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Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
Overview
What is representation?
A statement which induces entry into a contract but which is not part, i.e. a term, of the contract.
What is misrepresentation?
An untrue statement of fact made by one party to the other which was intended and did induce the latter to enter into the contract.
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
However, some signs of greater judicial readiness to recognize such a doctrine have emerged in recent years (see e.g. Philips Electronique Grand Publique SA v. British Sky Broadcasting Ltd. [1995] EMLR 472), particularly under the influence of EU legislation.
For further discussion, see e.g. R. Brownsword, Contract Law: Themes for the Twenty-First Century (OUP, 2006, 2nd ed.), chapter 6, E. McKendrick, Contract Law (OUP, 2008, 3rd ed.), chapter 13.
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
C. Inducement
To be actionable, the misrepresentation must influence a party in deciding whether or not to enter into the contract. The misrepresentation need not be sole inducement, just one of the inducements. See Edgington v. Fitzmaurice (1885) (above); if misrepresentation is fraudulent, rebuttable presumption that it induced contract; Dadourian Group International Inc. V. Simms (Damages) (2009). Thus misrepresentation is not actionable if representee:
Never knew of its existence Horsfall v. Thomas (1862) Did not allow it to affect their judgement Smith v. Chadwick (1884); Atwood v. Small (1838).
Types of misrepresentation
Need to differentiate between different types of misrepresentation in order to determine the available remedies.
A. Fraudulent misrepresentation (deceit) = false statement made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless about whether it be true or false Derry v. Peek (1889) B. Negligent misrepresentation (i.e. misrepresentation is neither fraudulent, or not proved to be made, fraudulently but made carelessly) C. Innocent misrepresentation (i.e. misrepresentation is neither fraudulent nor negligent; representor honestly believes in truth of statement and had reasonable grounds for their belief).
Cf. Negligent misstatement at common law arises in context of special relationship between persons; in such context, the maker of a statement is under a duty of care at common law to do all that is reasonable to ensure that the statement is correct; Hedley Byrne v. Heller & Pnrs. (1964). This tort provides remedy where misstatement made by non-party to contract.
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
Burden of proof (or, more accurately, disproof) is quite onerous see e.g. Howard Marine & Dredging Co. Ltd. V. A. Ogden & Sons Ltd. (1978).
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
Measure of damages here is at courts discretion. Damages in lieu of rescission usually assumed as not available if right to rescind has already been lost see e.g. Government of Zanzibar v. British Aerospace (Lancaster House) Ltd. (2000); cf. Thomas Witter v. TBP Industries (1996) per Jacobs J.
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
Emily M. Weitzenboeck, 2012 Norwegian Research Center for Computers & Law
However, some types of clauses (e.g. no-reliance clauses) may not be caught by MA s. 3 see e.g. Watford Electronics Ltd. v. Sanderson CFL Ltd. (2001). Emily M. Weitzenboeck, 2012
Norwegian Research Center for Computers & Law