Notes on Misrepresentation
Promise- An undertaking to do/not do something creating an expectation protected by law
Representation- asserts existence of a given state of affairs, either true or false. Invites reliance without
constituting an undertaking to bring about that state of affairs
1. Is it a contractual promise?
a. If the statement is a contractual term i.e. the defendant promised that a certain state of affairs
existed or would exist (rather than merely asserted the truth of them), then claim for breach of
contract, not misrepresentation!
b. Preferable because:
i. Claimant will obtain expectation measure of damages (place the claimant in the position as
if the promise had been fulfilled) rather than reliance measure.
ii. No need to establish culpability of defendant, or the requirements of a misrepresentation
2. Representation?
a. Kleinwort Benson Ltd v Malaysia Mining Corp [1989] – Claimant agreed to loan money to
defendant’s subsidiary company based on the representation that it is their policy to ensure the
subsidiary company is able to repay their debt. Subsidiary business collapsed when it had a £10
million debt.
i. Letter of comfort was a representation of their current policy and not a contractual promise
as to their future policy.
3. TWO main requirements for misrepresentation
a. Representation that is false
i. ‘Unambiguous false statement of existing fact or law’
1. Failure to disclose does not generally constitute a representation and silence is
usually insufficient (With v O’Flannagan)
2. If statement was true to begin with but false due to a change in circumstances by
the time it was acted upon, failure to disclose the change in circumstances is a
misrepresentation. With v O’Flannagan – Failure to disclose information on change
of medical practise’s income following the vendor’s illness was misrepresentation.
3. Statements of half-truth can be misrepresentation. Dimmock v Hallett – Statement
that farms on the land was tenanted but failure to inform the tenants had given
notice to quit was misrepresentation.
4. Conduct can sometimes constitute misrepresentation. Gordon v Selico Co Ltd –
covering up patches of dry rot so they are not seen upon inspection of flat.
5. Courts are flexible sometimes in defining a statement as it can be made by conduct
sometimes.
, ii. Misrepresentation of law will suffice (Brennan v Bolt Burden)
iii. NOT sufficient:
1. ‘Mere puff’ – statements that are too vague. The more specific, the less likely to be a
mere puff (Carbolic Smoke Ball Co, specific representation that payment will be
made and money was kept aside to show sincerity)
a. Contrast to Dimmock v Hallett, representation that land was ‘fertile and
improvable was not a misrepresentation.
2. Statements of opinion
a. Like in Bisset v Wilkinson, vendor said the land would carry 2000 sheep in his
judgement but this was an opinion honestly held.
b. Where facts are known to both parties What one says to another is often
a mere expression of opinion
c. UNLESS the representor has greater knowledge than the representee, courts
will then imply duty to make representations with reasonable skill and care
and it will be assumed representor impliedly states he knows facts that
justifies his opinion.
d. Esso v Mardon – such duty to make representation with reasonable care and
skill. Due to Esso’s representation that petrol station constructed in a less
busy spot would not affect throughput of petrol meant defendant incurred
losses and couldn’t pay Esso for petrol. Negligent misrepresentation found.
i. Bisset distinguished as farm had not ever been used for sheep
farming and both parties were equally able to form an opinion
whereas Esso had special knowledge in predicting throughput of
petrol.
3. Statements of intent (Wales v Wadham)
a. Statement of intent as to what D will do in the future is not a
misrepresentation
b. BUT false statement of present intent is misrepresentation
c. Edgington v Fitzmaurice – Directors raised money through stating it is for
expanding the business but was collected with the intention to pay off
existing liabilities.
b. Addressed to the misled party
i. Through direct communication
ii. Through communication through a third party with the intent to be passed on to claimant
(Commercial Banking Co v RH Brown)
c. Induced claimant to enter the contract
i. Misrepresentation played a ‘real and substantial’ part in inducing the claimant to contract
Promise- An undertaking to do/not do something creating an expectation protected by law
Representation- asserts existence of a given state of affairs, either true or false. Invites reliance without
constituting an undertaking to bring about that state of affairs
1. Is it a contractual promise?
a. If the statement is a contractual term i.e. the defendant promised that a certain state of affairs
existed or would exist (rather than merely asserted the truth of them), then claim for breach of
contract, not misrepresentation!
b. Preferable because:
i. Claimant will obtain expectation measure of damages (place the claimant in the position as
if the promise had been fulfilled) rather than reliance measure.
ii. No need to establish culpability of defendant, or the requirements of a misrepresentation
2. Representation?
a. Kleinwort Benson Ltd v Malaysia Mining Corp [1989] – Claimant agreed to loan money to
defendant’s subsidiary company based on the representation that it is their policy to ensure the
subsidiary company is able to repay their debt. Subsidiary business collapsed when it had a £10
million debt.
i. Letter of comfort was a representation of their current policy and not a contractual promise
as to their future policy.
3. TWO main requirements for misrepresentation
a. Representation that is false
i. ‘Unambiguous false statement of existing fact or law’
1. Failure to disclose does not generally constitute a representation and silence is
usually insufficient (With v O’Flannagan)
2. If statement was true to begin with but false due to a change in circumstances by
the time it was acted upon, failure to disclose the change in circumstances is a
misrepresentation. With v O’Flannagan – Failure to disclose information on change
of medical practise’s income following the vendor’s illness was misrepresentation.
3. Statements of half-truth can be misrepresentation. Dimmock v Hallett – Statement
that farms on the land was tenanted but failure to inform the tenants had given
notice to quit was misrepresentation.
4. Conduct can sometimes constitute misrepresentation. Gordon v Selico Co Ltd –
covering up patches of dry rot so they are not seen upon inspection of flat.
5. Courts are flexible sometimes in defining a statement as it can be made by conduct
sometimes.
, ii. Misrepresentation of law will suffice (Brennan v Bolt Burden)
iii. NOT sufficient:
1. ‘Mere puff’ – statements that are too vague. The more specific, the less likely to be a
mere puff (Carbolic Smoke Ball Co, specific representation that payment will be
made and money was kept aside to show sincerity)
a. Contrast to Dimmock v Hallett, representation that land was ‘fertile and
improvable was not a misrepresentation.
2. Statements of opinion
a. Like in Bisset v Wilkinson, vendor said the land would carry 2000 sheep in his
judgement but this was an opinion honestly held.
b. Where facts are known to both parties What one says to another is often
a mere expression of opinion
c. UNLESS the representor has greater knowledge than the representee, courts
will then imply duty to make representations with reasonable skill and care
and it will be assumed representor impliedly states he knows facts that
justifies his opinion.
d. Esso v Mardon – such duty to make representation with reasonable care and
skill. Due to Esso’s representation that petrol station constructed in a less
busy spot would not affect throughput of petrol meant defendant incurred
losses and couldn’t pay Esso for petrol. Negligent misrepresentation found.
i. Bisset distinguished as farm had not ever been used for sheep
farming and both parties were equally able to form an opinion
whereas Esso had special knowledge in predicting throughput of
petrol.
3. Statements of intent (Wales v Wadham)
a. Statement of intent as to what D will do in the future is not a
misrepresentation
b. BUT false statement of present intent is misrepresentation
c. Edgington v Fitzmaurice – Directors raised money through stating it is for
expanding the business but was collected with the intention to pay off
existing liabilities.
b. Addressed to the misled party
i. Through direct communication
ii. Through communication through a third party with the intent to be passed on to claimant
(Commercial Banking Co v RH Brown)
c. Induced claimant to enter the contract
i. Misrepresentation played a ‘real and substantial’ part in inducing the claimant to contract
