Chapter 12 – Misrepresentation
Misrepresentation is an untrue statement of fact made by one party that induces the
other to enter a contract. If established, it renders the contract voidable, giving the
claimant possible remedies, including rescission and damages.
1.Elements of Misrepresentation
To establish misrepresentation, the claimant must prove:
1) False statement
Must be a statement of fact, not opinion or intention
Opinion can’t amount to a statement or fact where:
- The maker is an expert (Esoo v Mardon)
- The opinion is genuinely held
Statements of future intention may be misrepresentations only if the
person had no intention to act as stated (Edgington v Fitzmaurice)
Silence usually does not amount to misrepresentations, unless:
- There is a duty of disclosure (e.g. a contract of utmost good faith) =
Uberrimae fidei contracts, a duty to observe 'utmost good faith' in
factual disclosure by the contracting parties. Usually, this term relates
to insurance contracts, since the information disclosed by the
applicant may affect the decision of the insurer to issue a policy of
insurance.
- Continuing representations become false and are not corrected
- Half-truths are misleading (Dimmock v Hallet)
- Fiduciary relationships = a relationship in which one party places
special trust, confidence, and reliance in and is influenced by another
who has a fiduciary duty to act for the benefit of the party.
2) Prior to Contract Formation (Roscola v Thomas)
Statement must be material (important to a reasonable person) and
Must have induced (subjective = Museprime v Adhill Props ) the claimant
to enter the contract
Claimant does not need to verify the statement; reliance is presumed
unless disproved (Redgrave v Hurd).
Misrepresentation is an untrue statement of fact made by one party that induces the
other to enter a contract. If established, it renders the contract voidable, giving the
claimant possible remedies, including rescission and damages.
1.Elements of Misrepresentation
To establish misrepresentation, the claimant must prove:
1) False statement
Must be a statement of fact, not opinion or intention
Opinion can’t amount to a statement or fact where:
- The maker is an expert (Esoo v Mardon)
- The opinion is genuinely held
Statements of future intention may be misrepresentations only if the
person had no intention to act as stated (Edgington v Fitzmaurice)
Silence usually does not amount to misrepresentations, unless:
- There is a duty of disclosure (e.g. a contract of utmost good faith) =
Uberrimae fidei contracts, a duty to observe 'utmost good faith' in
factual disclosure by the contracting parties. Usually, this term relates
to insurance contracts, since the information disclosed by the
applicant may affect the decision of the insurer to issue a policy of
insurance.
- Continuing representations become false and are not corrected
- Half-truths are misleading (Dimmock v Hallet)
- Fiduciary relationships = a relationship in which one party places
special trust, confidence, and reliance in and is influenced by another
who has a fiduciary duty to act for the benefit of the party.
2) Prior to Contract Formation (Roscola v Thomas)
Statement must be material (important to a reasonable person) and
Must have induced (subjective = Museprime v Adhill Props ) the claimant
to enter the contract
Claimant does not need to verify the statement; reliance is presumed
unless disproved (Redgrave v Hurd).
