misrepresentation
Part 5 - Exclusion of Liability for Misrepresentation
2012/// Filed in: Contract Law (UK)
Below are a few relevant principles and leading cases regarding the exclusion of liability for misrepresentation:
S Pearons v Dublin Corporation: It is not possible to exclude liability for fraudulent misrepresentation.
Walker v Boyle: The exclusion clause will only be effective if the party seeking to rely on it can prove the clause was reasonable (MA1967 s(2), UCTA 1977).
Inntrepreneur Pub Co v East Crown: `Entire Agreement' clauses fall within the scope of s.3 as far as liability for misrepresentation is concerned (i.e., such term has no effect except in so far it satisfies the reasonableness as stated in section 11(1) of the UCTA 1997).
S Pearons v Dublin Corporation: It is not possible to exclude liability for fraudulent misrepresentation.
Walker v Boyle: The exclusion clause will only be effective if the party seeking to rely on it can prove the clause was reasonable (MA1967 s(2), UCTA 1977).
Inntrepreneur Pub Co v East Crown: `Entire Agreement' clauses fall within the scope of s.3 as far as liability for misrepresentation is concerned (i.e., such term has no effect except in so far it satisfies the reasonableness as stated in section 11(1) of the UCTA 1997).
Part 4 - Remedies for Misrepresentation
2012/// Filed in: Contract Law (UK)
Below are a few relevant principles and leading cases regarding the remedies for misrepresentation:
Car & Universal Finance Co Ltd v Caldwell: Rescission is, in principle, available to all types of misrepresentation by notifying the other party or taking some other reasonable action to indicate the intention to rescind (e.g., contacting the police, applying to the courts for a formal order to recision). A formal order of rescission provides that any property exchanged under the contract reverts to its original owner.
Whittington v Seale-Hayne: Payment of money known as an indemnity designed to put the parties back to their former positions with regards to obligations necessarily created by the contract (i.e., it is a restitutionary claim). Note an indemnity payment is different and separate from damages.
Doyle v Olby: In the case of fraudulent misrepresentation the party must be compensated (damages) for `all the actual damage directly flowing from the fraudulent inducement' (i.e., it does not matter that the loss was not foreseeable, only that the misrepresentation caused the loss).
Royscot Trust Ltd v Rogerson: Damages under s.2(1) should be calculated in the same way as if the statement was made fraudulently (i.e., all looses are recoverable, not simply those that were reasonably foreseeable as it would be the case for negligent mis-statement under Hedley Bryne.
Car & Universal Finance Co Ltd v Caldwell: Rescission is, in principle, available to all types of misrepresentation by notifying the other party or taking some other reasonable action to indicate the intention to rescind (e.g., contacting the police, applying to the courts for a formal order to recision). A formal order of rescission provides that any property exchanged under the contract reverts to its original owner.
Whittington v Seale-Hayne: Payment of money known as an indemnity designed to put the parties back to their former positions with regards to obligations necessarily created by the contract (i.e., it is a restitutionary claim). Note an indemnity payment is different and separate from damages.
Doyle v Olby: In the case of fraudulent misrepresentation the party must be compensated (damages) for `all the actual damage directly flowing from the fraudulent inducement' (i.e., it does not matter that the loss was not foreseeable, only that the misrepresentation caused the loss).
Royscot Trust Ltd v Rogerson: Damages under s.2(1) should be calculated in the same way as if the statement was made fraudulently (i.e., all looses are recoverable, not simply those that were reasonably foreseeable as it would be the case for negligent mis-statement under Hedley Bryne.
Part 3 - Types of Misrepresentation
2012/// Filed in: Contract Law (UK)
Below are a few relevant principles and leading cases regarding the types of misrepresentation:
Derry v Peek: Fraudulent misrepresentation is a false statement that is made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly as to whether it be true of false. Fraudulent misrepresentation, in addition to being a ground on which a contract may be rescinded, constitutes the tort of deceit. The burden of proof is on the claimant.
Hedley Byrne v Heller: Negligent misrepresentation at common law is available where the maker of the statement and the party relying on it are in a `special relationship' requiring a `duty of care' and the maker of the statement acts in breach of this duty. The burden of proof is on the claimant. The representation may be made by a third party who is not a party to the contract.
