Contract Law: Misrepresentation & Terms

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Questions and Answers

What distinguishes a statement made before a contract from a contractual term?

The format of the statement, whether written or unwritten (correct)

The timing of the statement in relation to the contract (correct)

The relevance of the statement to the negotiation process

The authority of the person making the statement (correct)

Which situation exemplifies a representation rather than a term?

An expert validates a product's quality

A buyer asks detailed questions about the product's features

A seller emphasizes price as a tactic (correct)

An individual discloses detailed knowledge about a vehicle's history

When is a statement classified as a term rather than a representation?

When made by a non-expert

When written in a contract (correct)

When it is irrelevant to the contract

When it is expressed verbally

In the case of misrepresentation, which of the following is a crucial element?

The statement must be false Signup and view all the answers

What role does expertise play in differentiating between a term and a representation?

It defines the credibility of the statement Signup and view all the answers

Which of the following indicates a situation where silence does not constitute misrepresentation?

The seller has no knowledge about the product fault Signup and view all the answers

What is typically a characteristic of 'mere puff' in sales contexts?

It is a subjective claim that is exaggerated Signup and view all the answers

Which of the following is NOT considered a requirement for establishing misrepresentation?

The misrepresentation must have been intended as a lie Signup and view all the answers

What is the main legal implication established in the case Dimmock v Hallet?

Half disclosures can lead to misrepresentation. Signup and view all the answers

What was the failure of the defendant in the case With v O'Flanagan?

He did not disclose the changes to the situation. Signup and view all the answers

In the case of Spice Girls v Aprilia World Services, what type of misrepresentation occurred?

Misrepresentation by conduct. Signup and view all the answers

What does the principle of Uberrimae Fidei in insurance require?

Complete honesty and full disclosure of all relevant information. Signup and view all the answers

What is the distinction made between types of opinions in determining misrepresentation?

Misrepresentation can stem from non-expert opinions. Signup and view all the answers

What should be disclosed to avoid breaching fiduciary duty?

All corruption-related information. Signup and view all the answers

Which scenario best illustrates false statements of past or present fact?

A party states a fact they believe is true but is incorrect. Signup and view all the answers

In Bisset v Wilkinson, what principle regarding opinion and fact is illustrated?

Opinions cannot be misrepresentations if they are subjective. Signup and view all the answers

What is one of the primary effects of misrepresentation in a contract?

Make the contract voidable Signup and view all the answers

Which of the following is a remedy for misrepresentation?

Rescission of the contract Signup and view all the answers

What is one bar to rescission of a contract due to misrepresentation?

Impossible restitution Signup and view all the answers

In the case of Clarke v Dickson, what was the outcome regarding the restoration back to the original position?

Restoration was impossible due to the shares being worthless Signup and view all the answers

Under what circumstance can a contract be rescinded if goods are held by a bona fide third party?

When the third party is unaware of the misrepresentation Signup and view all the answers

What is the effect of a representee wishing to continue with a misrepresented contract?

They are affirming the contract Signup and view all the answers

Which of the following is NOT a requirement of misrepresentation?

Written agreement between parties Signup and view all the answers

What significant principle was illustrated in Philips v Brooks regarding misrepresentation?

Fraud affecting third parties can void a contract Signup and view all the answers

What is the general ruling regarding misrepresentation of future intentions?

A misrepresentation can occur if there is non-disclosure of a change in intention. Signup and view all the answers

Which case illustrates that nodding, shaking, and smiling can be considered as inducement?

Walters v Morgan Signup and view all the answers

What does the case of Pankhania v Hackney London Borough illustrate regarding misrepresentation?

False legal statements can lead to a successful claim for misrepresentation. Signup and view all the answers

Which statement is true regarding inducement in misrepresentation cases?

Inducement can occur without the party knowing the statement is false. Signup and view all the answers

In which scenario would there not be a case for misrepresentation according to the content?

A party checks the accuracy and finds the statement to be true. Signup and view all the answers

What is a critical aspect of communication in misrepresentation cases?

All statements should be communicated directly to the other party. Signup and view all the answers

What was the holding in the case of Edgington v Fitzmaurice regarding future intentions?

A false statement regarding plans to expand a business constitutes misrepresentation. Signup and view all the answers

What can negate an agreement according to the discussion on misrepresentation?

Non-disclosure of true intentions. Signup and view all the answers

What is the outcome of Peyman v Lanjani regarding the contract?

The contract was affirmed. Signup and view all the answers

Under what circumstance can a contract be rescinded according to Leaf v International Galleries?

If time has expired between agreement and rescission. Signup and view all the answers

What is a requirement for claiming damages under S.2(1) of the Misrepresentation Act for fraudulent misrepresentation?

The claimant must have a loss. Signup and view all the answers

According to Derry v Peek, what is NOT an element of fraudulent misrepresentation?

The belief that the statement is true. Signup and view all the answers

What does the case of Boyle v Olby establish regarding damages in cases of deceit?

All damages must be paid regardless of foreseeability. Signup and view all the answers

Which statement accurately reflects a condition for claiming negligent misrepresentation under statute?

There must be an existing contract. Signup and view all the answers

What was the court's ruling in Howard Marine v Ogden regarding the defendant's liability?

The defendant was liable for negligent misrepresentation. Signup and view all the answers

What type of remedy is available under S.2(2) of the Misrepresentation Act for innocent misrepresentation?

Rescission to claim other remedies. Signup and view all the answers

Study Notes

Misrepresentation (Misrep)

Misrepresentation is a pre-contractual statement that becomes a term of the contract or a mere puff.
Pre-contractual statements can be terms, representations (not part of the contract).
A breach of a contract term leads to damages or remedies.
To distinguish a term from a representation, consider importance, expertise of parties, and if the statement was made before or during contract formation.

Differentiating Term vs Representation

Contractual importance: Important statements are terms (e.g., Bannerman v White, Couchman v Hill), less important ones are representations (expert vs. non-expert).
Asking questions: Serious and important questions indicate a term.
Expertise: Expert opinion is likely a term, non-expert opinion likely a representation. Examples given include Oscar Chess v Williams and Dick Bentley Productions LTD v Harold Smith (Motors) Ltd.
Time of contract: Statements before the contract are representations, those at the time are terms.
Writing: Written terms are more likely to be legally enforceable than oral representations.

Four Requirements of Misrepresentation (LIE)

False statement of fact or law (lie): The statement must be demonstrably false.
Communication: The false statement must be communicated to the other party.
Inducement: The false statement must have led the other party to enter the contract.
Existing contract

Effects and Remedies of Misrepresentation

Voidable contract, allows the innocent party to cancel.
Remedies include rescission (restore parties to pre-contract position) and damages.
Bars to rescission include impossibility of restitution (e.g., the subject matter has been destroyed) or lapse of time.
Third party rights: if a third party has purchased goods via the contract, the contract cannot be rescinded.
Innocent Misrepresentation: allows for rescission or damages, governed in particular cases.

Statute: Misrepresentation Act 1967

Remedies for fraudulent or negligent misrepresentation include damages or rescission.
Important considerations include whether false statement is a present fact or future intention and reasonable grounds for believing the statement was true.
Specific examples include Howard Marine and Ogden, and Edgington v Fitzmaurice situations.

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Description

Explore the concepts of misrepresentation and the distinction between contract terms and representations. This quiz delves into important cases and principles that help differentiate between pre-contractual statements and binding terms. Test your understanding of key legal principles in contract law!