Misrepresentation in uk law

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Misrepresentation in uk law

Misrepresentation - Wikipedia

Misrepresentation in English law To amount to a misrepresentation, the statement must be untrue or seriously misleading. However, an action can be brought if the intention never actually existed, as in Edgington v Fitzmaurice. This means that only those who were an intended recipient of the representation may sue, as in Peek v Gurney [52] It is not necessary for the representation to have been be received directly; it is sufficient that the representation was made to another party with the intention that it would become known to a subsequent party and ultimately acted upon by them.

Inducement[ edit ] The misled party must show that he relied on the misstatement and was induced into the contract by it. In Attwood v Small [54] The seller, Small, made false claims about the capabilities of his mines and steelworks.

The buyer, Attwood, said he would verify the claims before he bought, and he employed agents who declared that Small's claims were true. The House of Lords held that Attwood could not rescind the contract, as he did not rely on Small but instead relied on his agents.

Edgington v Fitzmaurice [55] confirmed further that a misrepresentation need not be the sole cause of entering a contract, for a remedy to be available, so long as it is an influence. Redgrave said Hurd could inspect the accounts to check the claim, but Hurd did not do so.

This suggests that, having relied on a misrepresentation, the misled party has the onus to discover the truth "within a reasonable time". In Doyle v Olby [], [63] a party misled by a fraudulent misrepresentation was deemed NOT to have affirmed even after more than a year.

Although short and apparently succinct, the Act is widely regarded as a confusing and poorly drafted statute which has caused a number of difficulties, especially in relation to the basis of the award of damages.

Prior to the Misrepresentation Actthe common law deemed that there were two categories of misrepresentation: The effect of the act is primarily to create a new category by dividing innocent misrepresentation into two separate categories: Once misrepresentation has been proven, it is presumed to be "negligent misrepresentation", the default category.

It then falls to the claimant to prove that the defendant's culpability was more serious and that the misrepresentation was fraudulent. Conversely, the defendant may try to show that his misrepresentation was innocent. Negligent misrepresentation is simply the default category.

The misled party may rescind and claim damages under s. The court may "declare the contract subsisting" and award damages in lieu of rescission, but s.

Fraudulent misrepresentation is defined is the 3-part test in Derry v Peekwhere the defendant is fraudulent if he: The misled party may rescind and claim damages for all directly consequential losses.

Misrepresentation in uk law

Doyle v Olby [] Innocent misrepresentation is "belief on reasonable grounds up till the time of the contract that the facts represented are true". The misled party may rescind but has no entitlement to damages under s. However, the court may "declare the contract subsisting" and award damages in lieu of rescission.

Remedies[ edit ] The misled party may normally rescind the contract, and sometimes may be awarded damages as well or instead of rescission. Rescission contract law A contract vitiated by misrepresentation is voidable and not void ab initio.

The misled party may either i rescind, or ii affirm and continue to be bound.

Misrepresentation in uk law

If the claimant chooses to rescind, the contract will still be deemed to have been valid up to the time it was avoided, so any transactions with a third party remains valid, and the third party will retain good title. Rescission is an equitable remedy which is not always available.

The time limit for taking such steps varies depending on the type of misrepresentation. In cases of fraudulent misrepresentation, the time limit runs until when the misrepresentation ought to have been discovered, whereas in innocent misrepresentation, the right to rescission may lapse even before the represent can reasonably be expected to know about it.

Say, if A misleads B and contracts to sell a house to him, and B later sells to C, the courts are unlikely to permit rescission as that would unfair impinge upon C.

Under Misrepresentations Act s. Damages "Damages" are monetary compensation for loss. In contract [81] and tort, [82] damages will be awarded if the breach of contract or breach of duty causes foreseeable loss.

By contrast, a fraudulent misrepresentor is liable in the common law tort of deceit for all direct consequences, whether or not the losses were foreseeable. For innocent misrepresentation, the claimant may get only damages in lieu of rescission under s. InRoyscot Trust Ltd v Rogerson [84] changed all that.

The court gave a literal interpretation of s. The phrase shall be so liable was read literally to mean "liable as in fraudulent misrepresentation". So, under the Misrepresentation Actdamages for negligent misrepresentation are calculated as if the defendant had been fraudulent, even if he has been merely careless.Remedies For Misrepresentation Notes Law Notes > Contract Law Notes This is an extract of our Remedies For Misrepresentation document, which we sell as part of our Contract Law Notes collection written by the top tier of Oxford students.

The law of misrepresentation is not straightforward. It comprises elements of common law, equity and statute (the Misrepresentation Act , MA) and it includes characteristics of both contract law and tort.

The law of misrepresentation is not straightforward. It comprises elements of common law, equity and statute (the Misrepresentation Act , MA) and it includes characteristics of both contract law and tort.

Civil/commercial fraud, fraudulent misrepresentation and the tort of deceit What is fraudulent misrepresentation? Civil or commercial fraud commonly means a fraudulent misrepresentation, which can lead to a claim under the Misrepresentation Act or the common law tort of deceit.

If a party to a contract makes a misrepresentation of fact without suffering any repercussions for that misrepresentation, then few people would feel comfortable binding themselves to that contract.

Misrepresentation is an important concept in the contract laws of England, Wales, and certain other Commonwealth countries. For innocent misrepresentation, the court has a discretion to award damages in lieu of rescission; the court cannot award both (see section 2(2) of the Misrepresentation Act ).

For more information, see Practice note, Misrepresentation.

Misrepresentation | Practical Law