Misrepresentation

The legal issue at hand is whether the statement “_________” constitutes as a misrepresentation, and if _____ can
sue _____ for misrepresentation.

Type Features Legality

1. Puffs Normal exaggeration & grandstanding part of contract Legally insignificant; borderlines
negotiation. Statements that are vague because of imprecision on statement of opinions/ fact
or exaggerations.
2. Representations Statement of fact made with the intention of inducing the other If statement turns out to be false,
party to enter into a contract but is not intended by the parties the party that relied on it can sue
to form part of the contract for misrep.

Representation is UNLIKELY to be a term of the contract when: Effect: contract is voidable ab

 Representor asks representee to verify its truth: Ecay v initio. Innocent party can rescind
Godfrey (1947) or affirm the contract.
 Relative abilities of the parties: if representee is in a
better position (possessing special knowledge/
experience to ascertain the truth) : Oscar Chess Ltd v
Williams (1957)

Representation is LIKELY to be a term of the contract when:

 Statement is so important that the representee would
not have entered into the contract had the statement
not been made: Bannerman v White (1861)
3. Terms Statements which form part of the contract If the term is not met, the party
can sue for breach of contract

The statement made is unlikely to be a term as taking all circumstances into consideration, there is no evidence that
one or both contracting parties intended that there would be a contractual liability in respect of the statement. This
is especially so since the statement is not included in the contract itself but is only mentioned ___________.

In this case, “________” is a “________” since (list features of whatever statement it is)

A misrepresentation is a false statement of fact made by one party to another party, which induced the other
party to enter into the contract.

STEP 1: Hence, to sue under misrepresentation, there are 3 elements in an operative misrepresentation to be
fulfilled:

The statement must :

i. Be a false statement by words or conduct
ii. Be addressed to the party misled
iii. Have induced the party misled to enter contract

So long as the statement made is false, representee can sue for misrepresentation, no duty to verify. (all to proof is
statement made by party is false)
STEP 2: Prove that it was a false statement by words or conduct

The statement made by ______(defendant) is clearly a misrepresentation. The false statement can be a statement of
past/present fact, statement of opinion or statement of intention. We will then have to determine whether the
statement made constitutes a representation. ______’s statement “______” gives the fact/expresses his
opinion/states his intention to _______.

1) In general, a statement of past or present fact is a representation.

2) The general rule is that a statement of opinion or belief is not a representation.

 This is illustrated in Bissett v Wilkinson [1927], where the court held that there was no
misrepresentation because the vendor’s statement that the land could carry 2000 sheep was not a false
statement of fact but a statement of opinion which he honestly held.

For the case here, ______ ‘s statement was but his opinion, which was not meant to be relied on or to be acted
upon. Therefore, his/her statement was not a representation.

 (if applicable!!) However, if the facts are not equally known to both parties, and the opinion made is by a
professional who is expected to know the facts, then it is reasonable to assume in this case that the
statement of opinion made is a statement of fact. This is because a forecast made by a professional is
reasonably expected to be relied upon by the other party to act on it and that it is relatively sound and
reliable, as can be seen in the case of Esso Petroleum Ltd v Mardon [1976].

Similarly, since _______ (def) was an expert/ took it upon themselves to hire an expert for the purpose of _________
(eg providing an estimate of sales), they owed a duty of care to the plaintiff to ensure that this was done on the basis
of accurate information. Statement by the defendant was therefore a representation.

3) if your stated intention was false

Ambigious statements are misrepresentations when Representee cannot prove that he understood the statement in
the sense which is in fact false & Representor must have intended the statement to be understood in the sense that
it is false.
 As stated by Bowen LJ, “a misrepresentation as to the state of a man’s mind is, therefore, a misstatement of
fact”
 In the case of Edgington v Fitzmaurice (1885), the court had ruled that the directors of a company were
guilty of misrepresentation because they had misrepresented their actual purpose of raising money to pay
off company debts and had lied that they are raising money to expand the business.
 Similarly, in our case, …………….

