End-of-chapter questions: Answer Guidance 16.1

Misrepresentation

A good answer to this question will approach the issues raised in a clear and structured way. This is particularly important when dealing with a difficult topic such as misrepresentation. It is suggested that it would be sensible to consider the possible misrepresentations separately.

The first possible misrepresentation The first concerns the right of way. Easybuck Ltd makes a clear statement which is false. Does it matter that Oxfield Town FC could have checked for itself? Redgrave v Hurd suggests not. But is Oxfield Town FC really relying on the misrepresentation of Easybuck Ltd, or perhaps on its own solicitors (cf Attwood v Small (1838) 6 Cl & F 232)? The second misrepresentation concerns the ability to use the premises for gambling. Here the representation, if one is made, appears to be through conduct (Spice Girls Ltd v Aprilla World Service BV [2002] EWCA Civ 15, [2002] EMLR 27) and even if the representation was true when made, Easybuck Ltd should have corrected it when it became false (With v O’Flanagan [1936] Ch 575).

Good answers should consider the elements that give rise to a claim in misrepresentation. The key issue here is probably that of reliance. The primary remedy for misrepresentation is rescission, and here you might want to consider whether it is possible to put the parties back into their original positions, and whether there are any possible bars to rescission.

The next remedy to consider is damages. For each misrepresentation, you need to decide whether or not Easybuck Ltd can escape the clutches of section 2(1) since it had ‘reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true’ (using and perhaps distinguishing Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd [1978] QB 574). Easybuck Ltd could have checked the state of its own property and seen the footpath, but perhaps on questions of law it is reasonable to rely upon the advice of solicitors. Of course, Easybuck Ltd might be able to sue Martha for negligent advice. If section 2(1) applies, and this keeps Oxfield Town FC ‘locked in’ to the transaction, then Oxford Town FC could probably recover for all its losses, including those resulting from the crash in the property market, on the basis of Smith New Court Ltd v Scrimgeour Vickers (Asset Management) Ltd. If section 2(1) does not apply, then perhaps the court might exercise its discretion to award damages in lieu of an injunction under section 2(2), applying what was said by the Court of Appeal in William Sindall plc v Cambridgeshire County Council.

The other misrepresentation concerns using the property for gambling. Easybuck Ltd might have represented that this was possible through its conduct, in a similar manner to Spice Girls Ltd v ApriliaWorld Service BV. If so, then even if this was true when it was made (which is unclear), Easybuck Ltd would be under a duty to correct this when it realised that it was false (With v O’Flanagan). In a similar manner to that analysed above, Oxfield Town FC could try to rescind the contract, seek damages under section 2(1), and it would also be worth considering section 2(2).

You might then finally consider the effect of the entire agreement clause, and in particular whether it engages section 3 of the Misrepresentation Act 1967. It would be possible to do this at an earlier stage when considering whether all the elements of a misrepresentation claim have been satisfied. That would be fine; the key thing is to keep a logical, clear structure to your answer.