business_law--Chapter_9_2003.doc

Chapter 9: representations and terms Contractual term: a statement that includes the legally enforceable obligation—a promissory statement. Pre-contractual representation is a statement one party makes by words or conduct with the intention of inducing another party to enter into a contract. ---it’s not form part the contract, it’s not include the contractual obligations. Pre-contractual representation may result in a form of legal liability, such as actionable misrepresentation. The nature of misrepresentation 1. Misrepresentation: 不实的陈述 歪曲 , , an incorrect statement of an existing fact.  If a non-contractual statement is false, that means one of the parties has made a misrepresentation  When a contractual statement is not fulfilled, that means one of the parties is in breach of contract  A misrepresentation occurs only if the speaker claimed to state a fact. But a person’s opinion is not a misrepresentation even it is false. An opinion is the statement of a belief or judgment. But in another situation, if your opinion within your area of expertise leads another person to think that it must be true, a court may find that your statement includes not only an opinion but also an implied statement of fact that can be treated as a misrepresentation. A statement of future conduct is a second type of non-factual statement. Such statements are not usually treated as misrepresentation. But if a statement of future conduct is made fraudulently or if it is described in terms of a present intention, it may be classified as a fraudulent misrepresenta欺骗性的不实陈述 ). Inaccurately describe a particular law is not misrepresentation (matter of law). But the court may find a misrepresentation of you inaccurately describe the consequences of a law, because those consequences are treated as a matter of fact rather than law (matter of fact). In generally, to prove misrepresentation in those circumstances a party must prove that the speaker implicitly claimed to state some fact. 2. Silence as misrepresentation: four occasions when the failure to speak will amount to misrepresentation. a) When silence would distort a previous assertion: when a change in circumstances affects the accuracy of an earlier representation, the party that made that statement has a duty to disclose the change to the other party. Failure to do so amounts to a misrepresentation. But it will also happen on if one party tells half truth and remains silence on the other half. b) When the contract requires a duty of utmost 最大的 ) good faith: Some contracts need a party to make full disclosure of the material fact; these are known as contracts of utmost good faith. The party needs to bring up all the relevant facts or information in order to finish the contract with the other party. A breach of that obligation is usually treated as a misrepresentation. The best example is the insurance contract. The only person, who has all the information is customer, therefore imposes an obligation of good faith that requires the customer to disclose all of the relevant facts. If the customer breaches the obligation is usually treated as a misrepresentation that allows the insurance company to avoid the contract. c) When a special relationship exists between the parties: when one of the parties has special relation with the other party, a duty of disclosure may arise. For example, if you are selling something to your friend, you cannot remain silence. Because your friend trust you on the basis of your special relationship even without saying anything about the selling, you still have to fully disclose all material facts. d) When a statutory 法定的 ) provision条文 ) requires disclosure:  Insurance legislation in many provinces contains statutory conditions that are deemed to be part of every insurance contract and must be printed on every policy.  Some financial officers have a duty to disclose material facts.  Many provinces have legislation regulating the formation of domestic contracts. 3. Inducement (诱因 ): for a statement to be actionable as a misrepresentation, the deceived party must prove that the false statement induced the contract. In other words, the statement must have misled its recipient into creating the contract. The legal consequences of misrepresentation: there are two possible consequences of an actionable misrepresenta主动误诉 ( ) 1) The remedy of rescissio解约( ): rescission is the cancellation of a contract by the court with the aim of restoring the parties, to the greatest extent possible, to their re-contractual state.  The remedy of rescission is often accompanied by an order for restitution ( 退还 ) which involves a giving back and taking back on both sides. Restitution is therefore the appropriate remedy. The court will try to restore the pre-contractual situation by allowing you to recover the money at the same time that it allows the supplier to recover the paint.  The victim of a misrepresentation may be bar撤销d ) from rescission in certain circumstances. i. If the misled party affirmed the contract, then rescission is not available. Affirmation occurs when the isled party declares an intention to carry out the contract or otherwise acts as though it is bound by it. If you did not declare the mistake on time, after the due date, you will be treated as you affirm the contract. ii. Rescission maybe barred if restitution is impossible.