4) Representation by Conduct
In general, representation can be made through a person’s conduct (Express vs Implied).
As long as it is intended to induce the other party to believe in a certain state of facts, the gesture or conduct can
amount to a representation: Walters v Morgan (1861)
**conduct intended to conceal certain facts (eg. Fruit seller deliberately hides blemish on fruit with a sticker) also
amounts to representation

5) Misrepresentation by Silence:
General Rule: silence itself does not amount to a representation according to Bradford Third Equitable Benefit
Building Society v Borders [1941], where Viscount Maugham said “…mere silence, however morally wrong, will not
support an action of deceit”. Some active conduct is required; One party does not have a duty to disclose to the
other party material facts which the former knows may influence the latter’s decision whether or not to enter into
the contract.
In this case, ________

EXCEPTIONS: when silence amounts to a representation:

1. When silence makes what is said Spice Girls v Aprilia World Service (2002): Aprilla entered into the contract after
a half truth or an untruth seeing the group appear in a commercial which had all 5 members. But prior to the
commercial, Geri already informed Spice Girls Ltd that she was leaving the group.
The contract was based on the representation that all 5 members would continue
working together
 While a contracting party has no duty to make statements, once he begins,
he must make full & frank disclosure;
 representor is required to inform the representee of the change in
circumstances if a statement ceases to be true before the contract is
concluded
2. Representor listens is silence Broadley Constrcution Pte Ltd v Alacran Design Pte Ltd (2018)
when a statement (which the By keeping silent, he is impliedly representing that the statement is true. His
representor knows is false) is reticence may amount to a tacit confirmation of the truth of the statement
made by the representor or by a
3rd party to the representee

As can be seen here, ___________

*Exceptions to the general rule: silence amounting to misrep

 In certain contracts, the law imposes a duty of utmost good faith. The most appropriate example would be
insurance contracts, in which the law imposes on the proposed insured to disclose to the insurer all material
facts that may influence the insurer’s decision whether or not to insure.
 Contracts that involve in a fiduciary relationship such as principal and agent, company and director…
 Where the silence is an active attempt to conceal a defect. As shown in the case of Schneider v Health
(1813), the seller had purposely removed the ship from a dry dock and kept the her afloat until the sale was
over to conceal the fact that the bottom of the ship was worm-eaten was deemed to have committed a
fraudulent act.
 Where the silence had amount to affirmation of prior representation. Pilmore v Hood (1838)

STEP 2: For there to be a misrepresentation, the false statement of fact must have been made from one
contracting party to another.

In this case, this is clearly fulfilled since ________

STEP 3: Prove that the statement had induced the party misled to enter the contract
In order for misrepresentation to be operative, it must induce the representee to enter into the contract &
representee must have relied on the contract. It is sufficient that the representation need not be the sole reason for
inducement, as explained by Morritt LJ in Barton v Country Nat West Ltd (2002).

In this case, the _____ (innocent party) would not have entered into the contract if it was not for _____ (Def) who
made the claim “_____”, which induced ____ (innocent party) to enter into the contract. Thus, _____’s change of
stance shown by him entering the contract has shown reliance on the representation.

It is sufficient that the representation need not be the sole reason for inducement, as in the case of Edgington V
Fitzmaurice (1885) and Panatron Pte Ltd V Lee Cheow Lee (2001).

In this case, we can clear see that the statement is indeed very important/ would not have induced _____ to enter
into the contract.
**3.1 Other Scenarios where there is Inducement & Misrep
 Misrepresentation even when representee choses to makes his own inquiry
1. Panatron v Lee Cheow Lee (2001): Once inducement is proved, it is no defence that the representee failed to
take the steps which a prudent man would have taken to verify the truth
2. JTC v Wishing Star (No 2) (2005): Where the representee who chooses “to act carefully, but fails, through
negligence or otherwise” to discover the fraud, he is still regarded as having been induced

 Misrepresentation even if it is not the sole cause that induced the representee to enter into the contract, as
long as he is materially influenced
Edgington v Fitzmaurice (1885): As long as one is materially influenced by the misrepresentation, does not matter if
it’s not the only reason one decides to enter into a contract

 Misrepresentation even if representee had the chance to discover the truth

1. Redgrave v Hurd (1881): The fact that a representee had the opportunity to discover the truth but did not use
the opportunity does not disentitle him of relief

2. Peekay Intermark Ltd v ANZ Banking Group Ltd (2006): Where a representee signs a written contract
inconsistent with, and subsequent to, earlier oral representations, he may have been induced not by the oral
representation but by his “own assumption” that the subject matter of the contract corresponded to the
description that he had previously been given.

