Contract Law - Misrepresentation Part 1

[Music] welcome to Los sessions I am Jennifer Hudson in this law session we will look at the contract law area of misrepresentation what happens when someone says something to you that makes you enter into a contract with them what are the repercussions well what we will do in this law session of course for the next four segments is to look at misrepresentation and then of course there is a law session in media immediately after that which looks at mistake now quite often on examination papers what you get is a mixture of both miss wrap and mistake and so if this is an error that you intend to review in advance of your exam then certainly I think you need to take it on board with its twin mistake all right we will look at miss wrap and let's start off with what is a misrepresentation for the purposes of contract law well a misrepresentation is a false statement of fact or law now I will be honest with you and say that I always had a problem with that because if it's a statement of facts how can it be false well I'll show you in a moment but certainly it does look at a statement being made of fact or law which is false that's the way really to do it so it's a false statement of fact or law which induces the representing to enter into a contract now where a statement is made during the course of negotiations as I mentioned earlier in terms it is classed either as a representation rather than a term and an action for misrepresentation may be available where the statement turns out to be untrue so the point here is of course if you've already listened to the contents of a contra lecture the point is that a terminate contract can be a term which gives rise to obligation obligations or it is a representation if it is a representation it does not give rise to any legal liability unless it turns out to be a misrepresentation so if it is that it is a representation then of course liability will attach if of course representation has among other things induced you and it is false now there are three types of misrepresentation there is innocent misrepresent and there is fraudulent misrepresentation is that the contract is voidable meaning that the contract exists but it may be set aside by the represent T now the remedy available depends on the type of misrepresentation it is but generally it consists of rescission which means that you rescind the contract meaning you get out of it or act well and/or damages because you can get the both now the right to rescind the contract may be lost in certain circumstances the law as it relates to misread is mainly found in the common law but the misrepresentation act 1967 does provide supplemental assistance and there are certainly further details in the act now in order to amount to an actionable misrepresentation there are certain criteria which must be satisfied the first of course is that it is a false statement so there must be a false statement of fact or law now it can't be an opinion or an estimate of future events it must be that it is a statement of fact or law which is false now if we consider the case of businesses on Wilkinson in 1927 it is a Privy Council case and the facts there were that the claimant purchase a piece of farmland to use as a sheep farm he asked the seller how many sheep the land would hold now the salad not used it as a sheep farm before but estimated that it would carry about 2,000 sheep in reliance on this statement the claimant purchased the Lund now the estimate turned out to be wrong of course on the claimant brought an action from his rep the Privy Council said that the statement was only a statement of opinion and not a statement of fact and therefore it was not an actionable misrepresentation now you can see that the statement itself was false but in order for it to give rise to liability it must be a false statement or a fact it simply cannot me well I think that it will hold 2,000 anything you think so yeah I think so what did I base my thought process on if it is as in that case nothing given that there wasn't sheep on it before then arguably the courts are going to find that it's an opinion and in the circumstances no misread now the Clements action was unsuccessful in that case but let's consider as a petroleum on model it is one that we have considered before in the context of terms now mr. Martin entered into a tenancy agreement with SL petroleum in respect of a new petrol station XOS expert and estimated that the petrol station would sell 200,000 gallons of petrol the estimate of course was based on figures which were prepared before they got planning permission now when the planning permission was considered it changed the promise the prominence of the petrol station and that of course affected sales now also did not amend it estimate and the result was that under the tendency of course the basis was erroneous and as such it did not produce what they had said so it became impossible for mr. Martin to run the petrol station profitably in fact he did try to use best endeavors but the best he could do was to sell seventy eight thousand or seventy eight as opposed to two hundred thousands an extraordinary drop so of course he made quite a hefty loss the Court of Appeal dole said that there was no action from his rep as the statement was an estimate of future sales rather than a statement of fact however the claimant was entitled to damages based on either a negligent misstatement at common law or breach of