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CONTRACT LAW B NOTES 1. Misrepresentation a. Elements ..., Lecture notes of Contract Law

Falmouth UniversityContract Law

ELEMENTS OF ACTIONABLE MISREPRESENTATION To establish actionable misrepresentation, the party to whom the representation has been made (representee), must show ...

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CONTRACT LAW B NOTES
1. Misrepresentation
a. Elements of actionable misrepresentation
b. Types of misrepresentation
i. Fraudulent
ii. Innocent
iii. Negligent
c. Statement of fact
d. Statement of opinion
e. Must be false
f. Intention
g. Partially true
h. Material Inducement
i. Remedies
2. Mistake
a. Types of mistake
i. Common mistake
ii. Mutual mistake
iii. Unilateral mistake
b. Remedies
3. Quick identification test
• To identify Duress:
o Whether any applied pressure induced the victim to enter into the contract
o Did that pressure go beyond what the law is prepared to considered legitimate
• To identify Undue Influence:
o Does a special relationship exist between the parties? OR
• To identify Unconscionable conduct:
o Did the other party have a special disadvantage?
4. Duress
a. Five step test
b. Duress to the person
c. Duress of goods
d. Economic duress
e. Remedies
5. Undue influence
a. Categories of undue influence
i. Where there is a special relationship between the parties (arises a rebuttal
presumption of undue influence)
ii. Where no special relationship exists à actual undue influence (rare)
b. Actual undue influence
c. Presumption undue influence
i. Class 2A undue influence
ii. Class 2B undue influence
d. Meredith duress notes
6. Unconscionable conduct
a. Elements
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CONTRACT LAW B NOTES

  1. Misrepresentation a. Elements of actionable misrepresentation b. Types of misrepresentation i. Fraudulent ii. Innocent iii. Negligent c. Statement of fact d. Statement of opinion e. Must be false f. Intention g. Partially true h. Material Inducement i. Remedies
  2. Mistake a. Types of mistake i. Common mistake ii. Mutual mistake iii. Unilateral mistake b. Remedies
  3. Quick identification test
    • To identify Duress : o Whether any applied pressure induced the victim to enter into the contract o Did that pressure go beyond what the law is prepared to considered legitimate
    • To identify Undue Influence : o Does a special relationship exist between the parties? OR
    • To identify Unconscionable conduct : o Did the other party have a special disadvantage?
  4. Duress a. Five step test b. Duress to the person c. Duress of goods d. Economic duress e. Remedies
  5. Undue influence a. Categories of undue influence i. Where there is a special relationship between the parties (arises a rebuttal presumption of undue influence) ii. Where no special relationship exists à actual undue influence (rare) b. Actual undue influence c. Presumption undue influence i. Class 2A undue influence ii. Class 2B undue influence d. Meredith duress notes
  6. Unconscionable conduct a. Elements

i. Special disadvantage ii. Knowledge iii. Unconscientious exploitation of the disadvantage b. Defences i. Independent advice ii. Improvidence iii. Laches c. Remedies d. Statutory unconscionability ACL e. Unconscionable conduct pursuant to the unwritten law (s 20(1)) f. Unconscionable conduct in connect with goods and services (s 21(1))

  1. Statutory unconscionability pursuant to the Australian consumer law
  2. Privity a. Relationship with the doctrine of consideration b. Remedies c. Damages in common law i. Exceptions to the common law rule d. Specific performance in equity e. Trident General Insurance v McNeice Bros Pty Ltd f. Exceptions to the doctrine g. Exclusion clauses and third parties h. Bill of landing i. Covenants on land j. Trusts k. Equitable estoppel l. Unjust enrichment m. Statutory exception
  3. Construction of exclusion clauses a. Elements b. Exclusion clauses and negligence c. Principles of construction d. Exclusion clauses and ACL i. S 64
  4. Misleading and Deceptive Conduct a. Elements i. Person ii. Engages in conduct iii. In trade or commerce iv. Was it misleading and deceptive or likely to mislead or deceive v. Causation b. Pre-contractual statements c. Types of cases where misleading and deceptive conduct is likely to arise d. Six factual categories i. Comparative advertising ii. Character merchandising iii. Contractual promises e. Remedies
  5. Statutory Unconscionability

MISREPRESENTATION

Statements that are made during pre-contractual representations may become party of a contract which is subsequently made. Where those statements are false the innocent party has a right to seek damages for breach of contract. Whether such statements constitute terms or not is a matter of ascertaining the parties intention. If such statements are not contractual terms, they may be misrepresentations. Misrepresentations give rise to certain remedies that may be available to the innocent party. The primary remedy is rescission (restore the parties to their original status before the contract was made). If representation was fraudulent or negligent misstatement, the representee can pursue remedies in the tort of deceit. The misrepresentation must be of a fact past or present. It must be a misrepresentation of fact, not law. In the context of mistake, the distinction between fact and law has been rejected. Classic International v Lagos TYPES OF MISREPRESENTATION

