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Misrepresentation Misrepresentation Principle Case (1) A false statement Exception to a false statement: if a true representation is falsified by later events, the With v O’Flanagan [1936] Ch 575 change in circumstances should be communicated Dimmock v Hallett (1866) LR 2 Ch App 21; Implied representations: half-truths lead to Spice Girls Ltd v Aprilia World Service BV actionable misrepresentation [2002] EWCA Civ 15 (2) Existing or past fact An opinion is not usually a statement of fact Bisset v Wilkinson [1927] AC 177; and therefore not an actionable Hummingbird Motors v Hobbs [1986] RTR 726 misrepresentation An opinion which is either not held or could not Smith v Land and House Property Corporation be held by a reasonable person with the (1884) 28 Ch D 7 speaker’s knowledge is a statement of fact If there is an unequal skill, knowledge, and Esso Petroleum Co Ltd v Mardon [1976] 2 All bargaining strength, there is misrepresentation ER 5 An actionable misrepresentation is a false Edgington v Fitzmaurice (1885) 29 Ch D 459; statement of existing fact (i.e. statement of East v Maurer [1991] 1 WLR 461 intention) Kleinwort Benson v Lincoln CC [1999] 2 AC Misrepresentations of law amount to actionable 349; misrepresentations Pankhania v Hackney LBC [2002] EWHC 2441 (Ch) (3) Made by one party to another If a misrepresentation is made to a third party and, objectively, it is likely that the Cramaso LLP v Ogilvie-Grant [2014] AC 1093 misrepresentation will be passed to the other contracting party, it will be actionable (4) Induces the contract The false statement should be the main reason Attwood v Small (1838) 6 LC & Fin 232 for entering into the contract Actual and complete knowledge of the true Redgrave v Hurd (1881) 20 Ch D 1 facts will defeat the representee’s claim 1 The misrepresentation need not be the sole reason why the representee entered into the Edgington v Fitzmaurice (1885) 29 Ch D 459 contract If it is proven that the representee would have entered into the contract notwithstanding the JEB Fasteners v Marks, Bloom & Co [1983] 1 misrepresentation, the misrepresentation claim All ER 583 will fail Bars to rescission If the property is in a reduced state, the Erlanger v New Sombrero Phosphate (1838) returning party may be ordered to pay an LR3 App Cas 1218 allowance Where the representee has expressly or impliedly affirmed the contract the right to Long v Lloyd [1958] 1 WLR 753 rescind is lost Where there has been a lapse of time between the making of the contract and the decision to Leaf v International Galleries [1950] 2 KB 86 rescind the right to rescind is lost Types of misrepresentation and damages Fraudulent misrepresentation is a statement made: (1) knowingly; or (2) without belief in its Derry v Peek (1889) 14 App Cas 337 truth; or (3) recklessly, careless whether it be true or false The claimant may claim all losses stemming from having entered into the contract (not only Smith New Court v Scrimgeour Vickers [1997] reasonably foreseeable losses, as is the case in AC 254 respect of the tort of negligence) Hedley Byrne & Co Ltd v Heller & Partners Ltd Negligent misrepresentation [1964] AC 645 A right to damages for loss-causing negligent Esso Petroleum Co Ltd v Mardon [1976] 2 All misstatements where there was a ‘special ER 5 relationship’ As it is far easier for a claimant to succeed under s. 2(1) of the Misrepresentation Act 1967, Howard Marine & Dredging v Ogden & Sons common law negligent misrepresentation is [1978] QB 574 rarely used Assessment is based on the tort of deceit so Royscot Trust Ltd v Rogerson [1991] 2 QB 297 losses need not be reasonably foreseeable Suggests that the defence of contributory Gran Gelato Ltd v Richliff (Group) Ltd [1992] negligence ought to apply to actions for Ch 560 damages under MA 1967 s. 2(1) 2 Tortious damages assessment can include any notional profits arising from another contract Clef Aquitaine Sarl v Laporte Materials which, but for the deceit, the claimant would (Barrow) Ltd [2001] QB 488 have entered into This approach is not always beneficial to the East v Maurer [1991] 1 WLR 461 claimant There must be evidence that profits would have Davis v Churchward 6th May (1993) been made from the alternative contract (unreported) 3 .
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