In this case/ Similarly, __________

EXCEPTIONS: Scenarios where Representee is not Induced:
 Where the claimant is unaware of the misrepresentation at the time of entry into the contract;
 Where the representee regards the misrepresentation as unimportant and was not influenced by it
 Where the representee was aware of the misrepresentation but knew it was untrue or did not believe it to be
true: Tai Kim San v Lim Cher Kia (2001); Although the plaintiff had sold shares on information that the
companies were not doing well, the court had held that there was no misrepresentation as they were
businessmen and had access to all the information concerning the companies
 Where the representee relies on a third party's assessment: Atwood v Small (1838); the court had held that
Small had relied upon his agents’ report rather than on Atwood’s representation

STEP 4: Classify into which kind of misrepresentation it is

Since the existence of a misrepresentation has been established, the next step is to determine what type of
misrepresentation was made, as the remedies accorded differs.

4.1 Fraudulent Misrepresentation

 A fraudulent representation, as ruled in the case of Derry V Peek (1889), is a statement made knowingly,
without belief of its truth, or recklessly, not caring whether it is true or false. It has to encompasses these
three requirements for the representation to be a fraudulent misrepresentation.
 It is clear that the representation is not a fraudulent misrepresentation as it was not made knowingly,
without belief of its truth, or recklessly, not caring whether it is true or false. Moreover the onus to prove
that it was a fraudulent misrepresentation lies on ______ (Plaintiff) and it is regarded as a heavy one since a
high degree of proof is needed (can stop here, move on to negligent misrep)
OR
It is clear that the representation made was a fraudulent one as at the time in question, the ____
(Defendant) knew full well what he said was reckless and not cared if it was true or false.
 Similar to the case of:
 o (1) Panatron Pte. Ltd.v Lee Cheow Lee & Another (2001): The trial judge came to the conclusion
that Phua did make the alleged representations to the respondents, and that Phua knew these
representations was false.
o (2) Davies v London & Provincial Marine Insurance Co. (1878): A statement that was believed to be
true when made and was subsequently to be

 Hence, the ____ (plaintiff) need only prove that the false statement was made knowingly with the intention
that the representee should act upon it. Upon which if successful, ____ (plaintiff) may choose to either (i)
recover damages in an action under the tort of deceit and rescind the contract, or (ii) affirm the contract.

4.2 Negligent Misrepresentation

 As there is no clear facts to show that it was a fraudulent misrepresentation on the part of ____ (defendant),
we have to conclude that there is not enough evidence against him/her. In this case, we have to determine
whether _____ (defendant) is guilty of negligent misrepresentation instead.
 The representation can be classified as a negligent representation since the statement was made carelessly
by the representor or without reasonable grounds for believing it to be true.
 Assuming that there was no disclaimer clause included in the contract that would protect _____(def) from
being sued, then ____ (pf) may sue under common law via the tort of negligence or under the
Misrepresentation Act.
 Under the common law approach, it was stated in the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd
(1964) that a duty of care must first exist before this approach can be adopted.
 However, this is not the case if ___ sued under the Misrepresentation Act which is more advantageous than
suing under common law. This is because firstly, there is no requirement of “special relationship” needed
and it is enough if the misrepresentation is made by one contracting party to the other
 Secondly, referring to the case of Howard Marine & Dredging v Ogden (1978), the burden of proof is
reversed. At common law, _____ (plaintiff) would have to prove negligence, but (see next points)
 Applying S2(1) of the Misrepresentation act, once _____ proves that (1) it was a false statement of fact
which (2) induced ____ to enter into the contract & (3) caused _____ to suffer a loss as a result  the
burden of proof shifts to ____(representor) to prove that he had reasonable grounds to believe that the
statement was true up to the time the contract was made.
 However, as established earlier on, the statement was clearly false because …….. (link back to the statement
made carelessly, no reasonable grounds for believing it to be true.)

