Chapter 7 Multiple Choice Questions

. Fraudulent misrepresentation is established when a person makes a false statement that he knows or believes is not true, or makes recklessly, not caring whether it is true or not.

True

False

. A party makes a negligent misstatement when he makes a false statement without ……… grounds for believing it to be true.

. Fiona and Paul negotiate over the sale of a computer. Paul tells Pauline, Fiona's friend, who is a computer expert and who Paul knows has been advising Fiona on the sale, that the computer has never crashed and never needed repair. Pauline tells Fiona, and Fiona relies on this information and buys the computer. It crashes on first use and Fiona calls out a technician who discovers that the hard drive has already been replaced once; the diagnostic history reveals that the computer has a fault that causes it to crash on a regular basis.

Fiona can rescind the contract and claim damages for fraudulent misrepresentation on the basis of Paul's statement.

Fiona was not entitled to rely on the information from her friend, and so she cannot rescind the contract or claim damages for misrepresentation.

Fiona cannot rescind the contract because the principle 'buyer beware' applies and Fiona should have sought a promise from Paul if she wanted the computer's performance guaranteed.

Paul is not a computer expert and so should not be held to his statement about the computer's performance.

. Which of the following types of contract provide an exception to the rule that silence or non-disclosure does not give rise to liability? Please select all that apply.

Holiday insurance contract.

Construction contract.

Buildings and contents insurance contract.

Carriage by air contract.

. Which of the following are essential requirements of an actionable misrepresentation? Please select all that apply.

A false statement.

Statement of existing or past fact.

A fraudulent statement.

Statement which induces the contract.

. Which of the following may give rise to a statement of fact? Please select all that apply.

'The roof of the barn does not leak.'

'I intend to fix the roof of the barn this summer.'

'The roof of the barn complies with all local planning laws.'

'This barn roof is probably the best roof around this area.'

. (False) statements of law will now be automatically treated as misrepresentations, following Pankhania v Hackney LBC (2002).

True

False

. Rescission is a self-help remedy in that a party can choose to rescind a contract without the need for a court order.

True

False

. Section … of the Misrepresentation Act 1967 confers a right to damages where the representee proves that he entered into the contract in reliance on the misrepresentation, and the misrepresentor fails to prove that he had reasonable grounds for believing that his statement was true.

. Damages for fraudulent misrepresentation may be claimed for losses caused by the fraudulent inducement, even though they are not reasonably foreseeable.

True

False

. An advertising slogan, not intended to be taken seriously, is known as a 'mere ………'.

. Which of the following are bars to rescission? Please select all that apply.

Restitution is impossible.

The representation is true.

Section 2(2) of the Misrepresentation Act 1967.

Affirmation of the contract.

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