Chapter 41 Vitiating Factors: MISREPRESENTATION

elements of the definition of misrepresentation are:

1. A false statement
2. of material fact
3. made by a party to the contract
4. that induces the other party to enter the contract

Representation are statements which influence a decision on whether or not to make a contract, and are misrepresentations if they are false

4.1.1 False Statement

click to edit

Misrepresentations only occur during formation of a contract

effect of misrepresentation is to make the contract voidable

meaning that the contract is valid unless the party who has suffered the misrepresentation takes action to end the contract

known as rescission of the contract

rescission for misrepresentation applies in cases where a party relied on a statement by the other party to enter the contract, and the statement was not true

rescission treats contracts as if it had never existed: it becomes a void contract meaning the parties would be put back in the positions they were in before the contract was made - known as restitutio in integrum

elements of the definition of misrepresentation are:

1. A false statement
2. of material fact
3. made by a party to the contract
4. that induces the other party to enter the contract

statement is usually written/verbal, but doesn't have to be

could be anything that would influence the other's decision, e.g. hiding a fault

Gordon v Selico Ltd (1986)

where painting over dry rot immediately before selling a property was a fraudulent misrepresentation

Spice Girls Ltd v Aprilia World Service BV (2000)

spice girls had signed sponsorship agreement with Aprilia.
whilst agreement was being negotiated, unknown to Aprilia, a member of group, had given notice to leave the group
Filming of promotional material occurred with all the girls together, but when one left it made the films worthless for promotional purposes.
court decided that by all of them attending, the group represented that none of them intended to leave the group and none of them were aware that one member intended to. this was misrepresentation

to be misrepresentation, statement must be false - untrue or inaccurate

whether D knew statement was false or not defines types of misrepresentation

silence can't be misrepresentation.

there's no obligation on a person wishing to enter a contract, to make any statement about what is being offered - but anything said in that respect must be true

Fletcher b Krell (1873)

woman applied for a job of governess.
she wasn't asked and did not state she was divorced
in Victorian times this would mean she would not be offered the job
court decided there was no misrepresentation as she was under no duty to disclose her marital status and she had not been asked about it

however, there's factors which affect this principle:

1) change of circumstances - even if statement is trues when it's made, it can become misrepresentation if it becomes false before the contract is made

With v O'Flanagan (1936)

doctor accurately stated the profits of his medical practice with a view to including purchasers to buy the practice
but between statement and contract being made, the doctor fell ill and many of the patients left the practice.
this made original statement inaccurate
court decided he had to tell the purchaser of the changed situation

therefore, a person must correct info where the situation has changed between making the representation and acceptance of the offer

2) Half-truth