represented to be 0not included conse:uential loss1C That mean under 7 7 the difference in value between what the 0claimant1 was misled into believing he was ac:uiring, and the value of what he has in fact received *or e.ample: price is misrep by higher, so the loss is differ from the price supposed to be and the misrep price, but not loss from misrep price and the later ma-et price

Application: $ot e:uitable to rescind ctt 0give damages instead1 if the misrep did not significantly affect the uses of transactions 0present case is the misrep of sewer did not actual inhibit the use of land1- 8obiter9 %illiam Sindall Pic v Cambrid!eshire County Council

&.clusion of liability for misrep S ; Misrepresentation Act )@AB 8amended by 5!TA )@BB, s I9 "f a contract contains a term which would e.clude or restrictE Application: Sophisticated commercial parties agreed to regulate their future relationship by prescribing the basis on which they were dealing> a suitably drafted clause could properly be regarded as establishing that no representations were being made& so no sub<ect to reasonable test.aiffeisen 9entralbank 4sterreich A0 v .oyal $ank of Scotland "f attempt to retrospectively to alter the character of what has gone before or to re-write history of transaction then sub<ected to reasonableness test& Avrora Fine Arts Investment Ltd v Christie> *anson 8 %oods Ltd Blan-et e.clusion implicitly include fraud- %itter v $-P !ontrast: Blan-et clause to e.clude all statement may not construed to cover fraud unless e.plicitly refer to it& 9an"ibar v $ritish

'easonableness 0the same applied under 5!TA, here only few e.ample1 'easonable will not cover deliberate damage and fraud& .e!us (B+) Ltd v pcot Solutions Ltd )1GGH; (art of clause invalid ma-e whole clause invalid& Stewart 0ill Ltd v 'oratio *yer 8 Co Ltd

!lear word to e.clude liability is & -homas %hitter Ltd v -$P a) any liability to which a party to needed Industries Ltd a contract may be sub<ect by reason of any misrepresentation made by him before the contract was made= or &ven common clause used to e.clude still unreasonable- %alker v b) any remedy available to another $oyle party to the contract by reason of such a misrepresentation !annot e.clude fraudulent misrep'I' Casualty 8 0eneral Insurance Ltd v Chase *anhattan $ank> Chase cannot be e.cluded unless satisfied $ank v 'I' Casualty 8 the reasonableness test under s ))8)9 *anhattan 0eneral Insurance Ltd 5!TA )@BB An 3entire agreement4 clause could be effective to restrict liability for statements made by an agent of the party concerned 0not to be regarded as e.clude misrep1 4verbrooke states v 0lencombe Properties (/:F6) !ontrast# Inntrepreneur Pub Co (0L) v ast Crown Ltd (1GGG)& An entire agreement provision does not preclude a claim in misrepresentation, for the denial of contractual force to a statement cannot affect the status of the statement as a misrepresentation

$o reliance therefore not sub<ected to reasonableness test& %atford lectronics Ltd v Sanderson CFL Ltd A contrast with %alker v $oyle& open for argument 0not focus on substances rather than the form- depend on reliability1 But if selling a car with any representation given before the ctt and later agree no representations have been made or relied on, may be nothing more than an attempt retrospectively to alter the character and effect of what has gone before, and in substance to e.clude or restrict liability 0even no reliance, still within the scope1 the issue to be one of substance and not of form& .aiffeisen 9entralbank 4sterreich A0 v .oyal $ank of Scotland