Misrepresentation PDF

Preview

Summary

Summary of the first topic of misrepresentation. ...

Description

Misrepresentation: false statement of fact made prior to contract formation that induces a party to create contractual relations. When a misrepresentation finds its way into the contract as a term of the contract, the remedy is breach of contract. Silence does not equal a representation of fact. Three circumstances where you cannot stay silent - Silence distorts a positive representation – half truth - Contract ‘uberrimae fiedei’ utmost good faith e.g. contract of insurance - Where there is a fiduciary relationship

Opinion does not constitute a representation. Misrepresentation usually occurs during the negotiation phase. Hospital products case good example of when a promissory statement is part of the contract e.g when they are eating at the restaurant. Private transactions do not fall under statutory protection. Trade practices act 1974 (cth): this act and its remedies are broader in scope than those of common law misrepresentation. This act only applies in ‘trade and commerce’. Interpretation of this act by courts will be drawn from analogies within common law misrepresentation. If misrepresentation is made before contract the measure of damages is to put you in the state before the misrepresentation/contract was signed If misrepresentation is part of promise in contract then the measure of damages is the amount you would receive if the contract was fulfilled Remedy in contract is rescission Damages lie in tort - Fraudulent misrepresentation – damages in tort of deceit - Negligent misrepresentation – action in tort of negligence - Innocent – no damages available Research question Clause in question that says it can exclude the consumer law?

CASES Krakowski v Eurolynx Properties (1995) 183 CLR 563 Deceit and misleading conduct Vendor suing the solicitor because they wrongly answered something. ambiguous representation Held: If you tell a half-truth, mislead someone, don’t disclose all info, may be liable for misrepresentation. Krakowski agreed to enter into a contract to buy a shop premises from Eurolynx as long as a 'strong tenant' had been organised. The contract proceeded on the grounds that such a tenant had been arranged. Unbeknown to Krakowski, Eurolynx had entered into an additional agreement with the tenant to provide funds for the first three months rent to ensure the contract went ahead. When the tenant defaulted on the rent and subsequently vacated the premises, Krakowski found out about the additional agreement and rescinded the contract with Eurolynx. It was held that Eurolynx's failure to disclose all material facts about the 'strong tenant' was enough to constitute a misrepresentation and the contract could be rescinded on these grounds. The lease was the misrepresentation because they didn’t disclose the entire agreement. court will determine the meaning of the representation using an objective approach 576-7 test from this case 1. Statement was false 2. Party received the representation and was induced 3. Fraud: representor had no honest belief in the truth of the representation in the sense that they intended it to be understood 583 – put everybody’s minds together here and they knew exactly what was going on Gould v Vaggelas (1985) 157 CLR 215 the ultimate onus of proving reliance upon the representation still lies with the plaintiff. Representation does not need to the the sole reason for inducement; it is sufficient that it plays some part in contributing to the formation of the contract. Gould purchased a tourist resort from v based on their representations that the business was very profitable and their submissions of false figures as to occupancy rates and financial returns. The goulds venture was unsuccessful and two years after their purchase they sued in damages for deceit, negligence and breach of contract on the grounds that the statements about profitability for were fraudulently misrepresented. Issue?

Were the representations statements of facts or opinion? Reasoning The statements about profitability were sufficiently factual to constitute a factual statement, even though they contained an element of opinion Decision The statements were factual in nature Held: Actual and inferred inducement: • If the representation is material, • And calculated to induce the plaintiff, • And the p enters into the contract as a result of following the representation, • There is inference p was induced.

Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 V signed a guarantee for the delivery of concrete personally assuring the supplier of his liability for payment for its delivery He was told this only related to future deliveries Instead it applied to all deliveries, past and present Issue? Is it possible to rescind (revoke) the contract? reasoning V accepted liability for concrete already delivered because he signed the guarantee after being told it related to future deliveries It is only possible to revoke the contract in respect of future deliveries because they haven’t been made yet. he was already willing to accept liability for past deliveries so you can’t revoke the contact on those grounds Decision Only partial rescission can occur Byers v Dorotea Pty Ltd (1986) 69 ALR Exclusion/entire agreement clauses - non-fraudulent misrepresentations will be protected by disclaimers or entire agreement clauses. [715] a representation that residential units were "bigger and better" than others was found to be more than mere puff and therefore misleading. This conclusion was drawn on the basis that "here the statement was intended to, and did convey, a clear and wrong impression".15 they were told the new building would be bigger and better. There was no intention to make the new buildings bigger and better. They were misled by this representation; a normal person would have been misled. This statement was objectively misleading. There was also misleading conduct because they were told that a pool would be built. This was false, there was no intention to build a pool....