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Misrepresentation Of Facts With Rulings And Case Studies
Contract law (University of London)
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Misrepresentation
Principle Case
(1) A false statement
Exception to a false statement: if a true
representation is falsified by later events, the
With v O’Flanagan [1936] Ch 575
change in circumstances should be
communicated
Dimmock v Hallett (1866) LR 2 Ch App 21;
Implied representations: half-truths lead to
Spice Girls Ltd v Aprilia World Service BV
actionable misrepresentation
[2002] EWCA Civ 15
(2) Existing or past fact
An opinion is not usually a statement of fact
Bisset v Wilkinson [1927] AC 177;
and therefore not an actionable
Hummingbird Motors v Hobbs [1986] RTR 726
misrepresentation
An opinion which is either not held or could not
Smith v Land and House Property Corporation
be held by a reasonable person with the
(1884) 28 Ch D 7
speaker’s knowledge is a statement of fact
If there is an unequal skill, knowledge, and Esso Petroleum Co Ltd v Mardon [1976] 2 All
bargaining strength, there is misrepresentation ER 5
An actionable misrepresentation is a false
Edgington v Fitzmaurice (1885) 29 Ch D 459;
statement of existing fact (i.e. statement of
East v Maurer [1991] 1 WLR 461
intention)
Kleinwort Benson v Lincoln CC [1999] 2 AC
Misrepresentations of law amount to actionable 349;
misrepresentations Pankhania v Hackney LBC [2002] EWHC 2441
(Ch)
(3) Made by one party to another
If a misrepresentation is made to a third party
and, objectively, it is likely that the
Cramaso LLP v Ogilvie-Grant [2014] AC 1093
misrepresentation will be passed to the other
contracting party, it will be actionable
(4) Induces the contract
The false statement should be the main reason
Attwood v Small (1838) 6 LC & Fin 232
for entering into the contract
Actual and complete knowledge of the true
Redgrave v Hurd (1881) 20 Ch D 1
facts will defeat the representee’s claim
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The misrepresentation need not be the sole
reason why the representee entered into the Edgington v Fitzmaurice (1885) 29 Ch D 459
contract
If it is proven that the representee would have
entered into the contract notwithstanding the JEB Fasteners v Marks, Bloom & Co [1983] 1
misrepresentation, the misrepresentation claim All ER 583
will fail
Bars to rescission
If the property is in a reduced state, the
Erlanger v New Sombrero Phosphate (1838)
returning party may be ordered to pay an
LR3 App Cas 1218
allowance
Where the representee has expressly or
impliedly affirmed the contract the right to Long v Lloyd [1958] 1 WLR 753
rescind is lost
Where there has been a lapse of time between
the making of the contract and the decision to Leaf v International Galleries [1950] 2 KB 86
rescind the right to rescind is lost
Types of misrepresentation and damages
Fraudulent misrepresentation is a statement
made: (1) knowingly; or (2) without belief in its
Derry v Peek (1889) 14 App Cas 337
truth; or (3) recklessly, careless whether it be
true or false
The claimant may claim all losses stemming
from having entered into the contract (not only Smith New Court v Scrimgeour Vickers [1997]
reasonably foreseeable losses, as is the case in AC 254
respect of the tort of negligence)
Hedley Byrne & Co Ltd v Heller & Partners Ltd
Negligent misrepresentation
[1964] AC 645
A right to damages for loss-causing negligent
Esso Petroleum Co Ltd v Mardon [1976] 2 All
misstatements where there was a ‘special
ER 5
relationship’
As it is far easier for a claimant to succeed
under s. 2(1) of the Misrepresentation Act 1967, Howard Marine & Dredging v Ogden & Sons
common law negligent misrepresentation is [1978] QB 574
rarely used
Assessment is based on the tort of deceit so
Royscot Trust Ltd v Rogerson [1991] 2 QB 297
losses need not be reasonably foreseeable
Suggests that the defence of contributory
Gran Gelato Ltd v Richliff (Group) Ltd [1992]
negligence ought to apply to actions for
Ch 560
damages under MA 1967 s. 2(1)
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Tortious damages assessment can include any
notional profits arising from another contract Clef Aquitaine Sarl v Laporte Materials
which, but for the deceit, the claimant would (Barrow) Ltd [2001] QB 488
have entered into
This approach is not always beneficial to the
East v Maurer [1991] 1 WLR 461
claimant
There must be evidence that profits would have Davis v Churchward 6th May (1993)
been made from the alternative contract (unreported)
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