Self-test questions: Misrepresentation

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. Zoe is interested in buying Georgia's house. During the pre-contractual negotiations, Georgia refuses to answer any of Zoe's questions, but does state that the property is in great condition with no known defects. Subsequently, Georgia is informed that the house is infested with deathwatch beetle but fails to tell Zoe of that fact. Zoe buys the house but is told that it will need to be demolished within six months because it is infested with deathwatch beetle. Which one of the following statements most accurately summarises the position between the parties?

Zoe has a claim for misrepresentation as a result of Georgia's refusal to answer any questions. correct incorrect

Zoe has a claim for misrepresentation because Georgia's active concealment of the defect constitutes an untrue statement of fact. correct incorrect

Zoe has a claim for misrepresentation because Georgia has greater knowledge than Zoe of the condition of her property. correct incorrect

Zoe has a claim for misrepresentation because Georgia failed to pass on the information that she had subsequently acquired. correct incorrect

Zoe has a claim for misrepresentation because Georgia's active concealment of the defect constitutes an untrue statement of law. correct incorrect

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. Tenishia agrees to buy Luke's house. During the pre-contractual negotiations, Luke refuses to answer any of Tenishia's questions. In fact, local authority plans to build a motorway near Luke's house have recently been publicised. Luke realises that the value of his house will fall when the plans to build a motorway are given more widespread publicity, but he also knows that, for the moment, Tenishia is unaware of the intended motorway construction. Tenishia buys the house and immediately discovers the motorway plan. Which one of the following statements most accurately summarises the position between the parties?

Tenishia does not have a claim for misrepresentation because Luke had no duty to disclose the motorway building plan. correct incorrect

Tenishia has a claim for misrepresentation because Luke had a duty to disclose the motorway building plan due to a change of circumstances. correct incorrect

Tenishia has a claim for misrepresentation because Luke has told a half-truth. correct incorrect

Tenishia has a claim for misrepresentation because Tenishia and Luke are in a fiduciary or confidential relationship. correct incorrect

Tenishia has a claim for misrepresentation because Luke has actively concealed the motorway building plan. correct incorrect

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. Which one of the following misstatements is not likely to be a misstatement of fact?

A misstatement by a vendor to a purchaser as to the conditions of his house put up for sale. correct incorrect

A misstatement by a bookseller that he thinks a particular collection of books is a limited edition signed by the author, when he in fact does not know whether the signature is a genuine one nor whether the collection is a limited edition. correct incorrect

A misstatement by a private car owner to a potential buyer as to a highly technical specification of the car. correct incorrect

A misstatement made negligently by a financial adviser to a client in relation to future movements of the financial market. correct incorrect

A misstatement by a person selling her business relating to the turnover of the business in the previous three years. correct incorrect

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. Arnie is hoping to sell his 12-metre yacht to Beth. During the pre-contractual negotiations, Arnie says: 'I think you should get the boat surveyed. It's always been reliable, but I recently had to pay for the mast to be repaired.' Unknown to Beth, Arnie has used paint and other means to conceal other repaired parts of the yacht. Beth purchases the yacht without further inspection, but then finds out that recent repairs to the yacht included the rudder, keel, and hull. Which one of the following statements most accurately summarises the position between the parties?

Arnie's statement is not an actionable misrepresentation because the caveat emptor principle applies on the facts. correct incorrect

Arnie's statement is an actionable misrepresentation because it amounts to an active concealment of the defects of the yacht. correct incorrect

Arnie's statement is an actionable misrepresentation because his statement constitutes a half-truth. correct incorrect

Arnie's statement is not an actionable misrepresentation because he has offered no more than a statement of opinion linked to the reliability of the yacht. correct incorrect

Arnie's statement is an actionable misrepresentation because the parties are in a fiduciary relationship. correct incorrect

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. Which one of the following principles was recognised and applied by the Court of Appeal in Edgington v Fitzmaurice (1885) 24 ChD 459?

In order to be actionable, a misrepresentation must be the only factor to have contributed to the decision to enter into the contract. correct incorrect

A false statement of a present intention is a misstatement of fact. correct incorrect

The right to rescind can be lost by a lapse of time. correct incorrect

A misstatement of intention does not amount to an actionable misrepresentation. correct incorrect

The right to rescind can be lost by affirmation. correct incorrect

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. Maximo Ltd alleges it has been induced to enter into a contract with Invest Wise Finance Ltd on the basis of negligent misrepresentations made by Invest Wise Finance. Which one of the following does not correctly describe an advantage for Maximo in bringing a claim alleging negligent misrepresentation under s. 2(1) of the Misrepresentation Act 1967?

Under s. 2(1), Maximo does not have to prove the existence of a special relationship between Maximo and Invest Wise Finance. correct incorrect

Under s. 2(1), Invest Wise Finance has the burden to disprove negligence and this burden is not to be discharged lightly. correct incorrect

Under s. 2(1), Maximo is entitled to claim expectation damages. correct incorrect

Under s. 2(1), Maximo is entitled to all of the losses directly caused by the misrepresentation, even if the losses are not reasonably foreseeable at the time of the misrepresentation. correct incorrect

Under s. 2(1), the so-called fiction of fraud means liability is said to exist where it would exist had the misrepresentation been made fraudulently, even though it was not made fraudulently. correct incorrect

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. In which one of the following situations will the misrepresentee's right of rescission remain?

