Contract Law Tutorial 8 PDF

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Questions: 1. Describe the various remedies open to a party who is induced to enter into a contract by the misrepresentation of the other party. Remedies for misrepresentation – - Rescission and/or damages (fraudulent & negligent) 

Rescission of contracts for misrepresentation – contract is set aside from the beginning (voidab;e), any obligations yet to be performed are cancelled and any benefits transferred are treated as if they were never due and so must be returned. Rescission is backwards looking, representee can choose to rescind or affirm—no partial rescission

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Rescission has to be communicated to the other party for it to be effective

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If A transfers property under a contract to B induced by B’s misrep, then B sells that property to C, A can only recover the property if:

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Timing of rescission is important – only can recover property if A rescinds contract with B before B transfers property to C

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C is not a good faith purchaser from B

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However, rescission does not need to notify the representor if she has otherwise taken all possible steps to recover the goods, as seen in Car and Universal Finance Co Ltd v. Caldwell, C was fraudulently induced to sell his car for a bad cheque, went to police and automobile association but could not communicate his rescission because the person who scammed him disappeared.

- Reward of damages in lieu of rescission (innocent) – remedy  just rescission 

Section 2(2) of Misrepresentation Act

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The representee must have a good (not barred) claim for rescission to be eligible for damages ‘in lieu of’ rescission; If rescission is barred, so is resort to secion 2(2) (Salt v Stratstone Specialist (2015))

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Representee can only obtain damages ‘in lieu’ where she has sought but been denied rescission by the court; a rational representee will only seek rescission if that will make her better off than affirming the contract – William Sindall v. Cambridgeshire County Council

-Money awards for misrep 

Sec 2(1) of Misrepresentation Act

2. D, acting in good faith and without negligence, represents to A that a painting is by Rembrandt, whereas in fact it was painted by another artist, of the Rembrandt school. A buys the painting from D. On discovering that the painting was not by Rembrandt, A writes to D saying that he intends to keep the painting but looks to D to compensate him for the difference in value. D concedes that there is a substantial difference in value but says that as his statement was made in good faith he is not prepared to make any payment to A. Advise A.

D  innocent misrepresentation (rescission) Party wants to keep the contract alive and he wants damages A can be awarded damages in lieu of rescission under section 2(2) of Misrepresentation Act 1967 because in this case rescission itself is also available as a remedy (Salt v Stratstone Specialist

Ltd)

3. "The courts have extended liability for damages for misrepresentation far beyond what Parliament intended." Discuss. In particular, do the courts indicate any concern about such an extension? Separation of powers – public law 4. Walter was visited by Vincent who was interested in what was described as a 2012 Lamborghini and priced at £200,000. Vincent wanted the car to be specially modified by the addition of bat-like wings to rear of the car, special windows and wheels. He would also like it to be re-painted black. Walter informs Vincent that this is very unusual and would make the car much more difficult to re-sell. After much head shaking, Walter agrees to have these modifications done on the car for an extra £50,000. The car, so modified, is delivered to Vincent. Vincent then discovers that the car is not a 2012 model but a 2010 model with a blue-book value of £180,000. Vincent cannot show that Walter knew or had any reason to suspect that the car was not a 2012 model, but Walter cannot show that he had any reasonable grounds for thinking it was. Negligent misrepresentation If they wanted rescission, not possible because they modified the car Resort to damages  under fraudulent Advise Vincent. Did

5. Alfred was visited by Cedric, a racing enthusiast, who wishes to race in the London National. Alfred tells him that he has "the perfect car", one of the fastest in its class, and that it had previously performed well in the London National. Alfred believes this because his friend, Morton, had previously owned the car and told him of its past when he sold it to Alfred. Cedric purchases the car for £100,000. When he tries to enter the London National, the entry is rejected as the car is not part of a recognised class. Cedric thinks about what to do, and after a week, drives back to Alfred’s. On the way, he skids off the road to avoid a small child and hits a tree. The car is a complete write off. Advise Cedric. Statement is misrepresentation  however Alfred is innocent misrepresentation and Morton is negligent misrepresentation to Alfred Alfred and Morton made statements of opinion – “perfect car” + “did well in the London National” Did Alfred make an actionable misrepresentation? Yes. Misrepresentation was addressed to misled party directly

The fact that it ‘performed well’ induced Cedric to enter in to a contract with Alfred Cedric relied on the statement and entered in to a contract Expertise of parties – There is lapse of time because he waited for a week There is affirmation because he drives it However, Court of Appeal held in Salt v. Stratstone Specialist Ltd, a court will only be able to award damages under s2(2) of misrepresentation act 1967 as an alternative remedy to rescission if rescission itself is also an available remedy. In this case, rescission is not possible because the parties could not be put back in their pre-contractual conditions as the car was damaged. Bars to rescission -Affirmation -Lapse of time -Restitution impossible – item has been so changed you cannot restore to pre-contractual conditions -Third party rights -Equitable...