○ Also, there is no duty to check whether the
IV. Misrepresentation opinion was correct or not → Hummingbird
Motors Ltd v Hobbs [1986]
Vitiating factor → factors that present at the contract, ○ However, if D is in a position to check, then
possibly unknown to one or either party; these contracts it is a misrepresentation → Smith v Land &
lack the voluntariness, since it is based on misinformation House Property Commisssion [1884]
● should be a statement of material fact, not opinion or
If a contract has a vitiating factor, it can be void (contract future intentions
is not enforceable at all) or voidable (party may choose) Edgington v Fitzmaurice [1885] → C, at
first took the loans to improve the building but then
decided to pay off the debts
Misrepresentation →
Exception:
● statement made during negotiations before forming the
A. Where the opinion given by X contradicts info X
contract
already knows
● was an inducement to the other party
B. Expert opinion is a statement of fact
● did not intend to be binding
● was not true
● There should be a positive act or conduct; silence or
● Voidable not void
non-disclosure is not a statement
Gordon v Selico [1986] → D did not say
Whether the statement is a term or misrepresentation will
anything about the existence of dry rot; D
depend on:
by saying nothing did a positive act to
● Intention of the parties
conceal this fact
● Statement is reduced to writing
● Generally, no misrepresentation by silence or non-
● Specialist skill or knowledge
disclosure (Keates v The Earl of Cadogan [1851])
Exception:
What makes misrepresentation actionable?
a) Only half facts / half truths are given:
1. There must have been an unambiguous false
Nottingham Patent Brick & Tile Co v
statement
Butler [1885]
2. The false statement must have been of law or fact
however: substantially correct statements
3. The false statement must lead the other party to enter
are not misrepresentations: Avon
the contract
Insurance plc v Swire Fraser Ltd [2000]
Dimmock v Hallett [1866]
● can be verbal, written or conduct b) Change of circumstances → at the
Spice Girls Ltd v. Aprilia World Service BV [2002] moment of negotiations, the statement
● only can be done by parties of the contract; agent is an is true, but then it becomes untrue; the
exception parties fail to inform
● statement must be done before or during the formation With v O’Flangan [1936] → at first
of the contract party had excellent business with good
income; the sale was made few months later
and businesses income fell drastically; D
There must have been an had a duty to inform;
unambiguous false statement c) Where there is good faith, parties should
disclose all relevant facts because of the
● There should be an unambiguous false statement to relationship of the parties, e.g. insurer and the
the other party insured
Exception: if the third party makes the
misrepresentation, then it is not enforceable
→ Barclays Bank v O’Brien [1994]
● The statement MUST be unambiguous The false statement must lead the
McLerny v Lloyd’s Bank Ltd [1974] → other party to enter the contract
ambiguous statements are not actionable
● must be inducing to the other party and materially
important
False statement of fact: JEB Fasteners Ltd v Marks Bloom & Co. Ltd
[1983]
● Not the statement of opinion, but of law or fact
● it should be inducing to the other party, even generally
Bisset v Wilkinson [1927] → farmer stated
it would not be
that it was his opinion that the land could hold
Museprime Properties Ltd v Adhill
2000 sheep; this clearly was an opinion + D said
Properties Ltd [1990] → 3 properties were
that he was not an expert, and C also knew it.
sold in auction; it was said that they have
outstanding rent review; C claimed that this was a
misrepresentation; D said that the statement could statute is an alternative for the fraudulent
not be an inducement; misrepresentation
Held: this was misrepresentation
● it is not an inducement if the other party is unaware of
the misrepresentation
● if C already knows it was false, the statement cannot Innocent misrepresentation
be an inducement → honest belief that the statement is true and it is based
● If the party would have entered into a contract anyway, on reasonable grounds, then the statement turns out to be
then there is no misrepresentation false
○ Must not be the only reason why the party entered
into contract
○ It does not matter if C missed an opportunity to Non-disclosure
discover the truths a. Fletcher v Krell [1873]
● it cannot be a misrepresentation if C did not rely on the b. Locker and Woolf Ltd v Western
statement in the first place Australian Insurance Co. Ltd [1936]
Attwood v Small [1838] c. Tate v Williamson [1866]
D made a representation; C later confirmed it from d. Dimmock v Hallett [1866]
his agents before agreeing; later, it was found out e. With v O’Flanagan [1936]
that this was false;
Held: since C relied on his agents to make a
Remedies:
decision, this was not a misrepresentation
1. recession → parties went back to the previous
position, as if the contract never existed
Types of Misrepresentation:
When is it unavailable?
● Fraudulent
a) When the parties continue with a contract even
● Negligent
after they discovered the statement was false, e.g.
● Innocent
Long v Lloyd [1958]
b) If too much time has lapsed since
Fraudulent misrepresentation misrepresentation, e.g. Leaf v International
Galleries [1950]
→ when the representation has been made because 2. Damages → only for fraudulent and negligent
of its being made with a knowledge of its untruth, misrepresentation; cannot be applied for
or because of its being made dishonestly with a innocent; depends on what position the parties
reckless ignorance whether it was true or untrue would have been in if the false representation
→ statetment made, derived from Derry v Peek had not been made, even if loss is unforeseeable
[1889]: 3. Damages under s 2(2) Misrepresentation Act 1967
(i) knowingly
(ii) without belief, it is true
(iii) recklessly/carelessly—not caring whether it is
true or false:
Derry v Peek [1889] →
Negligent misrepresentation
→ an honest belief that the statement is true, but
failed their duty to check the accuracy
Hedley Byrne & Co. Ltd v Heller & Partners Ltd
[1964]
Types:
(i) under common law → C has to prove that
D was negligent + it is negligent
misstatement under tort
(ii) under the s. 2(1) Misrepresentation Act 1967 →
D has to proof they were not negligent →
more significant
○ Exclusion can be: the Unfair Trading
Regulations Act 2008
