Textbook Notes (368,440)
Canada (161,878)
LAW 122 (625)
Chapter 9

LAW122- Chapter 9- Representations and Terms.docx

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Law and Business
LAW 122
Theresa Miedema

LAW122- Chapter 9- Representations and Terms Pre-contractual and contractual statements (Page 202)  Contractual term- provision in an agreement that creates a legally enforceable obligation o Promissory statement—agrees to do something in the future  Pre-contractual representation- statement one party makes by words or conduct with the intention of inducing another party to enter into a contract o Does not impose a contractual obligation  Statements made during negotiations o Puffs  Mere sales words – no consequences o Representations  Induce contract – possible consequences o Terms  Contractual promises – certain consequences  Test: parties’ objective intentions  Representations o Statements made to induce contract o Do not become contractual promises o May be actionable if they falsely induce contract  Actionable if mis-representation Misrepresentations (Page 202)  If a non-contractual statement is false—we can say one of the parties made a misrepresentation  Contractual statement not fulfilled—one of the parties is in breach of contract  Pre-contractual representation—form if legal liability such as actionable misrepresentation The nature of misrepresentation  Misrepresentation- false statement of fact that causes the recipient to enter into a contract o May be actionable if it induced a contract o Whether statement made past or present—main feature—false when made o Contractual term—provides promise of future performance  Misstatement of fact o Not every misstatement is a misrepresentation o People often make non factual statements during negations o Opinion- statement of a belief or judgment  Personal opinion—usually not a misrepresentation even if false  Cannot have an opinion that leads someone to think it is true  Unless opinion contains facts  Future conduct—not a statement of fact as it is only an indication of a persons future intentions  Misrepresented—made fraudulently or if the future conduct is described in terms of a present intention  Unless prediction contains facts  Describe the law—we all presume to know the law  Misrepresented if you inaccurately describe the consequence of a law  Unless statement contains statement of fact 1 LAW122- Chapter 9- Representations and Terms  Silence of misrepresentation o Occasions when the failure to speak will amount to misrepresentation  Silence would distort a previous assertion—falsifying a statement that was previously true  Statement is a half-truth—party cannot give partial account if the unspoken words would substantially alter the meaning of the actual statement  Contract requires a duty of utmost good faith—require a party to make full disclosure of the material facts  Special relationship exists between the parties—relationship between 2 parties is 1 of truth  One parties has some other form of special influence over the other, a duty of disclosure may arise  Statutory provision requires disclosure—disclosure of material facts in a contractual setting  Insurance legislation in many provinces contains statutory conditions— deemed to be part of every insurance contact o Must be printed on every policy  Financial officers have a duty to disclose material facts  Many provinces have legislation regulating the foundation of domestic contracts  Facts are actively concealed—party to a contract actively conceals the truth it may be treated as a misrepresentation  Inducement o Statement must have mislead its recipient into creating the contract  Sufficient that misrepresentation was one inducement  Inducement presumed if inducement intended  Recipient not obliged to investigate representations o A party can claim relief for misrepresentation even if other factors were also influential The legal consequences of misrepresentation  Actionable misrepresentation—deceived party may receive o Remedy of rescission o Rights to damages  Potential remedies o Rescission—termination of contract ab initio o Restitution—restoring parties to original position o Damages—monetarily reparation of losses  Recession- cancellation of a contract, by the parties or the court, with the aim of restoring the parties, to the greatest extent possible, to their pre- contractual state o Discretionary equitable remedy o Terminates contract ab initio  Contract treated as if it never existed  Parties restored to pre-contractual status o Often accompanied by order for restitution o Available for all types of misrepresentation Innocent, negligent, fraudulent o Only contractual consequence of misrepresentation o Difficult in advance whether a court will grant rescission—discretionary remedy— one that is not available as of right o Awarded basis of the courts judgment—what is best according to the rules of reason and justice o Restitution- involves a giving back and taking back on both sides  Restoration of money, land, or goods  Available for all types of misrepresentation o Victim may be barred from rescission in certain circumstances 1. If the mislead party affirmed the contract—rescission is not available a. Affirmation- occurs when the misled party declares an intention to carry out the contract or otherwise acts as through it is bound by it 2 LAW122- Chapter 9- Representations and Terms 2. Rescission may be barred if restitution is impossible a. Parties cannot be substantially returned to their pre-contractual positions, a court is reluctant to grant rescission b. More that has been done under the contract—less likely courts grant rescission 3. Rescission may be unavailable if it would affect a third party a. Rights of third party that make restitution impossible  Damages- intended to provide monetary compensation for the losses that a person suffered as a result of relying upon a misrepresentation o May be awarded for a breach of contract o If awarded for a misrepresentation—plaintiff claim arise not in contract but tort o Claim lies for fraud or negligence only  Fraud = tort of deceit  Negligence = tort of hedley byrne  Innocent = damages not available Types of misrepresentations  Innocent misrepresentation- statement a person makes carefully and without knowledge of the fact tat it is false o Remedy—rescission—substantial difference between what the deceived party had
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