Thus, ______ is able to sue ______ . _______(innocent party) may choose to rescind the contract and claim
damages if _______(def) had no reasonable grounds for the statement made. Alternatively, he may choose to
affirm the contract, at which the right to sue for damages is lost.

4.3 Innocent Misrepresentation

 The representation can be classified as an innocent misrepresentation as the false statement was made
honestly and with care as shown by ________ . Both ________ and _________ had reason to believe it is
true.

Conclusion: Therefore, based on the facts of the case, it is most likely a _____ misrepresentation.
 STEP 5: Available Remedies

Negligent Misrep Rescission/ Affirmation + Damages S2(1)

Fraudulent Misrep Rescission/Affirmation+ Damages S2(1)

Innocent Misrep Rescission/Affirmation/ Damages S2(1), S2(2)

If Rescind, only entitled to indemnity.

Since it is established that the representation made by the _____ (defendant) is one that is (fraudulent/ negligent/
innocent) , we should now consider what remedies is ______ (plaintiff) entitled to.

The plaintiff is always entitled to rescind the contract for any type of misrepresentation. However, the plaintiff is
only entitled to damages under Fraudulent & Negligent Misrepresentation.

 In this case of a fraudulent misrepresentation, _____ (plaintiff) is allowed to both rescission or affirmation
and damages.
 In this case of a negligent misrepresentation, _____ (plaintiff) is allowed to both rescission or affirmation and
damages.
 In this case of an innocent misrepresentation, _____ (plaintiff) is only allowed to rescission if deemed
equitable by the courts.

If _____ (plaintiff) decides to rescind the contract, assuming that there is no bars to rescission, she/he has to
bring the decision to rescind to the notice of ______ (defendant) or it will not be valid, as in the case of Car and
Universal Finance Co Ltd v Caldwell (1965).

Bars to Rescission: (put parties in position as if contract had never existed)

1. Resitution If restoration of restitution is not possible, rescission should not be permitted.
impossible General Rule: However, what is required is not precise restitution but substantial restitution; equity
seeks to make adjustments necessary for practical justice between the parties allows a representee to
rescind if he returns the subject matter in its altered state and makes an allowance for any diminution in
its value or account for any benefit he derived from using it

**If substantial restitution is not possible, the representee is not barred from rescinding if the
diminution is due either to the very defect in the subject matter which it was represented not to have or
to external causes, such as damage caused by a third party.
2. Affirmation General Rule: Upon discovery of the misrepresentation, if the representee elects to affirm the contract,
the right to rescission is lost: Long v Lloyd (1958)
- Affirmation may be express or implied by conduct (uses the goods after knowing of the misrep)
- However election is conditional upon the representee knowing: (1) of the untruth, (2) that the
law gives him a right to rescind, even if he had already known of the misrep.
**Where election is conditional, upon the failure of the condition, the right to rescind re-emerges: JTC v
Wishing Star (No 2) (2005)
3. Lapse of General Rule: If, subsequent to the discovery of the truth, a reasonable period of time has passed and the
time representee still does not exercise his right to rescind, his inaction may be evidence of affirmation.
 For innoncent and negligent misrep, the lapse of reasonable time may be a bar to
rescission even if the representee has not discovered the truth: Leaf v International
Galleries (1950)
 For fraudulent misrep, lapse of time without discovery of the truth would not prevent
a representee from rescinding.
4. Third party Misrepresentation makes a contract voidable not void.
rights General Rule: If before a representee rescinds the contract, an innocent third party has acquired an
interest in the subject-matter, the right to rescission is lost.