a warranty of a collateral contract now as I say we touched on that when we looked at a contractual term and its contents in the context of collateral contra because he succeeded there but certainly he could not succeed on the basis of a misread because it was a an opinion and that opinion was of course based on a planning permission that said though it was a misstatement which was negligent and really they ought to have fixed it by the time they had come to put him into possession of the tenancy so a statement of opinion may of course amount to an actionable Mis rep where the represent tour was in a position to know the facts and that is slightly different it's not taking it into it's not making it inconsistent because if I give you an opinion which is based on a situation where I should know the factual background so if you look at mr. John Wilkinson if he had done sheet before and then he gave an estimate which was clearly wrong well possibly well the case to consider here is Smith and London house property corporation where the claimant purchased a hotel now the seller described it well the seller described one of the tenants as being most desirable in fact as the seller knew the tenant was in area on the verge of bankruptcy now this was held to be a statement of fact rather than opinion as the seller was in a position to know the facts so even if it is an opinion it may cross over into the factual arena if it is that that opinion ought to have been based on what you ought to or would have known factually a statement as to the future intent cannot of course amount to miss Rapp unless the represent tour had no intention of carrying out the stated intent and in Edgington on fitzmorris in 1885 we see there that the Clement purchased some shares in the defendants company now the company prospectus stated the shares were being offered in order to raise money to expand the company in fact the company was experiencing financial difficulty and the money raised from the sale of the shares was going to use to pay the company pay of the company's debts now the court said that despite the fact that the statement related to a statement of future intent it was an actionable misrepresentation as the defendant had no intention of using the money to expand the company what about a false statement of law well a false statement of law will now amount to an action of a misread what do I mean by now the fact is there was a time when it was not simply because everybody is taken to know the law now in the case of Pan Kania and L and London Berg Council of Hackney we see this is a 2002 case the claimants purchased property induced by a representation that the current occupiers of the property were contractual licensees whose occupation could be terminated simply by giving them three months notice in fact the current occupant was a tenant protected under the Landlord and Tenant Act now this was a misrepresentation as to law which had previously been assumed not to be an actionable misrepresentation through analogy with case law based on certain types of claims for mistake well the rule barren recover from mistake of law is abolished by the House of Lords in klamath Benson and Lincoln County Council the High Court L that the actions based on Miss Rev of law could now be actionable based on the change of the law the claimants action in that then was successful silence will not generally amount to a miss rep in fact silence will not generally amount to anything if you go back to acceptance in a previous law session but for our purposes silence will not generally amount to misrepresentation and the case of course is Smith and Hughes it's an 1871 case where the claimant had purchased a quantity of what he thought was old oats having been shown a sample in fact the oats were new oats and it was very important for him to have gotten old oats the claimant wanted the oats for horse feed and new oats were of no use to him now the seller was aware of the mistake of the claimant but said nothing the claimant brought an action against the seller based on mistaken misread the court said that both actions would have to fail the action based on misread failed as you cannot have silence as a misrepresentation the defendant had not mislead not mislead the claimant to believe they were old oats the action based on mistake fail as the mistake was not as to the fundamental terms of the contract but only a mistake as to quality when we go into the next launch session as I said if you manage to listen to that one you will see what the position in his position is in relation to mistake now that is not to say that silence will not give rise the liability because if it is a contract of what is called a contract of a boramae Friday which is a contract of the utmost good faith such as an insurance contract or whether represent where the represent or is in a fiduciary position well in such case a duty exists to disclose all material facts and a failure to do so may give rise to an action for misrepresentation how then do you consider what is a contract of the utmost good faith well we will take a short break and in the next segment we'll pick up with our contracts of good faith [Music]

Channel: Law Sessions

Views: 115,296

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Keywords: Contract Law, Law, Law Sessions, Jennifer Housen, LLB, University of London, Lecture, Misrepresentation

Id: i9D7CTnV9_8

Length: 13min 49sec (829 seconds)

Published: Tue Dec 11 2012