Howard Marine v Odgen: Statutory misrepresentation is available where the maker of the statement has no reasonable grounds for believing it to be true (S.2(1) Misrepresentation Act 1976). The burden of proof is on the defendant to show that the misrepresentation was not made fraudulently by proving ``that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true". The party making the misrepresentation bears a heavy burden of proof under s.2(1). The burden of proof for the claimant is that a misrepresentation was made and that it induced the contract.
Whittington v Seale-Hayne: Representation that is neither fraudulent nor negligent is innocent misrepresentation.
Derry v Peek: Fraudulent misrepresentation is a false statement that is made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly as to whether it be true of false. Fraudulent misrepresentation, in addition to being a ground on which a contract may be rescinded, constitutes the tort of deceit. The burden of proof is on the claimant.
Hedley Byrne v Heller: Negligent misrepresentation at common law is available where the maker of the statement and the party relying on it are in a `special relationship' requiring a `duty of care' and the maker of the statement acts in breach of this duty. The burden of proof is on the claimant. The representation may be made by a third party who is not a party to the contract.
Howard Marine v Odgen: Statutory misrepresentation is available where the maker of the statement has no reasonable grounds for believing it to be true (S.2(1) Misrepresentation Act 1976). The burden of proof is on the defendant to show that the misrepresentation was not made fraudulently by proving ``that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true". The party making the misrepresentation bears a heavy burden of proof under s.2(1). The burden of proof for the claimant is that a misrepresentation was made and that it induced the contract.
Whittington v Seale-Hayne: Representation that is neither fraudulent nor negligent is innocent misrepresentation.
Part 2- Actionable Misrepresentation
2012/// Filed in: Contract Law (UK)
Below are a few relevant principles and leading cases regarding actionable misrepresentation:
Bisset v Wilkinson: In general, for a misrepresentation to be actionable it must be a false statement of past or existing fact which is material and induces the contract.
Edgington v Fitzmaurice: A statement of intention or a statement of opinion (i.e., a statement of what a person is thinking) can be considered a statement of fact, and it if is false it can amount to a misrepresentation.
Redgrave v Hurd: In order for the misrepresentation to be actionable, it must induce the party to enter into the contract. The misrepresentation does not need to be the only reason why the innocent party entered the contract (Edginton).
Spice Girlds Ltd v Aprilia World Service: Conduct can be treated as implicitly making a statement that if untrue may be a misrepresentation.
Dimmock v Hallet: A statement which is literally true may be treated as a misrepresentation if relevant information to the statement is not disclosed (e.g., the literal statement will be no longer true by the time the contract is executed or shortly afterwards).
Lambert V Co-operative Insurance Society: There are certain contracts (e.g., insurance) that require uberrimae fidei (the utmost good faith). In such contacts silence (i.e., failure to disclose relevant information even if not asked for) may amount to a misrepresentation.
Bisset v Wilkinson: In general, for a misrepresentation to be actionable it must be a false statement of past or existing fact which is material and induces the contract.
Edgington v Fitzmaurice: A statement of intention or a statement of opinion (i.e., a statement of what a person is thinking) can be considered a statement of fact, and it if is false it can amount to a misrepresentation.
Redgrave v Hurd: In order for the misrepresentation to be actionable, it must induce the party to enter into the contract. The misrepresentation does not need to be the only reason why the innocent party entered the contract (Edginton).
Spice Girlds Ltd v Aprilia World Service: Conduct can be treated as implicitly making a statement that if untrue may be a misrepresentation.
Dimmock v Hallet: A statement which is literally true may be treated as a misrepresentation if relevant information to the statement is not disclosed (e.g., the literal statement will be no longer true by the time the contract is executed or shortly afterwards).
Lambert V Co-operative Insurance Society: There are certain contracts (e.g., insurance) that require uberrimae fidei (the utmost good faith). In such contacts silence (i.e., failure to disclose relevant information even if not asked for) may amount to a misrepresentation.
Part 1 - Review of Case Law on Misrepresentation
2012/// Filed in: Contract Law (UK)
The next series of posts are intended as a summary that includes relevant legal principles derived from the English case law dealing with pre-contractual statements and their effect on a subsequent contract. In particular, the summary is concerned with false statements of existing fact that induce a party to enter into a contract. Such statements may amount to actionable misrepresentations. The principal remedies for actionable misrepresentation are rescission and damages. The full-text transcript of the cases is freely available at http://www.bailii.org.