The bars to rescission includes the following 4 factors: (1) In the situation where ‘precise” restitution is made
impossible as seen in Vigers v Pike (1842) (2) upon affirmation of the contract, as illustrated in the case Long v Lloyd
(1958), where the fixed tractor is held as affirmation of the contract and thus, the right to rescind is immediately lost
(3) Lapse of time; if, subsequent to the discovery of the truth, a reasonable period of time has passed and the
representee still does not exercise his right to rescind, his inaction may be evidence of affirmation. As seen in Leaf v
International Galleries (1950). (4) Third party rights; since misrepresentation makes a contract voidable and not
void, if before the representee rescinds a contract and an innocent third party has acquired an interest in the
subject, then the right to rescind is lost too.

*With regards to the “restitution impossible”: The law at equity would make adjustments necessary to do practical
justice to both parties. Such that what is required is not precise restitution but substantial restitution; and a party is
allowed to rescind if he returns the subject matter in its altered state and makes an allowance for any dimunition in
its value or accounts for any benefit he derived from using it.

 Rescission cancels the whole contract as if it had never existed before. Since the deal is disadvantageous to
_____ (plaintiff), it is advisable that she rescinds the contract. The damages that she will receive will thus be
as if the contract had not been entered into

OR for Fraudulent & Negligent:

 However, given that the contract is still a good deal for ______ (plaintiff), it is advisable that she affirms the
contract instead and claim for damages. Once ____ (plaintiff) affirms the contract, the contract goes on and
the right to rescission is immediately lost. The purpose of damages in this case is to put the _____ (plaintiff)
in as good as a position as if the misrepresentation had not been made. With reference to the case of
Royscot Trust Ltd v Rogerson (1991), damages are subjected to the remoteness test.
 For fraudulent misrepresentation, all losses caused by the misrepresentation is claimable in
damages, regardless of whether those losses are foreseeable
 For negligent misrepresentation, the loss must be foreseable for it to be claimable. Non-
foreseeable losses are not claimable.

 In this case, damages allow the representee to recover any expense or loss that was necessitated by the
contract entered into as a result of the misrepresentation. Therefore, _____ (plaintiff) should ask
herself/himself what would she/he have demanded the contract price to be if the misrepresentation had not
happened (i.e. she/he had known of the misrepresentation). For example, he/she may have just paid
_______ ( a sum lesser than the original value). In this case, she/he would then claim for the difference of
______, as seen in the case of Smith New Court Securities v Scimegeor Vickers (Asset Management) (1997).
In the Smith case, the Court of Appeal had awarded damages to Smith to reflect the difference between
what was paid and the market value at the date of purchase.

******Negligent Misrep:

 However, for negligent misrepresentation, the court retains the discretion under S2(2) of Misrepresentation
act, to declare that the contract subsists and to award damages in place of rescission, if it is just to do so. As
explained by Judge Raymond Jack QC in Government of Zanziber v British Aerospace (Lancaster House)
(2000), damages are only available as a substitute for rescission when the court believes that damages are
more equitable as a solution
 Can claim 2 sets of damages: damages as of right: under s 2(1) & awarded damages in lieu of rescission s 2(2)
****Innocent Misrep:

 Hence, ____ has the right to rescind and to indemnify himself. However, the court retains the discretion
under S2(2) of Misrepresentation act, to declare that the contract subsists and to award damages in place of
rescission.

STEP 6: Check and see if there is an exclusion of liability clause in the contract

General Rule: Apart from where the representor is fraudulent, such clauses are valid & subject to the normal rules of
construction applicable to exemption clauses (incorporation, construction etc. )

Misrepresentation Act 1967 s3 states: If a contract contains a term which would exclude or restrict (1) any liability to
which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was
made; or (2) any remedy available to another party to the contract by reason of such a misrepresentation, that term
shall be of no effect except in so far it satisfies the requirement of reasonableness as stated in s 11(1) of the UCTA,
and it is for those claiming that the term satisfies that requirement to show that it does

In this case, ______ (normal rule of construction, 2nd schedule of UCTA - chp 2)

Hence, Exemption Clause may/may not exclude liability for misrepresentation.