Jas bought goods from Romario last week and used them in her manufacturing process. Jas has now discovered that Romario had fraudulently misrepresented the quality of the goods. correct incorrect

Jermaine bought a painting from Yvonne two years ago. It hangs in his private gallery. Jermaine recently discovered that Yvonne had fraudulently misrepresented the provenance of the painting at the time of the sale. correct incorrect

Lawrence bought goods from Kiran last week and sold them on to Carol. Lawrence has now discovered that Kiran had misrepresented the quality of the goods. correct incorrect

Hope bought a painting from Lionel two years ago. It hangs in her private gallery. Last year, Hope discovered that Lionel had fraudulently misrepresented the provenance of the painting at the time of sale, but she was so happy with the painting that she did not complain. Hope has now changed her mind and wants to claim back the contract price from Lionel. correct incorrect

Sandy purchased machinery from Mandeep to use in her manufacturing process. Some parts of the machinery broke on the first use. Sandy accused Mandeep of misrepresenting the quality of the machinery and Mandeep offered to replace it. Sandy continued to use the machinery without it being replaced and more parts of the machinery broke on the second and third use. correct incorrect

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. Hassan purchased goods from Jacqui. Hassan has now discovered that Jacqui misrepresented the quality of the goods. Which one of the following situations is not true in respect of Hassan's right to rescission?

If it is established that Hassan has the right to rescind, and Jacqui alleges that one or more of the bars to rescission apply, the burden of proof is on Hassan to show that the bars do not apply. correct incorrect

If Hassan has used or changed the goods in a way that means he cannot restore what he obtained, his right to rescission may be lost. correct incorrect

If Hassan were to sell the goods to a third party, his right to rescission may be lost. correct incorrect

If Hassan were to tell Jacqui that he is willing to accept the goods as they are because he thinks he can use them in a different way than initially intended, but then changes his mind one month later after using the goods, his right to rescission may be lost. correct incorrect

A court has a statutory power to award damages in lieu of rescission in certain circumstances, if of the opinion it would be equitable to do so. correct incorrect

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. Amrit and Nev have concluded their main negotiations for the purpose of forming a commercial contract involving the sale of Amrit's business to Nev. Amrit has been advised that she should include a term in the parties' final contract which ensures she cannot be held liable for any pre-contractual representations should they turn out not to be true. In relation to such a contractual term, which one of the following is true?

The term should be drafted in a way that states that the parties are contracting on the 'basis' that no representations have been made or relied on, because then it will be so fundamental as to be enforceable without being subject to any statutory controls. correct incorrect

If the parties have included an 'entire agreement' clause in their contract, this will have the effect of also covering the exclusion of any possible liability for any misrepresentations. correct incorrect

The term will not be subject to any statutory controls, as long as it is drafted carefully and does not refer to 'excluding' or 'restricting' liability for misrepresentation. correct incorrect

A court will focus on the substance of the term to ascertain whether it is an attempt to exclude or restrict liability for misrepresentations and, hence, whether it is subject to any statutory controls. correct incorrect

If the parties' final written contract is a complex and lengthy commercial contract, a court is likely to recognise the term in question as an implied term, because the officious bystander would consider it to be obvious that the parties intended to be bound only by the actual terms of the contract and not by any pre-contractual statements. correct incorrect

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. Jasdeep is considering buying Ollie's bakery business as an investment. By a fraudulent misrepresentation, Ollie induces Jasdeep to buy the bakery for £180,000 although its actual value is only £120,000. When, two weeks later, Jasdeep discovers the fraud, the value of the bakery has fallen to £80,000 due to serious damage caused by the collapse of a supporting wall at the bakery premises. At this point, a buyer offers £80,000 for the bakery. Jasdeep does not sell until three months later, when she only gets £75,000 because of an economic downturn. Jasdeep rescinds the contract with Ollie for fraudulent misrepresentation and claims damages. Which one of the following statements most accurately calculates the damages to which Jasdeep is entitled?

Jasdeep is entitled to £60,000 in damages because this represents the difference in value between the amount paid and the actual value at the date of the contract. correct incorrect

Jasdeep is entitled to £100,000 in damages because this is the only loss caused by Ollie's misrepresentation. correct incorrect

Jasdeep is entitled to £105,000 in damages because this would put her into the position before the misrepresentation was made. correct incorrect

Jasdeep is entitled to £180,000 in damages because, upon rescission of the contract, the parties would be restored to their positions before the contract was made. correct incorrect

Jasdeep is not entitled to damages because she entered into a bad bargain due to the economic downturn. correct incorrect

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. Which one of the following statements relating to a claim for damages brought under s. 2(1) of the Misrepresentation Act 1967 is true?

