Contract 5 - Misrepresentation

Question 1

What is the difference between a condition and a warranty?

Answer 1

Condition: important term going to root of the contract ⛓️
Warranty: less important term not going to root 👍

Question 2

What’s the difference in remedy between a condition and a warranty?

Answer 2

• Condition can result in terminating 💥
• Both can result in damages 💵

Question 3

What are the respective consequences for breach of condition or warranty?

Answer 3

• Condition⛓️: right to repudiate 💥& damages 💵
• Warranty👍: only damages 💵

Question 4

What is the starting point for determining the classification of a term?

Answer 4

• Has term been classified by
  (i) statue 🇬🇧
  (ii) the parties or 🥳
  (iii) previous judicial decision 🧑‍⚖️
• does it go to root 🌳
• If can’t determine, apply test for innonimate term ⚛️🐈

Question 5

What is the test for an innominate term?

Answer 5

Does breach deprive the innocent party of substantially the whole benefit from the contract?

• yes = condition ⛓️
• no = warranty👍

Question 6

What vitiating factors are there?

Answer 6

• Mistake 😳
• Misrepresentation🤥
• Unfair Contract Terms 📝
• Duress & Undue Influence 🔨😈
• Illegality 👮

Question 7

What are the requirements for an actionable misrepresentation?
🤥

Answer 7

1. clear 🔍
2. False 🤥
3. Statement of fact 👇
4. Addressed to Claimant 🫵
5. Induces C to Enter into Contract 💝

Question 8

What is a statement of fact NOT?
👇

Answer 8

• Statement of opinion (unless unbalanced parties) 🤷
• Statements of intention 🔮💡
• Silence (unless previous statement becomes un true) 🤐

Question 9

How does one determine if a misrepresentation ‘induced C to enter contract’?

Answer 9

• objective: 🗣️ would’ve influenced 💝a reasonable person 🧑‍💼 then inducement inferred & burden shifts to 👉D to rebut
  OR
• subjective: representee shows it was personally 😵‍💫 was induced 💝by statement 🗣️

Question 10

When can a statement not be an inducement for misrepresentation?

Answer 10

Statement:
- not communicated to representee
🫢
- known to be untrue to representee
💩
- did not affect representee’s decision
🙉

Question 11

What is the position on inducement where representee made their own investigations?

Answer 11

If they relied on their own investigations, not the misrepresentation, cannot bring a claim
🔍

Question 12

Is there a duty to check a misrepresentor’s statement?

Answer 12

No

• but if unreasonable, contributory negligence may be possible. 🤪
• The more commercial 👨‍💼 they are, the likelier court will consider it reasonable

Question 13

When may statements of opinion form a claim for misrepresentation?

Answer 13

If representor considered to have a greater knowledge than representee,
🤓

Question 14

When can statements of future intention form a claim for misrepresentation?

Answer 14

misrepresented their existing intention 💡

Question 15

When can silence form a claim for misrepresentation?

Answer 15

1. Half-Truths: technically true statements but misleading 🤥
2. Continuing Representations: at beginning of negotiations, statement is made but becomes false prior to entering the contract, representor must correct the representation ⏱️
3. Contracts uberrimae Fidei: duty to disclose material facts in some contracts where one party is in a particularly strong position to know material facts 🏥🩻

Question 16

What is the effect of misrepresentation on a contract?

Answer 16

Makes contract voidable - must take action to rescind

Question 17

What are the different behaviour categories of misrepresentation and their definitions?

Answer 17

1. Fraudulent: made knowingly or w/o belief in truth, or recklessly (flagrant disregard for truth) - failure to disclose must be deliberate/dishonest
2. Negligent: representor fails to show reasonable grounds to believe, or did believe up to time contract was made, that statement was true - an easier claim but treated liked fradulent
3. Reasonable: Representor proves they had reasonable grounds to believe in truth and did so until time of contract

Question 18

What remedies are there for misrepresentation for fraud

Answer 18

• Damages: greatest for fraudulent, but neg will often match;
• can recover for all losses even if not foreseeable 👀
• C must mitigate;
• value of damages will be reduced by benefit received
• contributory negligence not available for Fraud 🕳️🚶‍♂️
  OR
• Rescission: put parties back in position before contract - only awarded where this is possible 🔁

Question 19

What remedies are there for misrepresentation for negligent

Answer 19

• No right to damages but at Court’s discretion
• Damages: greatest for fraudulent, but neg will often match;
• can recover for all losses even if not foreseeable 👀
• C must mitigate;
• value of damages will be reduced by benefit received
• contributory negligence is available for negligence 🕳️🚶‍♂️
  OR
• Rescission: put parties back in position before contract - only awarded where this is possible 🔁
• Indemnity: covers expenses for obligations assumed due to contract - not granted where damages given💰

Question 20

What remedies are there for misrepresentation for reasonable care

Answer 20

• Rescission: put parties back in position before contract - only awarded where this is possible 🔁
• Indemnity: covers expenses for obligations assumed due to contract - not granted where damages given💰
• no right to damages but at Court’s discretion

Question 21

Are exemption clauses allowed for misrepresentation?

Answer 21

Only if it is reasonable
⚖️

Question 22

Can a misrepresentation be carried out by actions alone?

Answer 22

Yes, concealment of dry rot was found to be a misstatement.