Misrepresentation

Untrue statement- (caveat emptor let the buyer beware)

Fletcher V Krell where the woman failed to reveal that she had been
previously married when she applied for the post of a governess the courts held that her silence didnt amount to misrepresentation.

Silence amounts to misrepresentation

Contracts requiring utmost good faith (uberrimae fidei)
International Management Group UK Ltd V Simmonds{insurance} The insurance co. didnt have to pay the compensation owed, and
were allowed to retain the premiums paid, as IMG has breached the requirement of utmost good faith by failing to reveal the rumours heard that the Indian Government was likely to refuse to allow the Indian Players to play for the Sahara cup, thus voiding the contract.

Subsequent falsity
With V OFlannagan {medical practice}, here the doctor had wished to
sell his medical practice and claimed that it was worth 200 pounds per annum, however the seller was unable to keep up with his work upon falling ill, and 4 months when the contract for sale was made the practice was worth virtually nothing, the failure of the doctor to inform the buyer this change in circumstances was held to be misrepresentation.

Partial revelation
Dimmock V Hallett {sale of land}, here a seller of land told a prospective
buyer, that the farms on the land were let, while he failed to mention that the tenants were about to leave, this gave a distorted picture of the true situation and thus amounted to misrepresentation.

Statement of fact (the state of a mans mind is as much as a fact

as his digestion)

Bisset V Wilkinson {sheep farming}, here the courts held that as the land
had not been previously used for sheep farming, it would be impossible to know as a statement of fact how many sheep the land could support, thus Bissets statement was merely considered to be a statement of opinion, thus didnt amount to misrepresentation.

Edington V Fitzmaurice {prospectus issued for loans}, here the Court of

Appeal held that the statement made by the defendant inviting loans for the purposes of improving buildings and extending the business, amounted to fraudulent misrepresentation of his state of mind, as he knew that at the time of issuing the prospectus the money would not be used for the purposes stated.

Smith V Land and House Property Commission {sale of a hotel :

tenant}, here the Court of Appeal held that the statement made that the tenant was desirable when in possession of facts that the tenant only paid in driblets when pressurised, and that the rent was severely in arrears, made the plaintiffs statement amount to actionable misrepresentation. Dimmock V Hallett mere sales talk will not amount to misrepresentation

Inducement
Redgrave V Hunt- {sale of law practice}, here a solicitor falsely quoted the
value of the law practice as 300 pounds a year when it was only worth 200 pounds a year, however though the buyer upon inspection would have found out the statement was untrue, he simply relied on the sellers word, and as a result the sellers statement amounted to actionable misrepresentation.

Attwood V Small {sale of a mine}, here the owners of a mine exaggerated

the true value of the earning capacity of the mine, but the prospective buyer did not rely on this statement, and instead employed surveyors, who unfortunately produced inaccurate reports, therefore the owners of the mine were not liable based on misrepresentation, as the buyer had not relied on their untrue statement, rather on the surveyors statement.

Types of misrepresentation
Fraudulent misrepresentation (tort of deceit Lord Herschell)
Derry V Peek {steam powered trams}, here the defendant failed to obtain
permission from the Dept. of Trade to run steam powered trams, as they genuinely believed that it was a mere obligation, given the passing of the Act, and as a result they were not to be held liable for fraudulent misrepresentation.

Negligent misrepresentation at common law

Hedley Byrne V Heller and Partners the plaintiff co. Easi Power Ltd,
asked an advertising co. Hedley Byrne, to buy substantial amounts of advertising space on behalf them. To carry out the transaction Hedley inquired from National Provincial Bank about the credit worthiness of Easi Power. Then National Provincial Bank on two occasions contacted Heller who were Easi Powers bankers, and were backing them financially. Heller gave favourable references on both occasions, but with a disclaimer, without responsibility on the part of this bank, unfortunately Easi Power later default in their payment, so the plaintiff sued the bank Hellers. The plaintiff lost because the reference was given with a disclaimer that it was without responsibility.