The principle of mitigation does not apply to the misrepresentee who brings such a claim. correct incorrect

The misrepresentee's contributory negligence will not be taken into account in assessing the amount of damages. correct incorrect

The misrepresentee is entitled only to recover losses that are reasonably foreseeable by the misrepresentor at the time when the misrepresentation is made. correct incorrect

To rely on s. 2(1) requires proof of a special relationship giving rise to a duty of care. correct incorrect

The aim of damages is to put the misrepresentee into the position it would have been in had it not entered into the contract. correct incorrect

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. Big Bucks Ltd has advised Jensen Ltd in relation to certain financial investments. Jensen now claims that Big Bucks misrepresented the nature of these investments and this caused Jensen to lose substantial amounts of money. Big Bucks claims that it is not liable for any such misrepresentations, even if they were made, because of the inclusion of a non-reliance clause in the parties' contract which states that the parties agree that no pre-contractual representations were relied on. In relation to such a clause, which one of the following is true?

Big Bucks might be able to invoke this clause and claim a contractual estoppel, but to do so Big Bucks must show that it relied on the non-reliance clause, i.e. that it relied on Jensen's acknowledgement, via the non-reliance clause, that no pre-contractual representations were actually relied on. correct incorrect

If a court were to find that the clause in substance amounts to an attempt to exclude liability for misrepresentation, it would be subject to s. 3 of the Misrepresentation Act 1967 and s. 11 of the Unfair Contract Terms Act 1977. correct incorrect

Such a clause will be unenforceable because it purports to deny the existence of past facts. correct incorrect

In order to claim a contractual estoppel, Big Bucks must show that it would be unconscionable for Jensen to be able to go back on its acknowledgement, via the non-reliance clause, that no pre-contractual representations were actually relied on. correct incorrect

A clause which purports to deny that any pre-contractual representations were relied on is automatically unenforceable under the Misrepresentation Act 1967 once a party can prove that any such representation was actually relied on. correct incorrect

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. Beth has entered into a commercial contract with Alexo. The contract contains a term, in the form of a non-reliance clause, by which the parties agreed that Beth had not relied on any representations made by Alexo during their pre-contractual negotiations. Assuming a court holds that such a term is subject to s. 3 of the Misrepresentation Act 1967, which one of the following is true?

The reasonableness test only applies if the parties have not specified in their contract that it does not apply. correct incorrect

As this is a commercial contract, a court will conclude that the non-reliance clause is not subject to the reasonableness test in s.11 of the Unfair Contract Terms Act 1977. correct incorrect

The clause will only be effective if it satisfies the requirement of reasonableness contained in s. 11 of the Unfair Contract Terms Act 1977. correct incorrect

The non-reliance clause will not be subject to the reasonableness test in s. 11 of the Unfair Contract Terms Act 1977 if Alexo can show that Beth was a sophisticated commercial party that understood the nature and purpose of the clause, but otherwise it will be. correct incorrect

The non-reliance clause will not be subject to the reasonableness test in s. 11 of the Unfair Contract Terms Act 1977 as long as it states that Beth had not relied on any representations, as opposed to stating that no representations were actually made. correct incorrect

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. Which one of the following statements in relation to the three types of misrepresentation is true?

A misrepresentation is fraudulent only if the misrepresentor, when making the misrepresentation, has no reasonable ground to believe that the statement is true. correct incorrect

To claim damages on the ground that a misrepresentation is negligent, the misrepresentee must prove the existence of a special relationship between the misrepresentor and the misrepresentee. correct incorrect

An innocent misrepresentation does not give the misrepresentee a right of rescission; it is a matter of the court's discretion whether the misrepresentee has such a right. correct incorrect

A term which purports to exclude liability for a negligent misrepresentation in a commercial contract will be rendered unenforceable under the Misrepresentation Act 1967. correct incorrect

A change of circumstances misrepresentation in a commercial contract will entitle the misrepresentee to claim damages under the Misrepresentation Act 1967. correct incorrect

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. Which one of the following statements relating to attempts to exclude or limit liability for misrepresentation is not true?

In determining whether a non-reliance clause falls within s. 3 of the Misrepresentation Act 1967, the time at which the non-reliance provision was agreed might be relevant. For example, an agreement by the parties at the start of their negotiations as part of a confidentiality agreement that they will not rely on any representations might mean the clause falls outside s. 3. correct incorrect

In applying the test of reasonableness referred to in s. 3 of the Misrepresentation Act 1967, a court will consider whether the term in question was a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made. correct incorrect

Where the contract is a consumer contract, a term which attempts to exclude or restrict liability for misrepresentation will be subject to the 'fairness' test within the Consumer Rights Act 2015 if the contract is one falling within the scope of that Act. correct incorrect

If a party claims that a term falling within s. 3 of the Misrepresentation Act 1967 satisfies the requirement of reasonableness, the burden is on that party to show that it does. correct incorrect

If a party wants a term attempting to exclude or limit liability for misrepresentation to be included in a contract, it should be drafted in a way that states that no representations were ever made (and not that if representations were made, they were not relied on) because it will then fall outside s. 3 of the Misrepresentation Act 1967 as it will not be a non-reliance clause. correct incorrect