  1. Fraudulent a. Makes a statement knowing it to be false or without believing in its truth b. Test in Krakowski v Eurolynx c. Consider the sense in which the seller intended the other party to understand the statement.
  2. Negligent
  3. Innocent – not actionable a. Believes the statement is true and consequently has no intention to deceive the buyer ELEMENTS OF ACTIONABLE MISREPRESENTATION To establish actionable misrepresentation, the party to whom the representation has been made (representee), must show, before or at the time of making the contract, the person who made the misrepresentation (representor) directly or indirectly
  4. Made a false statement of fact;
  5. Which was intended to induce the innocent party to enter into the contract;
  6. That it did in fact operate as an inducement to enter into the contract. It need not be the sole inducement. Dadourian Group International a. Sole inducement or; b. Partial inducement **if ambiguous, the court will determine the meaning of representation using an objective approach: Krakowski v Eurolynx The onus of proof is on the party whom the representation has been made (the representee).

THE REPRESENTATION MADE MUST BE A STATEMENT OF FACT

A representation must be of past or present fact

  • Excludes statements of law
  • The law makes no distinction anymore between mistakes of fact and mistakes of law. Both are now actionable. a. Classic International Pty Ltd v Lagos Statements of law:
  • If the misstatement is both a statement of fact and law it can be misrepresentation
  • Misstatements as to a persons private rights, the effect of a private instrument and the effect of private Acts of parliament can amount to misrepresentations - Public Trustee v Taylor
  • If the misstatement of law is deliberate or wilful it can amount to misrepresentation – Public Trustee v Taylor Advertising puffery cannot be regarded as a misrepresentation
  • A puff is a promotional statement that no reasonable person would believe to be a statement of fact. Mitchell v Valherie STATEMENTS OF FACT Promises or assurances as to the future are not statements of fact for the purposes of misrepresentation ( Civil Service Co-operative Society of Victoria v Blyth ).
  • Statements of future intention are not misrepresentations as such a statement cannot be either true or false at the time it is made, it cannot be a statement of a presently existing fact. Beattie v Lord Ebury
  • However a statement of future will be a statement of presently existing fact, if there is no previous intention to do that which the representor state is his or her future intention. TEST: Will be held as misrepresentation if:
  1. The maker makes the statements without the genuine intention of fulfilling them; or
  2. There are no reasonable prospects of fulfilling those expectations. STATEMENT OF OPINION Where a person makes a statement of intention or opinion it can be implied that their state of mind is consistent with that intention or opinion. If that is not the case, the representation will be regarded as fraudulent. Ritter v North Ide Enterprises Statements of opinions are not generally regarded as statements of fact. Bisset v Wilkinson Take into account the material facts of the transaction, the knowledge of the parties respectively and their relative positions the words of representations used and the actual condition of the subject matter spoken of.

What is material

  1. Where the insured is aware that it is a material fact, that the insurer would want to know before deciding whether to accept the risk and if so, on what terms or reject the risk altogether.
  2. A reasonable person would be expected to know that the fact that is undisclosed would be relevant to the insurer in that he would have wanted to know. If the statement is only partially true or a distortion of a truth, the failure to disclose the whole truth amounts to a misrepresentation ( Tipperary Developments v WA ) Representations may continue without being expressly repeated, unless they are modified or withdrawn o long as they remain relevant to the dealings between the parties. If the statement is true at the time, but becomes untrue, the representor has an obligation to disclose. Brownline v Campbell EVEN IF A STATEMENT IS ONLY PARTIALLY TRUE OR IT IS A DISTORTION OF THE TRUTH IT IS STILL A MISREPRESENTATION. Dimmock v Hallett The vendor’s statement was held to be a misrepresentation, although at the time of making it, it was literally true. Krakowski v Eurolynx Properties Ltd
  • Failed to disclose to Krakowski that they had a side agreement with the tenant. The features of the side agreement between Eurolynx and the tenant, said the High Court amounted to a misrepresentation to the Krakowskis. In fact, the High Court went as far as holding that it was misleading and deceptive conduct under Section 18 of the ACL as well as fraudulent misrepresentation. If mere silence does engender reasonable expectations, then the context in which silence as a false representation may be found. Demagogue Pty. Ltd v Ramensky Also, representations may continue without being repeated unless modified or withdrawn. The representations must relate to the dealings between the parties. Mbakwe v Sarkis Changed circumstances. If a representation is true when made but over time is no longer accurate, there is an obligation to disclose changed circumstances. With v O’Flanagan , it was held that there was duty to disclose the change of circumstance.
  • Only disclose what is adverse to the transaction In the Australian case of Lockhart v Osman , the failure to disclose the changed circumstances, was held to be a fraudulent misrepresentation, particularly if the initial representation was clearly known to be inaccurate.