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CONTRACT – Misrepresentation (lectures 13 and 14)
Misrepresentation is a vitiating factor
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The court may allow rescission
for all types of misrepresentation
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Evans & Son v Andrea Merzario Ltd), which give an action for breach
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All elements must be proven
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If wording is clear, the C
can’t manipulate the meaning
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It has to be substantially correct, then it is not
false ie not a misrep
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FRAUDULENT – tort of
deceit (common law)
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It is a statement asserting a given state of
affairs (Klienwort Benson Ltd v Malaysia
Mining Corp)
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Conduct may be fact: Attempts at
concealment (Gordon v Selico); conduct
(Spice Girls ltd v Aprilia WS)
2
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A layman’s
opinion with no greater knowledge than C is
not fact
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If the facts are not equally
well know on both sides, then a statement of
opinion involves very often a statement of
material fact, for he impliedly states that he
knows facts which justify his opinion
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Expert opinion may be fact where expert
gives opinion in area of their expertise – Esso
v Marden
4
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“A
representation that something will be done in
the future cannot be true or false at the
moment it is made” – Beattie v Ebury
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Must be a fact not a promise
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It is a statement asserting a given
state of affairs – Kleinwort Benson Ltd v
Malaysia Mining Corp
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*If the statement is not material,
actual inducement cannot be inferred,
unless the c can prove subjective
inducement (Museprime properties v
Adhill properties)

However, half truths (Dimmock v Hallett;
Notts Patent Brick & Tile v Butler) and
continuing representations, which were true
initially but false at the time of contracting
(With v O’Flanagan) eg contracts uberrimae
fidei (insurance contract) and fiduciary
relationships
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Commercially it is probably different
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*Difficult claim as burden on c
to prove actual fraud
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Smith New
Court v Scrimgeour Vickers
confirmed Doyle, but C must
mitigate as soon as fraud
discovered and damages will be
reduced by benefits obtained by
C
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*C can also recover loss of
profits (Down v Chappell) but
note the measure (East v
Maurer) ie tortious – put c back
in position s/he would’ve been
in had contract not taken place
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*However, even if have investigated,
partial reliance on misrep also is
sufficient – Edginton v Fitzmaurice
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Unless
misrep or had reasonable
grounds to believe in truth of
statement will be deemed
negligent AND treated as
having made fraudulent misrep
ie the ‘fiction of fraud’ –
howard marine v ogden
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*There is a debate as to whether the
misrep must have been material - Pan
Atlantic Insurance Co ltd v Pine top
insurance co ltd
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5
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No general duty to
disclose information – Keates v The Earl of
Cadogan; Sykes v Taylor-Rose
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Pearson & Son Ltd v Dublin Corp
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*Just the losses directly
flowing from that NM
(Royscott Trust v
Rogerson/Smith new ct v
scrimgeour Vickers)
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*S2(2) MA 67 ct MAY
award rescission OR
damages ‘in lieu’ of
rescission
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*Can damages be reduced
for contrib neg? NB Grey
area: Gran Gelato ltd v
Richcliff/ cf Royscott Trust v
Rogerson (treat NM same as
FM ie d cannot argue contrib
neg)
INNOCENT MISREP –
s2(1) misrep act 1967
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*Remedies – Indemnity (if
relevant)
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C will be awarded
either rescission OR
damages in lieu (s2(2) MA
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Misrep
renders contract voidable
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*Rights to rescind may be
lost: third party rights
(Phillips v Brooks);
affirmation (Long v Lloyd);
lapse of time (Leaf v
International Galleries);
Impossibility (Clarke v
Dickson)
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*Indemnity is available for
all types of misrep
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NB
Generally no indemnity
given if damages awarded

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