21 False Representation NON Contractual REP AND Promises PDF

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21 False representaton or broken promise The legal consequence of a false representation or broken promise will depend on whether the representation or promise was:

Non-contractual re pre sentation or promise

Breach of express terms

Breach of implied terms of the contract Non contractual representaton

A representation is a statement of fact. If the representation was not made during contractual negotiation but not meant to be a term of the contract, it is referred to as a non-contractual representation and is not enforceable. (However promissory estoppel might be otherwise) Parol Evidenc e Rule In an event of inconsistency between written term and verbal representation or promise, the court will favour the written term. However, the misrepresentation can still be enforceable if the other party can establish that the false representation or broken promise was: 1. 2. 3. 1.

A breach of collateral contract, A misrepresentation A contravention of the ACL

A breach of collateral contract

A collateral contract is a secondary contract that was formed when a representation or promise prompted the party to enter into the main contract. And if the representation or promise is broken, the other party can sue for breach of collateral contract. 2.

Misrepresentaton

A false statement made by one person to induce another person to enter into a contract. It must be a statement of fact. (Promises are not representations and thus cannot be misrepresentation). However, the false statement must not be a puf, law, or opinion. ALSO, SILENCE IS NOT A REPRESENTATION. Three types of misrepresentation: 2.1.

Fraudulent misrepresentation A person tricks another to enter into contract by saying things that are not true. It is fraudulent if it is made knowingly or recklessly the person may 2.1.1. Terminate contract under contract law 2.1.2. Under tort law recover damages in tort of deceit 2.2. Negligent misrepresentation A statement that is made honestly but without grounds for believing in its truth. The party can 2.2.1. Claim damages under misrepresentation 2.2.2. Claim damages under tort of negligence 2.2.3. Rescission of contract 2.3. Innocent misrepresentation The statement is made honestly and has reasonable grounds in believing in its truth. Under misrepresentation act, the court can rescind the contract, and has discretion to award damages in lieu of rescission. Not able to do so if, 2.3.1. Lapse of time 2.3.2. Affirmation of contract 2.3.3. Restitution is impossible 3.

Breach of ACL

if a party was tricked or deceived into entering a contract, the can commence legal proceedings using statutory provisions in the ACL that prohibit misleading or deceptive conduct, false representation or other unfair practises.

Oscar Chess v Williams (1957) – Williams sold car to Oscar Chess. During negotiation, Williams said that the car was a 1948 model but after sale it was discovered that it is a 1939 model. Given Oscar Chess’s experience, he would be able to examine the age itself and as it was not a term explicitly included into contract, it was a non-contractual representation. Parol evidence rule (Breach of Collate ral Contrac t) Van den Esschert v Chappell (1960) – Chappell agreed to buy house from VDE. Before signing, Chappell asked if the house was free from white ants and VDE gave assurance that it was. VDE liable to compensaton as the agreement did not include any exclusion clause to white ants and it was a collateral contract that prompted him to enter into the main contract. Da Lasalle v Guildford (1901) – Da Lasalle agreed to lease house from Guildford. Before leasing, Da Lasalle asked if the drainage of the house was in order and Guildford gave assurance that it was in order. However the drains was again blocked but Guildford was liable and breached collateral contract was although this term wasn’t included in the main contract, it was a collateral contract that prompted him to enter into the lease. Misrepres entation Dimmock v Hallett (1866) – Hallett bought land from Dimmock. He said at that time that the land was fully occupied and generating rental income. But the fact is that it is occupied at the moment for sale but the tenants have already given their notice to move out but this was not conveyed to the buyer. Misrepresentation present and Hallett was entitled to rescind the contract. Fraudulent misrepresentation Edgington v Fitzmaurice (1885) – Defendant said that the sale of shares was to raise money to expand company. But it was instead used to pay off debts. Fraudulent misrepresentation present although expansion might be a future plan, the true intent was not so. Negligent misrepresentation Howard Marine v Ogden (1978) – Ogden hired 2 barges from HM for $1800 to carry out works. In order to make an accurate estimation for the tender to the government, Odgen asked HM for the capacity. The capacity given was inaccurate as it was checked from a place called Lloyd’s register instead of the registration document. Negligent misrepresentation as despite them making an honest statement about the capacity, there was no grounds to believe that it is true....