2019-2020 misrepresentation exam problem question PDF

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Peter owns a historic building in Nottingham which who has recently accepted a job in Nottingham as a dois divided into flats. Hannah,ctor, views one of the flats in order to decide whether to rent it. During that the building used to house the Nottingham Genethe viewing, Peter tells Hannahral Hospi...

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Peter owns a historic building in Nottingham which is divided into flats. Hannah, who has recently accepted a job in Nottingham as a doctor, views one of the flats in order to decide whether to rent it. During the viewing, Peter tells Hannah that the building used to house the Nottingham General Hospital. Being a doctor, Hannah is rather interested by this. Peter based the statement on a conversation he overheard in a pub. What he heard was in fact inaccurate: the hospital had been in a neighbouring property. Hannah also asks Peter about the condition of the building in general and the state of the plumbing and wiring in particular. Peter replies, “Well, I’m no structural expert but I can tell you that no previous occupant of the flat has had any problems.” Reassured, and entranced by the panoramic views of Nottingham Castle from the flat’s windows, Hannah enters into a two-year lease of the flat. Two months after Hannah moves in, a fire breaks out in the flat. Hannah is able to extinguish the fire, but not before the fire destroys a valuable painting given to Hannah by her grandmother. It transpires that the fire was caused by faulty wiring in the flat and that similar fires have occurred in three other flats in the building in the previous two years, although not in the flat that Hannah has rented. Hannah’s immediate reaction to the fire is to resolve to move out, but pressure of work leaves her too tired to look for alternative accommodation. She stays in the flat for a further three months, paying rent each month. Recently, however, she has experienced flashbacks of the fire and desperately wants to leave. She needs to escape from the financial obligations under the lease as she cannot afford to honour those obligations and also pay rent on a second accommodation. Advise Hannah of her rights and remedies in misrepresentation

consideration of remedies depends on (a) type of misrepresentation and (b) whether or not H can prove that she was induced into contract be misrepresentation by P define misrep & what is needed for misrep to be actionable (1)-(7) identify the misreps made to H. go through each requirement in turn. go through inducement in the most detail – difference in requirements for fraudulent and non-fraudulent. remedies are there any potential bars & how do they apply? MA 1967 s(1) go through whole statement, each section at a time defence – will P be able to make defence?

Advising Hannah(H) of her rights and the remedies available to her requires an examination of (a) they type of misrepresentation that was made to her, (b) whether or not the misrepresentation that was made to her by Peter (P) induced her into the contract and (c) are there any factors that limit her ability to discharge her rights and claim a remedy. A misrepresentation is a false statement of fact that induces party A into a contract with party B. On the facts, a false statement of fact made by P that induces H into a contract with P. In the present scenario, there are two misrepresentations made by P: first, regarding the history of the building and secondly, regarding the condition of the building. In order for these misrepresentations to be actionable, H must prove (1) a statement (2) of fact (3) made on or on behalf of P (4) to H (5) that is false (6) that is material and (7) that induces C to enter into the contract. first misrepresentation: history of the building H must show that P made a statement. This requirement is satisfied by the fact that P told H that the building used to house Nottingham General Hospital. Next, she must show that this statement was a statement of fact. P does not make the statement as a statement of opinion, as set out in Bissett v Wilkinson, or as one of intention, therefore the statement is of fact and this requirement is satisfied. Next, H must show that the statement was made on or behalf of P to her. A statement made by a third party constitutes no basis for challenging the contract (Royal Bank of Scotland v Etridge (No2)). On the facts, this requirement is satisfied as P makes the statement himself, to H directly. Next, H must show that the statement is false. The facts show that the statement is false as the building did not previously house Nottingham General Hospital, the hospital was in fact in a neighbouring property.

