Misrepresentation 786

“an unambiguous and untrue statement of fact made by one party that induces the other party
to enter into the contract.”
Contract becomes voidable because of misrepresentation.
Damages might also be available depending on the type of misrepresentation made.

unambiguous
Statement must be unambiguous as was in case of Dimmock v Hallett where statement that land
is imporveable was seen as unclear and ambiguous.

UNTRUE STATEMENT
An untrue statement can be made by culprit himself or agent acting on his behalf.Statement can
be written or oral or conveyed through conduct.Innocent party must be aware of the untrue
statement.
->conduct
Misrepresentation can be made thorough such conduct that misleads the other party and
creates false impression:Spice Girls-Group by appearing in promotional activities together
created false image that group membership was intact.

Representation that induces contract can be continuing representation,if it has continuing effect
and it was not withdrawn:Cramso v ogilive

->Silence
there is no general duty in English contract law to disclose facts:Keates v Earl of Cadogan
There can be misrepresentation only where there is express statement.Silence by a party cannot
be misrepresentation,even if it involves concealing material facts and hiding defects.
Under the doctrine of ‘let buyer be aware’duty to question is on buyer.Seller is not expected to
give away information unless questioned.

In fletcher v krell it was held that silence cannot be misrepresentation even where 1 party is is
aware that other party is under false impression because of his silence and has misunderstood
the situation.

Leggatt J was advocate of the idea that contracts carry a implied duty to act in good faith in
Sheikh Tahnoon v Kent
He proposed that “duty to act reasonably and with fair dealing having regard to the interests of
the parties was an essential feature of any relational contract”
He raised this issue multiple times in previous cases:Yam Seng v International Trade;Novus
Aviation v Alubaf

Both his approach was not appreciated in cases of Mid Essex Hospital v Compass; MSC v
Cottonex

EXCEPTIONS TO SILENCE PRINCIPLE

1. consumer protection from unfair trading regulations 2008
Under consumer protection from unfair terms regulations 2008 if a trader in a consumer
contract,tries to hide material information and mislead the other party,then it is a criminal
offence.

2. Contracts requiring utmost good faith

There is duty of disclosure in contracts of ‘utmost good faith.’These contract include sale of
shares,title of property,and family arrangements.Contract is made voidable for
misrepresentation.

Insurance contract is a contract of utmost good faith in which silence will be misrepresentation.
An individual taking out insurance must tell insurance company the important facts that will
determine the decision of accepting insurance:Lambert v cooperative insurance

3. Subsequent falsity
If a statement of fact was initially true,at the time it was made.But then there was change of
circumstance which made the statement untrue.The change not being communicated amounted
to continued misrepresentation:with v o flanagan,Spice Girls Ltd v Aprilia

4. Partial revelation
Telling half truth that misrepresents the whole siutaiton is also misrepresentation.
If a statement itself is true but it misrepresents and distorts the whole situation,because of what
is not said,then that silence over the situation is misrepresentation:Dimmock v hallet
Omitting to communicate material facts that distort complete situation is misrepresentation.

5. Fiduciary relationship
Parties having fiduciary relationship owe each other duty to disclose which is breached by
remaining silent and amounts to misrepresentation.Such duty arise by virtue of relationship
between parties rather than contractual relationship such that one party has influence over the
other and other trusts the former.Such relationship exists between
parent,child;solicitor,client;trustee,beneficiary.

6. Voluntarily assumption of responsibility

Duty to reveal arise where one party assumes responsibility voluntarily for the other and other
relies on the former:hamilton v allied domecq

Statement Of Fact
->fact
Statement amounting to misrepresentation must be one of fact.
->Statement of law-
Statement of law could give rise to misrepresentation:Pankhania v Hackney London Borough

{Ps successfully bid for a property under the representations by the auctioneers that the people
who used the car parks at the front of the properties did not have a legal right to stay there,
whereas in fact this was a wrong interpretation of law and they were protected, reducing the
value of the houses. The judge ruled that a misrepresentation of law could give rise to rescission.
Rex Tedd QC (the judge) said that the old distinction between a misrepresentation of law which
was not actionable and misrepresentation of fact had been abolished rightly by the HL, since
where it was reasonable for P to rely on D’s statement of law, as here, there was little sense in
denying P restitution for simple lack of legal knowledge. A misrepresentation of the law IS a
misrepresentation of fact. }}

->Statement of opinion
statement of opinion is insufficient to constitute misrepresentation:bisset v wilkinson.
Here neither party had any expert knowledge,so whatever they said was merely expression of
opinion and estimate,not representation of facts.They both were aware that land had not ever
been used for farming so any estimate was merely opinion.They cannot anticipate the other to
be in possession of knowledge or facts.Party giving opinion gave no assurance that it is accurate
or could be relied on.
->opinion based on facts
However “if the party giving opinion is in possession of facts then his opinion is deemed to be
based on facts and effectively a statement of fact.”:smith v land property
If x knows that clock is 200years old but he states that he thinks clock is some days old,then his
opinion is misrepresentation as he know facts and lied about them.He is lying about his state of
mind.

