LAWS104 Lecture Notes - Lecture 7: Tobacco Institute, Vehicle Insurance, Specific Performance
28 May 2018
School
Course
Professor
Week Seven - Misrepresentation;
Misleading or Deceptive Conduct;
Mistake
VITIATING FACTORS
-Lack of genuine consent.
-Contract is either voidable (most cases) or void.
Common Law and Equity
-Misrepresentation
-Mistake
-Duress
-Undue influence
-Unconscionable Conduct
Statute
-Misleading of Deceptive conduct, unconscionable transactions and unfair contract terms
(Australian Consumer Law).
-Unjust contracts (Contracts Review Act (NSW)).
MISREPRESENTATION
-Representations may be false fraudulently, negligently or innocently.
-Usually rescission and/or damages available.
Alternatives to rescission:
• Action in deceit
• Action in negligence
• Action for misleading or deceptive conduct (under statute)
-If terms are breached - breach of contract and the right to terminate.
-Where the statement is a representation, and it is false, and amounts to a misrepresentation,
the contract will usually be rescinded (it makes it voidable), damages usually available.
-Misrepresentation and torts. Fraudulent.
-Negligent misrepresentation - info given carelessly -> rescission is available usually, and
damages available.
-Innocent misrepresentation - the car scenario -> rescission available.
ACTIONABLE MISREPRESENTATION AT COMMON LAW
-Statement of fact:
• Past or present material fact.
• There are puffs, statements that no reasonable person would take seriously.
• Misstatement of law cannot amount to a misrepresentation. Rationale is because there is
a general presumption that the law is known.
• Promises or predictions about the future -> the reasonable person would not fall for it.
• Edgington v Fitzmaurice (1885)
-Defendants sough funding for a property and Plaintiff advances Defendants 1500
pounds. Defendants made several misstatements to Plaintiff. Plaintiff sued for deceit.
• The defendants were experiencing financial difficulty and the money raised was going
to pay the company debts.
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• It was a statement of future intent, but it was an actionable misrepresentation as the
defendant had no intention of using the money to expand the company like originally
said.
• Smith v Land & House Property Corp (1884)
-Land and House contracted with Smith to buy the title of the Marine Hotel. Smith
advertised that it was let to Fleck, "a most desirable tenant". Land and House agreed to
buy the hotel, Fleck who was overdue with rent, went bankrupt before the title was
transferred. Land and House refused to complete the transaction, defending Smith's
specific performance on the basis that the description of Fleck's virtues was grounds for
misrepresentation.
• Appeal dismissed, Smith made a false representation of him being a 'desirable
statement' when Fleck was actually behind on rent.
-Statement must be false:
• Dimmock v Hallett (1866)
-Someone was selling apartments, told someone interested that all the units were leased,
but the vendor did not disclose that some tenants were already going to leave. Half-
truth, court determined it amounted to a misrepresentation.
• Onus on representor to ensure that the statements they tell remain true.
-Statement must induce:
• Holmes v Jones (1907).
-Knew that a representation was wrong but bought anyway. Is the representee able to
argue that it was induced.
• Redgrave v Hurd (1881).
-Solicitor selling his practice and the house where his practice was running, there was a
conclusion that there was less active work than records stated. The purchaser bought the
practice and then found out that it had a lot less work then stated, and refused to
continue with payments, it amounted to a misrepresentation, so the contract was
rescinded.
• Dadourian Group International v Simms [2009].
-Statement of opinions:
• Drawn from facts. They are not statements of present facts, they cannot amount to
misrepresentation.
-There is no obligation to disclose facts.
-There is an obligation to disclose fully, if there is partial disclosure.
-Contracts of utmost good faith - insurance, both parties are under and obligation to disclose
certain material facts -> car insurance, you disclose certain facts that are relevant.
-Actions in tort are a possibility (chap 37 textbook). Main action in tort is the tort of deceit.
-Law of tort:
• Derry v Peak (1889)
-Plaintiff brought suit after it bought shares in Defendant's company, under the belief
that Defendant would have the right to use steam power, as opposed to other
companies, which would not. The company did not possess this right as it had to be
approved.
• Rejected - the company (Peak) were not shown to be dishonest in their belief, it had to
be false or a statement made recklessly (case happened when these rules were forming).
• Esso Petroleum Co Ltd v Mardon [1976]
-Statute:
• Misleading or deceptive conduct
• Australian Consumer Law s 18.
find more resources at oneclass.com
find more resources at oneclass.com