The difficulty lies in satisfying requirement (6) materiality. This requirement simply seeks to establish whether the reasonable person would have had the misstated fact as relevant in deciding whether or not to enter the contract. It is unlikely that the history of the building would be considered as important by the reasonable person choosing to enter into a property contract, as it has no bearing on what it is like living in the property. Furthermore, the last requirement, inducement, is not satisfied by the first misrepresentation. This requires that the misrepresented fact was the actual reason that the contract was entered into. Inducement requires that had no statement been made, the representee either would not have entered into the contract or would have done so on different terms (Assicurazioni Generali sPa v Arab Insurance Group) H entered into the contract based on the condition of the building not it’s history and it is likely that H would have still entered into the contract had no statement relating to the history of the building been made by P. As it is unlikely that H will satisfy these requirements, the first representation is not an actionable misrepresentation. second misrepresentation: condition of the building As with the first misrepresentation, in order to make a successful claim, H must prove requirements (1)-(7). First, H must show that a statement was made. This requirement is satisfied as P states that “no previous occupant of the flat has had any problems”. This statement is a half-truth as while it is literally true, the statement is misleading in what is lef unsaid, as was the case in the case of Dimmock v Hallet. Next, H must show that this statement was a statement of fact. P makes the statement as a statement of opinion. Generally, the law imposes no liability for statements of opinion (Bisset v Wilkinson). However, P makes the statement knowing that previous tenants have had problems with the

property as similar fires have occurred in three other flats in the building in the previous two years, but P deliberately does not mention this to H. Therefore, the statement is a statement of fact that has been made fraudulently as it satisfies the Derry v Peek requirement that a statement be made with the knowledge this it is not true. The judgement in Dimmock v Hallett stated that where a seller answers a question from a buyer the seller has to tell the “whole truth”. P knew the statement made was not wholly true. Next, H must show that the statement was made on or behalf of P to her. P makes the statement directly to H, in an answer to her question. The statement must then be proven ad false. The facts show that the statement is false as fires of a similar sort have occurred in the past so previous occupants had in fact had problems. Regarding the materiality of the statement, this requirement is likely to be satisfied as the condition of a building is likely to be of importance to a reasonable person considering to occupy a property. The final requirement, inducement, is also satisfied by H. Since the misrepresentation was made fraudulently, there is no need for H to show that had no statement been made she would have either not entered into the contract or concluded on different terms (Barton v Armstrong). H simply needs to show that the misrepresented fact was ‘actively present’ in her mind when deciding to conclude the contract, which she satisfies as it was due to reassurance about the condition of the building by P that H decided to enter into the contract. remedies the standard remedy for any vitiating factor is rescission. This means that even though the contract has come into existence, it is set aside with retrospective effect and the parties are put back into the position that they were in had no contract been concluded. This would

require H to give back the property and P give back the money that H had paid. As a selfhelp remedy, H needs to inform P of her wish to rescind the contract in order to start the process of rescission. However, before any of this can take place, any potential bars to recission need to be considered. On the facts, there are a few bars to rescission that could arise. Firstly, there is lapse of time. H continued to occupy the flat for three months afer the fraudulent misrepresentation was or should have been discovered, that it may be unfair for the courts to allow rescission. Next, there is affirmation. Affirmation is a clear statement either by conduct or words by the representee that they waiver their right to rescind the contract. This is the biggest barrier that H will face, since she continued to pay rent and so she waivered her right to rescind by conduct - a similar set of facts occurred in the case of North Ocean Shipping Co v Hyundai Construction Co. There is also the issue of unjust enrichment. This means that there is one-sided restitution. Given that there was a fire in the property that H occupied, it is likely that the market value of the flat would have gone down and so P would be given a less valuable property while H is given back all the money she paid for the property. This bar could be resolved however, by H giving back the property at the value it was worth, plus paying the difference to what the value was when she began occupying the property. Given that there are these bars to rescission, H is unlikely to be successful in her rescission of the contract. Even though H cannot rescind the contract, she can claim damages under s(1) of the Misrepresentation Act 1967. This section allows a claim ‘where a person has entered into a contract afer A misrepresentation has been made to him by another party thereto and as a

result thereof he has suffered a loss then, if the party making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable grounds to believe and did believe up to the time that the contract was made that the facts represented were true.’ On the facts, H’s claim for damages is likely to be successful. This is because she was induced into the contract by a misrepresentation by P, and so she satisfies the first requirement of s(1). Secondly, the statement was made fraudulently, as established by the facts. Lastly, P is unlikely to make a successful defence as he cannot show that he had reasonable grounds to believe and did believe the statement to be true up to the time the contract was concluded. Under s(1) P is liable for the full extent of damages caused by the fire e.g. damage to the painting as damages are assessed in accordance with the tort of deceit (Royscot Trust v Rogerson) so there is no remoteness restriction. Therefore, whilst H cannot make a successful claim for the first misrepresentation she is likely to be successful in a claim for the second misrepresentation under section 1 of the Misrepresentation Act 1967....