Chapter 9 Multiple choice questions

. A is interested in buying B's house. During the pre-contractual negotiations, B refuses to answer any of A's questions. Subsequently, B is informed that the house is infested with death-watch beetle but fails to tell A of that fact. A thereupon buys the house but is told that it will need to be demolished within six months. Which one of the following statements most accurately summarises the position between the parties?

A is entitled to sue B for misrepresentation as a result of B's refusal to answer any questions.

A is entitled to sue B for misrepresentation because B's active concealment of the defect constitutes an untrue statement of fact.

A is entitled to sue B for misrepresentation because B has greater knowledge than A of the condition of his property.

A is entitled to sue B for misrepresentation because B failed to pass on the information that B had subsequently acquired.

. 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 her house put up for sale.

A misstatement by a landlord to a tenant that relevant legislation prevents the tenant from terminating the tenancy contract on less than three months' notice.

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

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

. A is hoping to sell his 15ft yacht to B. During the pre-contractual negotiations A 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 B, A has used paint and other means to conceal other repaired parts of the yacht. B 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?

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

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

A's statement is an actionable misrepresentation because his statement constitutes a half-truth.

A's statement is not an actionable misrepresentation because B's failure to have the yacht properly surveyed demonstrates that B was not induced to purchase the yacht by that statement.

. 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.

A false statement of a present intention cannot be a misstatement of fact.

A fraudulent misrepresentation induces a contract, even if it is not the only factor to have contributed to the decision to enter into the contract.

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

. Which one of the following statements is incorrect in relation to the advantages for a party in bringing a claim alleging negligent misrepresentation under s. 2(1) of the Misrepresentation Act 1967 rather than at common law?

Under s. 2(1), the misrepresentee does not have to prove the existence of a special relationship between him and the misrepresentor.

Under s. 2(1), the misrepresentor has the burden to disprove negligence and this burden is not to be discharged lightly.

Under s. 2(1), the misrepresentee is entitled to claim expectation damages.

Under s. 2(1), the misrepresentee 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.

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

A bought goods from B last week and used them in her manufacturing process. A has now discovered that B had fraudulently misrepresented the quality of the goods.

A bought a painting from B two years ago. It hangs in her private gallery. A recently discovered that B had fraudulently misrepresented the provenance of the painting at the time of the sale.

A bought goods from B last week and sold them on to X. A has now discovered that B had fraudulently misrepresented the quality of the goods.

A bought a painting from B two years ago. It hangs in her private gallery. Last year, A discovered that B 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. She has now changed her mind and wants to claim back the contract price from B.

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

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

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.

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.

A change of circumstances misrepresentation will entitle the misrepresentee to claim damages under the Misrepresentation Act 1967.

. A is considering buying B's house as an investment. By a fraudulent misrepresentation, B induces A to buy his house for £180,000 although its actual value is only £120,000. When A discovers the fraud two weeks later, the value of the house has been reduced to £80,000 due to serious damage caused by the collapse of a supporting wall. At this point, a buyer offers £80,000 for the house. A does not sell the house until three months later, when A only gets £75,000 for the house because of a general fall of the property market. A rescinds the contract with B for fraudulent misrepresentation and claims damages. Which one of the following statements most accurately calculates the damages to which A is entitled?

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

A is entitled to £100,000 in damages because this is the only loss caused by B's misrepresentation.

A is entitled to £105,000 damages because this would put A into the position before the misrepresentation was made.

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

. 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.

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

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

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

. Damages for fraudulent misrepresentation will not be affected by any contributory negligence on the part of the misrepresentee.

True

False

Chapter 9 Multiple choice questions

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