Lecture 5 - Vitating Factors 250911


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Unformatted text preview: or ii) The representation was false. Therefore, though you intend to tell lie at the time when it was made, it turns out that it is realized, this requirement will not be met. A statement that is true can be a misrepresentation where the person making the statement fails to disclose a material fact (i.e. a non­disclosure of fact) (Dimmock v Hallet). If a representation, which is true, becomes untrue before contracts are concluded and the representor fails to correct the statement this will amount to misrepresentation, (i.e. there is a duty to correct information no longer correct) (With v O'Flanagan). CM20278 Regulatory Framework 23 Business 2011 - 2012 for iii) The representation was related to a material fact. A material fact is one, which would influence a person's judgment whether to enter into a contract, or not (Green Park Properties Ltd v Dorku). CM20278 Regulatory Framework 24 Business 2011 - 2012 for iv) The representation induced the representee to enter into the contract There is no misrepresentation where the representee was aware of the truth or he was unaware of the misrepresentation or he ignored the misrepresentation or where he found out the truth from somewhere else. Merely having an opportunity to discover the truth is not fatal to the representee's claim if he does not make use of the opportunity. From the above, we can see that it is the subjective state of mind of the representor that is important. CM20278 Regulatory Framework 25 Business 2011 - 2012 for 2.1 Types of Misrepresentation: i) Fraudulent Misrepresentation ­ a false statement made by a person with a dishonest intent, i.e. if the statement is made knowingly, OR without belief in its truth OR recklessly not caring whether it is true or not (Smith New Court Securities Ltd v Scrimgeour Vickers Ltd). See also (Deny v Peek). Reckless means that the statement is made without regard that there is high risk of being false. CM20278 Regulatory Framework 26 Business 2011 - 2012 for Remedies ­ if the misrepresentation is not a term the contract, the representee may rescind the contract and claim damages in the tort of deceit. Where it is a term of the contract the representee may SUE for rescission or claim damages for breach of contract; or claim damages in the tort of deceit. Under tort of deceit, damages will be awarded no matter whether it is reasonable. CM20278 Regulatory Framework 27 Business 2011 - 2012 for Note: the innocent party cannot rescind where he affirms the contract e.g. uses the goods after knowing the defects, the parties cannot be put back to the original position e.g. one party already consumed the goods, where a long time has elapsed between the misrepresentation and the time he attempts to rescind the contract; or where the goods have been sold to a third party. Damages ­ can be claimed whether or not the contract has been rescinded or not. CM20278 Regulatory Framework 28 Business 2011 - 2012 for ii) Innocent Misrepresentation ­ when a person makes a false statement honestly believing it to be true and does so up to the time the cont...
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