Misrepresentation - Law - Lecture Slides, Slides of Law

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Misrepresentation

History

• 1880’s – Caveat Emptor – Let the buyer beware
• Court of Equity
  • Relief for fraudulent misrepresentation
  • Rescission was only remedy
• Common Law Courts
  • Relief for innocent misrepresentation only if it became a term of the contract
  • Tort of negligent misrepresentation
  • Only remedy was damages

Action for misleading or deceptive conduct (breach of TPA s 52, Fair Trading Act or ASIC Act)

Action for damages for tort of deceit (fraud)

Action for damages for tort of negligence

common law misrepresentations

statutory misrepresentations

Causes of action for misrepresentation

Action for breach of contract

contract law

Categories of Misrepresentation

• Fraudulent misrepresentation
  • Representor knew it to be false or was reckless as to whether it was true or false

Categories of Misrepresentation

• Negligent Misrepresentation
  • Representor owed a duty of care to representee
  • Representor failed to exercise the required standard of care
  • Loss, which was a reasonably foreseeable consequence of the misrepresentation, was caused by misrepresentation

Negligent misrepresentation

Did the representor owe a duty of care to the representee?

Were the representee’s losses caused by the negligence and were the losses reasonably foreseeable?

Step 1 Has the representor failed to exercise the required standard of care?

Step 2 Step 3

 Liability for negligence can be excluded by an exemption clause  Remedy for negligence is damages.

Categories of Misrepresentation

• Misleading & Deceptive Conduct
  • Section 52 Trade Practices Act
  • No need for fraud or negligence

Misleading or deceptive conduct (statutory misrepresentation) Is the representee covered by the TPA, ASIC Act and/or state legislation (eg FTA (Vic))?

What remedies are appropriate under the relevant Act(s)?

Has the representee committed ‘misleading or deceptive conduct’and was this ‘in trade or commerce’?

• Prominent and clear disclaimers may affect liability.
• Remedies:
  • Damages (if the misleading or deceptive conduct representation caused theloss);
  • Contract created in reliance on the misleading conduct may be varied ordeclared void;
  • Injunctions;
  • Other remedies (eg corrective advertising);
  • Criminal sanctions are available for misrepresentations unders 75AZC TPA.

Statement was false

• Silence will not normally suffice
  • Half truths
    • Re Hoffman; ex p Worrell v Scilling (noted – S&OR p39\59)
    • Krakowski v Eurolynx (note - S&OR p40\60)
  • Altered circumstances
    • Lockhart v Osman (S&OR p40\60)
• Misrepresentation can be made by conduct

Statement was one of fact

• Not a mere puff
• Usually, not an opinion
• An opinion can be a fact where the representor has special knowledge - Smith v Land and House Property Corp (S&OR p39\59)
• The existence of an opinion can be a fact
  • Sola Optical v Mills (1987) 168 CLR 628

Statement Induced Representee to Act

• Not necessary that it was the only reason for entering the contract
• But it must be one of the reasons
• Representee cannot be aware of truth before entering into the contract - Holmes v Jones (S&OR p40\60)
• Representee is not required to investigate
  • Redgrave v Hurd (S&OR p41\61)

Remedies for Misrepresentation

• Recission
  • Contract is void ab initio
  • Not the same as termination
• Damages

Duress

• A contract entered into due to coercion or force can be rescinded
• Coercion can be:
  • To the person;
  • To goods; or
  • Economic duress

Duress (cont.)

• Duress to the Person
  • Threats of physical punishment or imprisonment to the person, his family or friends
• Duress to Goods
  • Threats that are made against a person’s property