Misrepresentation

Transcript Area

Chapter sixteen on misrepresentation is like chapter fifteen, quite a long chapter. So again, I thought it might be helpful just to provide a sort of diagram to map out the structure of the analysis. And so first, what we're looking for is a representation. So, the claims of misrepresentation, you have to show that there's been a misrepresentation. Which is a statement of fact or law which is false. And that misrepresentation, that representation has to have been relied upon. And if the defendant has relied upon a claim as misrepresentation that will give you an actionable claim, prima facie,there is a misrepresentation claim here. And then you think about what the consequence of that might be. Well, it might lead to one party being able to rescind the contract. So being able to effectively wipe out the contract and put the parties back to their original positions. And, rescission is available for any misrepresentation claim.Prima facierescission is available whenever misrepresentation has been established. But you have to also consider that there are bars to rescission. In particular, that you might not be able to put the parties back into their original positions. You might not be able to achieve what's known as restitution in integrum. Well, one party might have affirmed the contract, so chosen not to rescind the contract, but to keep it alive, keep it on foot, and then they can't go back on that decision. There might be third parties who have acquired rights in the subject matter of the contract, and those third parties should be protected. So, it wouldn't be equitable to grant rescission. And arguably perhaps lapse of time might bar a rescission. For a long time, that's been thought to be orthodoxy, but the court of appeal has recently doubted that. And then you come on to damages as a potential remedy. So, at common law, you would only get damages for misrepresentation if you could establish the tort of deceit. So, if you could establish a forge of misrepresentation, or perhaps in the tort of negligence, post Hedley, Byrne, and Heller. Where you wouldn't get damages at common law for entirely innocent misrepresentation. But now the major aspect, when you're thinking about damages, is under the 1967Act, and in particular under Section 2 (1), which is very generous to the claimants because the measure of damages awarded is the fraudulent measure of damages, the tort of deceit measure of damages. Even though the misrepresentation might not  have been fraudulent at all. And to escape the scope of Section 2 (1) the defendant has to show they had reasonable grounds to believe, and did believe up to the time the representation was made, that the facts represented were true. That was the time the contract was made, sorry, that the facts represented were true. So, Section 2 (1) is a tough provision, which is very generous in awarding damages to a claimant. But damages might also be available under Section 2 (2). In which case the damages are available in lieu of rescission. But their damages will be much less extensive. And you also have to consider Section two, subsection four of the 1967Act, which takes you to the consumer protection from unfair trading regulations, 2008. So, the scope of this is clearly narrower, you have to fall within the scope of the consumer protection regulations, but that also offers different remedies. Which may mean that you couldn't get damages under Section 2 (1), for example. So, damages aren't always going to be available, but they might be available. But then, I mean, it's not exactly when you want to consider this, but I think the final thing you might want to consider is whether or not there's a term excluding liability. So, there might be a term that excludes liability for misrepresentation. And that means you've got to consider the scope and the substance of Section 3 of the 1967Act, if you're looking at contracts between commercial parties, and if you're looking at contracts in the consumer context of the 2015 Act. So again, there's lots of detail within the law of misrepresentation, which is why it's quite a long chapter in the book. But I think these are the main things to think about, and the principle flow of your analysis when looking at misrepresentation claims.