3 generally there is no duty to disclose

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3. Generally, there is no duty to disclose. Misrepresentations only govern positive actions. - caveat emptor ! The onus was on the buyer to look into everything, subject to certain exceptions. 4. Contracts uberrimae fides - requirement of full, complete & honest disclosure of all facts a. Insurance contracts: insured must disclose everything about the risk being undertaken. b. Existing fiduciary relationship: lawyer/client, doctor/patient, parent/child. Power inequality. Requires full disclosure by the stronger party. c. Vendors of real estate must disclose latent defects in the property (those not easily discoverable) which are dangerous or render the property uninhabitable. - special limits on caveat emptor doctrine - still expanding; not sure how far it extends 5. The misrepresentation must induce (be one of the reasons for) the contract. ex. if misrepresentation is made but not heard by buyer ex. if misrepresentation does not convince buyer to buy (checks it out himself) ex. if buyer already knows misrepresentation is false. 6. Misrepresentation must be fundamental. - brought-in by Ennis v. Klassen ; did not appear in the textbooks before that. - has not yet been adopted by the SCC - supported by the fact that rescission is a drastic remedy; makes sense that it should only take place in situations where misrepresentation is fundamental. Ennis v. Klassen (1990) - judge basically assumes statement that it is a 733i is a misrepresentation (not a promise or anything else) - makes contract voidable; open to rescission - plaintiff phones defendant once he discovers it is not a 733i ~ act of rescission - however, it was imperfect: he should have given back the car to show rescission (return to status quo ante ) - defendant now argues that plaintiff was barred from rescission ~ contract was already executed/performed - in contracts for the sale of land, execution/performance is a bar to rescission (because agreement & performance are so far apart), subject to two exceptions: 1. Fraudulent misrepresentation (“fraud unravels all”) 2. Error in substantialibus Page 63 of 99
- some courts simply adopted this framework for the sale of chattels. This is unjust/unfair. No chance (as with land) to check it over. - here, the court does not apply the rules/exceptions that apply to land. Gives instead a reasonable period of time to accept/reject the chattel. Execution is no longer a bar to rescission in the sale of chattels. - one last issue: Mr. Justice Huband stated that the misrepresentation had to be fundamental, not material. - confounds the above land-related framework ( basically erases the 2 nd exception ~ if misrepresentation must be fundamental, it is in substantialibus ) Other Bars to Rescission 1. Time: Leaf v. International Galleries (1950) - went after rescission for a painting which they thought was done by a famous painter - should instead have called it a promise and got damages for breach 2. Restitutio in integro : rescission requires a taking-back of goods on both sides ( restitution) ~ however, where fraud is involved, rescission will likely be allowed, even if restitution is not possible.

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