Misrepresentation Problem Question Structure

Posted by Catherine Robinson on August 3, 2021

4-min read

In a misrepresentation problem question, you must firstly identify each of the possible misrepresentations. It is easier if you discuss each one separately.

For each potential misrepresentation, go through the required elements of misrepresentation to ensure they are satisfied. Next, you must identify which type of misrepresentation you are dealing with and provide a justification with reference to the case law. Thirdly, you can consider whether there are any applicable defences, although defences don't typically come up in misrepresentation problem questions. Finally, you should consider which remedies the court may award. The basic steps are set out below, followed by a more detailed misrepresentation problem question structure.

How to Get a First in Law

1) Elements of misrepresentation

Unambiguous
False
Statement of fact
Addressed to claimant
Reliance on the statement – the statement induces the claimant to enter the contract.

2) Different types of misrepresentation

Innocent
Negligent
Fraudulent

3) Defences

Contributory negligence
Any other usual defences

4) Remedies

Damages
Rescission

1) Elements of misrepresentation

Unambiguous, per McInerny v Lloyds.
False, must be ‘substantially false’ per Avon Insurance v Swire Fraser.

Half-truths – Notts Patent Brick and Tile Co v Butler: buyer asked solicitor whether there were any restrictive covenants, solicitor said he wasn’t aware of any – this was true as he hadn’t checked, but his statement suggested to the buyer that there weren’t any.

Statement of fact

Can’t be opinion, per Bisset v Wilkinson.

Exception: where the statement comes from an expert, e.g. Esso Petroleum v Mardon.

Representation by conduct, e.g. Spice Girls v Aprilla World Services and Gordon v Selico.
Silence cannot amount to misrepresentation, per Keaton v Earl of Cadogan.

Exception 1: Half-truths – Notts Patent Brick and Tile Co v Butler (see above).
Exception 2: If earlier statement becomes false, per With v O’Flanagan.
Exception 3: Contracts of uberrimae fidei (means contract of utmost good faith, where you are expected to disclose info), usually apply in cases involving insurance companies, see e.g. Lambert v Co-operative Insurance Society.

A statement of future intent may amount to misrepresentation of fact, per Edgington v Fitzmaurice.
A statement of law (making a statement as to what the law is or the legal status of something) can amount to a misrepresentation, see e.g. Pankhania v London Borough of Hackney.
Sales talk or ‘mere puff’ is not considered to be a statement of fact, per Dimmock v Hallett.

Addressed to claimant, per Commercial Bank v Brown. Misrepresentation must be made before the contract is formed, per Roscorla v Thomas.
Reliance on the statement – the statement induces the claimant to enter the contract.

The representation must have been material to the claimant entering the contract, so must have played a ‘real and substantial’ part in inducing the claimant to enter the contract, per JEB Fasteners v Marks Bloom.
Edgington v Fitzmaurice: have to look at the claimant’s mindset and whether it was affected by the statement.
Pan Atlantic v Pine Top: would the statement have induced the reasonable person into entering the contract?
Does the claimant have any obligation to check the truth of the statement? Generally, no, per Redgrave v Hurd.

Exception 1: the rule may not apply to a claimant who has had the opportunity to uncover the truth, per Redgrave v Hurd.
Exception 2: if the claimant does check, then they cannot be said to have relied on the misrepresentation, per Attwood v Small.

Note: if the misrepresentation is fraudulent, then it does not matter whether the claimant could have/did conduct an investigation. The inducement is presumed, per Derry v Peek.

2) Different types of misrepresentation

Innocent misrepresentation: s 2(1) – if the representor believed the statement to be true and had reasonable grounds to believe in its truth, then the representation will be innocent.
Negligent misrepresentation, two types:

Negligent misrepresentation (statute), s 2(1) Misrepresentation Act 1967.

Burden of proof is on the defendant to show that they had reasonable grounds for believing the statement was true.
Contract required.
No special relationship needed.

Negligent misstatement (common law). Based on an action in tort: the case of Hedley Bryne v Heller.

Burden on the claimant.
No contract required.
Special relationship is required.
Esso Petroleum v Mardon – if a man with special knowledge negligently gives misleading info he will be liable in negligent misrepresentation.

Fraudulent: Derry v Peek – Lord Herschell: (1) knowingly make false statement, (2) making a statement without believing it is true, or (3) making a statement reckless as to whether it is true or false (almost sure it isn’t true). Thomas Witter v TPB – make no effort to investigate the truth of the statement.

The burden of proof is on the claimant.

3) Defences

Law Reform (Contributory Negligence) Act 1945, contributory negligence: can come up if the claimant is partially responsible for his losses, e.g. by not enquiring about the misrepresentation.

CAN be used for negligent misstatement, see e.g. Gran Gelato v Richcliff.
Law is uncertain as to whether it can be used for negligent misrepresentation, see conflicting cases: Royscot Trust v Rogerson and compare with Gran Gelato.
CAN’T be used for fraudulent misrepresentation, see e.g. Standard Chartered Bank v Pakistan National Authority.

4) Remedies: two types: (1) damages and (2) rescission

Fraudulent misrepresentation:

Damages can cover all losses flowing from the transaction, even if not foreseeable. However, the claimant must try to mitigate loss and take steps to do this, any excessive loss caused by the claimant not mitigating loss will be deducted from damages, per Smith New Court v Scrimgeour Vickers.
Rescission.

Negligent misrepresentation:

Damages can cover all losses flowing from the negligent misrepresentation.
Rescission

Innocent misrepresentation:

Can be awarded either damages OR rescission (not both, unlike fraud and negligence).

What is rescission? Ab initio: puts parties in position they would have been in had they not entered the contract. Can’t go for rescission if one of the bars to rescission apply:

Lapse of time, see e.g. Leaf v International Galleries.
Affirmation: claimant may either explicitly state they want to continue with the contract, or affirmation may be implied from conduct, see e.g. Long v Lloyd.
Impossibility, see e.g. Clarke v Dickson.
Third party rights: where the goods are sold to a good faith purchaser, see e.g. Phillips v Brooks.
Damages in lieu of rescission is preferable, per s 2(2) of the Misrepresentation Act 1967.

In order to write a first class misrepresentation essay, you must follow each of these steps.

Disclaimer:

The information provided in this blog post is based on the research I carried out for my law degree which I completed in 2020. I accept no responsibility for errors or omissions. Legal principles and interpretations may change over time, and the content presented here may not reflect the most current developments in UK contract law. This information is intended for general informational purposes only and should not be considered as legal advice or relied upon as a substitute for professional legal counsel. For the most up-to-date and accurate legal information or advice, it is advisable to consult with a qualified legal professional who is knowledgeable about the latest legal developments and can provide guidance specific to your situation.