Bowen LJ stated:”where facts are equally known to both parties,what one says to other is
expression of opinion…but if facts are equally known to both parties then statement of opinion
by one who knows the facts,best involves a statement of material facts, for he impliedly says that
he knows facts which justify his opinion.”
->opinion based on expertise

If one party has experience and expertise in relation to subject matter of the contract,whatever
he says is expression of fact as he knowledge on which his opinion could reasonably be based.In
Esso Petroleum v Mardon estimate of profit was fact not opinion as esso petroleum had
expertise and knowledge.<>contrary to decision of bisset.

->sales talk
In dimmock v hallett court ruled that “mere puffs and sales talk are not statement of fact or
representations of facts”.Puffing statements are exaggerated statements made to induce other
party to enter to contract and sell goods.
Vague statements and praises are sales talk,while precise statements are representation of facts.

->statement of intent
statement of future intent is statement of fact:Edington v fitzmaurice
If a person lies about his intention or if he states that he intends to do something but he actually
does not,then it is misrepresentation.
Bowen LJ said that “state of mind is as much a fact as state of digestion.Lying about state of mind
is misrepresentation.”
statement of purpose or future intent are statements of fact as the intention about future
conduct already exists.
In the case it was stated that statement of opinion can be misrepresentation where maker of
statement knows what he is saying is not truth.He is aware that the statement is false because
he is in possession of facts that prove so.

Inducement:
Misrepresentation must induce contract.
Conditions

1.Sole cause

Misrepresentation does not have to be sole and only reason for entering into contract.It can be
one of many reasons:edington v fitzmaurice

2.-material influence+actively present+might act differently if knew truth

In BV Nederlandse v Rembrandt court explained the meaning of inducement:inducement

occurs when misrepresentation “materially influences innocent party into entering into
contract.This means representation was actively present in their mind when they entered into
contract.The representee does not have to prove that but for representation,they would not
have entered into contract.They only need to show that they might have acted differently.”

3.Real and substantial part

In Raiffeisen Zentral v Royal Bank of Scotland court stated that for representation to induce
contract it must play “real and substantial part in inducement.”They might not have entered in
contract if they knew that statement was false.

4.material misrep

Material misrepresentation has been defined as misrepresentation on which a ‘reasonable

person would rely’.Scott J defined it as:“representation is material … if it is something that
induces the person to whom it is made, whether solely or in conjunction with other
inducements, to contract on the terms on which he does contract”

It is generally relevant to burden of proof:museprime v adhill.”If misrepresentation would

induced a reasonable person then burden is on representor.If If the misrepresentation would not
have induced a reasonable person to contract, the onus will be on the representee to show he
was induced by the misrepresentation”

Separate element of material misrepresentation has faded.If misrepresentation induces a party

to enter into contract then it is material.

5.presumption

After false statement has been made and the party enters into contract,there is strong
presumption held by court that misrepresentation induced the contract.Presumption is hard to
rebut and burden to disprove that is on representator:Hayward v Zurich

NO INDUCEMENT

->still enter into contract even if knew truth

If innocent party decision remained unchanged even after learning that statement was false,then
there could not be said to be any inducement.
Representee decision to enter into contract would have remained unchanged even after they
would to know that representation was false.
Representator carries the burden to prove;simply asserting this is insufficient:Atlantic Lines v
Hallam

->genuine knowledge/knew statement false

There is no inducement where innocent party already knows that statement is false.But this
must be genuine and real knowledge.Suspicion or having capacity to examine truthful of
statement are insufficient:redgrave v hurd.C refused to check information and relied on what he
was told,so he could be said to have been induced to enter into contract.

->relied on other inducement:own judgement

Where there is reliance by representee on other inducements such as his own judgement,there
is no inducement;judgement could be produced by independent survey to check facts or own
investigation:attwood v small
->unaware of misrep
Where C is unaware of misrepresentation,he could not said to have been induced by false
statement to enter into contract:horsfall v thomas
{The claimant purchased a gun which had a concealed defect. His action for misrepresentation
failed as he hadn't inspected the gun before purchasing it. Therefore the misrepresentation did
not induce him to enter the contract as he was unaware of it.}

7->false statement+mistaken conviction

In case of fradulent misrepresentation,false statement needs to be only reason for entering into
contract.A party mistaken conviction along with misrepresentation are sufficient:edington v
fitzmaurice

But in negligent or innocent misrepresentation,negligent or implausible beliefs plus

misrepresentation are not sufficient.Inducement must be cause of false statement:standard
chartered bank v pakistan national shipping