Misrepresentation
The possible remedies in misrepresentation, in contrast to breach of terms must be examined. Misrepresentation can be defined as a false statement of fact, made pre-contractually by one party, with a view to inducing the other party to enter into the contract. The statement must have been intended to be acted upon and must actually induce the other party to enter the contract.
Statement of facts
While considering statement of fact, it must be asked a) is the statement too vague? b) is it stated as an opinion or as a fact? c) how knowledgeable is the representor? and d) is the representor mispresenting the state of his mind?
* Merepuff is not a statement of fact. D’s statement seems to be too vague and ambiguous to amount to a statement of fact. (Scott v. Hanson) Puff can be statement of fact if it intended to be bound. (Carlill v. Carbolic Smoke Ball)
* Expression of an opinion based on ground of incapable of actual proof is not a statement of fact.(Bisset v. Wilkinson)
* Should D assert that his statement are only opinion, as in (Bisset), he might be met with the argument that, as an expert, he is impliedly saying that he knows facts which justify his opinion. (Smith v. Land) Also, (Brown v. Raphael) establishes that an opinion may be actionable as a misrepresentation where the representator is in a far stronger position to ascertain the facts than the representee. (Esso Petroleum v. Mardon)
* It is a statemet of fact when the representator possess special skill or knowledge to be in a position to ascertain the facts. (Edgington v. Fitzmaurice)
* Silence does not amount to misrepresentation, there is no duty of disclose in pre- contractual dealing.(Keates v. Cadogan)
Exception:- D’s act of being silence amount to active hiding of defect. (Gordon v. Selico)
* Half truth may amount to a statement of fact. (Dimmock v. Hallet)
* If a party makes a false statement in the belief it is true comes under a duty to disclose the truth after he discovers it.(Davies v. London Marine)
* If the party makes the statement which s true at the time, but which is found to be untrue later, is under a duty to disclose the truth.(With v. O’Flanagan)
* Mispresentation can be made by conduct. (Spice girls v. Aprilla)
* Mispresentation can be made by the agent of the D. (Spencer v. Jeffrey)
Inducement
The misrepresentation must have induced the representee to enter into the contract. It need not be the sole reason but it must play some part to effect the decision of the representee to enter into the contract.
However, the representee must have actually allowed the representation to influence his mind.
* The representee must be aware of the misrepresentation. (Horsfall v. Thomas)
* The representee must rely on the misrepresentation. (Attwood v Small)
* The representee must be affected by the misrepresentation. (Smith v. Chadwick)
* The representation must be addressed to the representee.(Peek v. Gurney)
* The oppourtunity to verify the statements will not prevent liability arising against the representator. (Redgrave v. Hurd)
C’s reliance on the statement of D, raises the chances of C being induced. The test is whether a reasonable person would have been induced in the position of representee.(Pan Atlantic v. Pintop Insurance) Burden of proof is on the representee to prove that reasonable man would be induced.
Once inducement has been proved then burden of proof shifts on the representator to prove that the representee did not rely on his statement, at the time of entering into the contract.(Museprime v. Adhill)
Fraudulent Misrepresentation
The remedies for misrepresentation will be determined by the lack of care exercised by the misrepresentator. Traditionally, fraud has attracted the best remedies for the representee but it is difficult to establish. The burden of proof is a heavy one to discharge.(Derry v. Peek) It must be established that the representation was made with knowledge on ts falsity or belief in its true or recklessly careless whether it was true or false.
In the view of common law, a charge on fraud is such a terrible thing to bring against a man that it cannot be maintained in any court unless it is shown that he had a wicked mind.(La Lieve Gould) However, in the light of recent case law concerning the Misrepresentation Act-1967 (hereafter MA-1967),s.2(1), it is unlikely that C would be advised to pursue a claim in fraud unless he had firm evidence that D was intentionally lying. Damage will lie in tort of deceit i.e. all the losses directly flowing from the misrepresentation.
Alternatively, if a special relationship exists between the parties, C might consider suing in the tort of negligence misstatement.(Esso Petroleum v. Mardon) It must be affirmatively establish negligence on the part of D in making those pre-contractual statements. However, as we shall see, in view of s.2(1) of the Act 1967 Act, it is pointless to pursue this line of argument.
Misrepresentation Act-1967
S.2(1) of MA-1967 reverses the burden of proof, requiring D to prove that he had ‘reasonable grounds’ for his belief. It provides “where a person entered into a contract after a misrepresentation is made to him as a result he suffers loss then the representator would be liable for damages as if he would have been in case of fraudulent misrepresentation, unless he can show that he has a reasonable ground to believe and did believe upto the time of making the contract that his statement were true”.
This may be difficult to establish, especially in the light of (Howard Marine v. A Ogden), where the Court of Appeal stated a party had an ‘absolute obligation’ not to state facts which he had no reasonable grounds for believing were true, as honest belief is insufficient. If the representator cannot discharge this burden he will be liable for damages which will be assessed in the tort of deceit i.e. damages which directly flow from the consequences. (Royscot Trust v. Rogerson)
Losses includes personal distress and anxiety (Doyle v. Olby), oppourtunity cost (East v. Maurer) and additional profit (Clef v. La Porte) Consequential losses (Standard Chartered Bank v. Pakistan National Shipping). Varies types of non-peculiarly loss should be recoverable under s.2(1) i.e. damage for pain and suffering (Reliance v. Rhodes), it would cover injured feeling (Shelly v. Paddock), mental disquiet (Archer v. Brown), physical inconvenient and discomfort. (Mafo v. Adams)
In (Gosling v. Anderson) (Jarvis v. Swan Tours), Lord denning argued that the measure of loss recovery was the expectation loss but it was rejected and the measure of loss recovery was the reliable loss.(Royscot v. Rogerson)
Where the representee has a fault, then the damage payable may be reduced on the ground of contributory negligence (Law of Reform Contributory negligence Act-1945, s.1). (Gran v. Richcliff)
Innocent Misrepresentation
If there is any reason behind the misrepresentation and thus the representor can show reasonable ground for his belief then he will be liable under innocent misrepresentation.
s.2(2) of the Act provides: “ If the representor will liable under innocent misrepresentation then the purpose will get rescission in lieu of damages.
All misrepresentations attract the remedy of rescission and the purpose of which is to restore “status quo ante”.
However, rescission would not apply if one of the bar applies: a) affirmation of contract. (Long v. Lloyd), b) lapse of time between the breach and claim. (Leaf v. International Galleries), c) Restitution not possible, good substantially changed (Clarke v. Dickson) d) Title passed to third party.(Philips v. Brook)
However, C’s claim is subject to the enforceability of the exclusion clause inserted into the contract. Assuming the clause has been properly incorporated under the existing common law principle, one needs to consider the effect of the Unfair Contract Terms Act-1977,s.8, which subjects such clauses to a test of reasonableness. Adopting the guidelines in sch.2 of the Act, the answer might depend upon what opportunity C was given of checking the capacity, whether he received any inducement for agreeing the clause, and the respective strength of the parties ‘bargaining position’. But this can be evade by drawing analogy from (Stewart v. Horatio) which emphasized that all parts of a clause must be reasonable, irrespective of what the reliance is being placed upon each part by either party.
Denningzcave 