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LAW 122 (618)
Chapter 9

Chapter 9 - Representations and Terms (LAW 122)

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Law and Business
LAW 122
Andre Serero

Pre-Contractual and Contractual Statements -contractual term – agreement that creates a legally enforceable obligation  future -person who makes it, 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  past/present -does not impose a contractual obligation Misrepresentation -pre-contractual representation is false one of the parties has made a misrepresentation -contractual term isn’t fulfilled one of the parties is in breach of contract The Nature of Misrepresentation - misrepresentation  incorrect statement of an existing fast Misstatement of Fact - misrepresentation occurs only is the speaker claimant to state a fact -people often make non-factual statements during negotiations -opinion statement of a belief or judgment - personal opinion isn’t usually a misrepresentation, even is its false EXCEPT: - if you state an opinion in a way that leads me to think that it must be true, court may find that your statement includes not only an opinion but also an implied statement of fact that can be treated as misrepresentation  eg: pg 203 -future conduct  indication of a persons future intentions/ not treated as misrepresentations EXCEPT if its described in terms of a present intention  eg: pg 203 -misrepresentation doesn’t arise if you inaccurately describe a particular law, we are presumed to know the law EXCEPT if you wrongly describe the consequences of a law, because those consequences are treated as a matter of fact rather than law  eg: pg 204 Silence as Misrepresentation -parties aren’t required to disclose material facts during pre-contractual negotiations - six occasions when failure to speak will amount to misrepresentation 1. when silence would distort a previous assertion 2.when a statement is a half-truth 3.when the contract requires a duty of utmost good faith 4. when a special relationship exists between the parties 5.when a statutory provision requires disclosure 6.when facts are actively concealed Inducement -for the statement to be a misrepresentation, deceived party must prove that the false statement induced the contract - aka the statement must have misled its recipient into creating the contract -WRITE MORE The Legal Consequences of Misrepresentation -two possible consequences of an actionable misrepresentation/deceived party may receive; -remedy of rescission -right to damages Rescission – PG.207 -the cancellation of a contract with the aim of restoring the parties to the greatest extent possible, to their pre-contractual state  Rescission -rescission is often accompanied by an order for restitution -restitution involved a giving back and taking back on both sides  ex.PG.208 -victim of misrepresentation may be barred from rescission in certain circumstances 1.if the misled party affirmed the contract, then rescission is not available -affirmationwhen the misled party declares an intention to carry out the contract or otherwise acts as though it is bound by it  ex. PG.209 2.rescission may be barred if restitution is impossible  ex. PG.209 3.rescission may be unavailable if it would affect a third party  ex. PG.209 Damages -court may respond to a misrepresentation by awarding damages against the party that made the statement -damagesare intended to provide monetary compensation for the losses that a person suffered as a result of relying upon a misrepresentation Types of Misrepresentation -3 types of misrepresentations: innocent, fraudulent & negligent Innocent Misrepresentation -statement a person makes carefully and without knowledge of the fact that it is false -if speaker is innocent, the deceived party cant recover damages -only legal remedy for innocent misrepresentation is rescission  MORE TO IT PG.209 Negligent Misrepresentation -is a false, inducing statement made in an unreasonable or careless manner -party making the statement doesn’t need
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