Esso Petroleum Co Ltd. V Mardon Essos sales rep. who was an

expert in the industry gave an assurance to the def. that the new petrol station would be able to sell around 200000 gallons of petrol for a year, after the statement was made, the local council forced to do changes to the plans of the site. This meant the sales potential of the site was much less than what was told by the rep. As a result of negligence on Essos behalf this change was not communicated to the def. Relying on the reps estimate, he signed a 3 year agreement. Defendants lost a lot of money. When Mardon fell into arrears with his rent Esso sued him, so Mardon counter claimed for damages for negligence and misrepresentation, Hedley Byrne principal applied and Mardon won the case.

Misrepresentation under statute

Harvard Marine V A Ogden & Sons In this case the COA held that
there was liability under s 2 (1) as the def. had failed to prove they had not been negligent.

Spice Girls Ltd. V Aprilia Spice Girls Ltd. Was for the co.

formed to

promote a pop group called Spice Girls, Aprilia the Italian co. who manufactured motorcycles and scooters signed a contract with Spice Girls to use their images and logos. The agreement referred to the group currently comprising of 5 members, and required the members to participate in filming a commercial for scooters, which could be shown until March 1999. Aprilia later failed to pay the advertising pay for the advertising campaign and Spice girls sued for payment. Counter claim was brought by Aprilia saying that there was misrepresentation; it argued that one of the Spice girls declared her intention to leave and this was not communicated to Aprilia, they incurred expenditure and suffered a commercial loss. If they knew the girls intention they would not have signed the agreement. COA said as the group knew she had intended to leave it was misrepresentation so the Spice Girls Ltd had to pay damages.

Remedies for misrepresentation

Rescission
Car and Universal Finance Co. Ltd v Caldwell {stolen car }, here
the defendant sold the car to a fraudulent party, therefore the def. immediately contacted the Automobile Association and the police, making his intention to rescind the contract sufficiently clear, therefore the ownership of the car reverted to him. Any property exchanged under the contract therefore reverts back to its former owner as the injured party applies to the courts for a formal order of recession.

Bars to rescission Impossibility of restitution Vigers V Pike {mine used up}, here there was nothing left in the mine since
it had been worked out thus rescission was impossible.

Erlanger V New Sombrero Phosphate Co {mine used up}, here the

subject matter was a mine which had been partially used up, therefore rescission was awarded, along with damages to compensate for the partial loss in value

All or nothing De Molesina V Ponton High court stated that a victim of

misrepresentation can rescind the whole of a contract but not part of it, if the whole contract cannot be rescinded, then it could not be rescinded at all, instead damages would be awarded.

Affirmation Leaf V International Galleries {Painting of Salisbury Cathedral}, in this

case the painting purchased was discovered to be a fake and not painted by the Constable, however this discovery was made 5 years after the sale, therefore the time elapsed meant that it could not be applicable for rescission, especially as the seller had not committed fraudulent misrepresentation in this case and had every reason to believe that the picture had been accepted.

Zanzibar V British Aerospace Ltd. {aeroplane}, The government of

Zanzibar brought action against British Aerospace Ltd for misrepresentation made about the features of the aeroplane, however the right to rescission was lost, as the govt. had delayed in bringing proceedings.

Indemnity payment
Whittington V Seale Hayne {farm was not in hygienic condition},
here, the premises were falsely claimed to be in good condition but this wasnt a term of the contract, and as a result of the poor condition the plaintiff suffered a loss of 1525, but was only compensated 20. It was held by the courts that this 20 was the indemnity payment as mentioned in the contract as payment for repairs as the other expenses did not rise under the contract.

Damages
Doyle V Olby Ltd. here it was stated that for fraudulent misrepresentation
a person can be compensated for all the actual damage directly flowing from fraudulent inducement. It does not matter that the loss was not foreseeable; essentially all that is required is that the misrepresentation caused the loss. So a person claiming for fraudulent misrepresentation will be frequently able to claim for lost profits. Hedley Byrne damages available for negligent misrepresentation