SEM 2, LECT 2 - MISREPRESENATION 1 - CONTRACT 21/01/2020 Misrepresentation - This refers to pre-contractual statements which induce a party to enter into a contract, but the statements turn out to be "false". - The law here is predominantly based on common law rules, however, there is now statutory intervention in the form of the Misrepresentation Act 1967 mainly as regards remedies. Issues - Definition - Basic Requirements - Exceptions - Misrepresentation by Action/Conduct - Misrepresentation by Silence Definition - A false statement of fact or law, made by one contracting party to another, which induces the other party to enter into the contract. Example ... - During negotiations for the purchase of a house, seller tells prospective buyer that the central heating system is 'excellent'. - Subsequently, the sale is concluded, and buyer finds out the central heating system malfunctions. - If buyer was induced by that statement to enter into the contract, a claim will arise in misrepresentation. Basic Requirements - False statement must have been made by one contracting party to the other. - It must be a statement of fact or law, not intention or opinion. - The statement must have induced the other party to enter into the contract. One Contracting Party to Another - The normal rule is that the false statement must have been made by, or on behalf of, the other contracting party. - If a person enters a contract on the basis of a misrepresentation by a third party, it will usually have no effect on the contract. - However, note that liability can arise if a party makes a misrep to a third party, knowing it will be passed on to the other contracting party.
Statement of fact or law, not intention or opinion - "I will get the car cleaned before I deliver it to you" - intention, not fact. - "This car is one of the best in the market" - opinion, not fact. ? - Bisset v Wilkinson (1927) o Owner of land in NZ told perspective buyer that land can take 2000 sheep, but turned out that land couldn't - fact or opinion? o Court held that this was opinion. Seller of land had never found sheep of that land, and buyer was aware of this. o Statement as to the number of sheep a piece of grazing land would support was held to be a statement of opinion. Exceptions - Opinion is contradicted by other facts known to the person giving that opinion o Smith v Land and House Prop. Corp (1884) " Sellers of a hotel told perspective buyer that occupant was a most desirable tenant, turned out that they knew that this tenant was on the verge of bankruptcy. - Opinion comes from an "expert" o Esso Petroleum v Mardon (1976) " Mardon was told by rep from Esso that the petrol station had "" amount of petrol when infact they had "" " Lord Denning argued that Esso shouldn't get away