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Law Notes Contract Law Notes

Misrepresentation Requirements Notes

Updated Misrepresentation Requirements Notes

Contract Law Notes

Contract Law

Approximately 1511 pages

Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...

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Different remedy for different falseness

  • When false statement which induces contract is a term within the contract

    • Term = enforceable undertaking to do something

      • When term is breached remedies available are:

        • Specific performance (if sought and appropriate)

        • Damages which put C in position as if contract performed.

        • Termination if sufficiently serious

  • When false statement which induces contract is a representation about something outside of the contract

    • Representation = statement which asserts truth of given state of facts and invites reliance on it

      • Without giving an enforceable guarantee of its truth

        • Remedies available:

          • Rescind Contract

          • Claim damages to put C in position as if C had not relied on the statement’s truthfulness (i.e. not entered the contract)

Why this can make a difference

  • Rescinding a contract or claiming damages to “undo” the effect of contract

    • is useful if you’ve made a bad bargain

      • Thus you’d try and claim the false statement is a representation about something outside the contract

  • Whereas being able to claim your expectation interest

    • Or have opportunity to request specific performance

      • Is better if you’ve made a good bargain

        • Thus you’d try and claim (first and foremost) the false statement is a term of the contract rather than a representation.

  • How to distinguish between a term and a representation

    • Intention of Parties manifested by their words and conduct

      • Heilbut, Symons and Co v Buckleton:

        • Importance of truth of statement to the representee

          • More important, more likely term

        • Whether speaker had special knowledge

          • More specialist knowledge, more likely a term

        • Whether innocent party was asked to verify the truth

          • If asked to verify, more likely representation

        • Whether speaker initiated false statement or merely passed it on

          • If not first “false speaker” then less likely term

        • Whether statement was formally recorded

          • If recorded, more likely term (parole evidence rule) (although statement outside of document can be classed as collateral term)

Requirements for Misrepresentation

  • 1. Unambiguous, false statement

    • Of existing fact

      • Can be made by words or conduct

    • Of intention that is in fact

      • dishonest

        • Mere statement of intention, if honest, is not actionable

          • Wales v Wadham [1977]:

            • Even if D then fails to act on his intention – he is entitled to change his mind

        • If D states an intention and in fact intends to do something else, however

          • Edington v Fitzmaurice [1885]: D, directors of a company, sent shareholders prospectus inviting subscription for bonds to buy vans. C read prospectus and mistakenly thought would be given charge of company property, so bought some bonds. D only wished to improve cash flow.

            • Bowen LJ

              • State of a man's mind is as much a fact as the state of his digestion.

                • Therefore, misrepresentation as to the state of a man's mind is a misstatement of fact.

      • OR a term of the contract

    • Of opinion that is

      • Dishonest

        • Asserting an opinion that is not genuinely held

          • Is an assertion of existing fact (“I hold this opinion”)

            • That is in fact false (cos you don’t actually hold it)

      • OR Unreasonable

        • Smith v Land and House Property Corp (1884): D, landlord selling flats to C, describes tenant as “most desirable” when in fact tenant an arse who doesn’t pay rent. C later sues.

          • Bowen LJ:

            • Where facts known by both parties equally

              • what one of them says to the other is frequently nothing but an expression of opinion.

                • And mere opinion is not actionable

            • But if the facts are not equally known to both sides,

              • then a statement of opinion by one who knows facts best can involve a statement of a material fact,

                • for he impliedly states that he knows facts which reasonably justify his opinion.

        • Bisset v Wilkinson [1927]: C, knowing no better than D, advised that land not used for sheep before could potentially hold 2000 sheep. C turned out to be wrong.

          • Lord Merrivale

            • In these cases, things to consider are:

              • the material facts of the transaction,

              • the knowledge of the parties respectively and their relative positions,

              • and the actual condition of the subject-matter spoken of,

                • which will lead to conclusion whether opinion honestly and reasonably held.

      • OR a term of the contract

    • Or “Puffs” (vague and exaggerated laudatory statements about contract subject matter) which

      • Are specific enough in the context to constitute a contractual term

        • Carhill v Carbolic Smoke Machine [1893]:

          • SEE CONTRACT WK 1

  • Chen Wishart: Arguably s.2(1) of Misrepresentation Act will include statements of intent, opinion and puffs as actionable UNLESS D can prove the expression was HONEST – whereas under common law, C must still prove...

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