Martes, Oktubre 15, 2013

A Series of Consumer Rights: Misrepresentation

Representations are statements made in order to induce party to enter into a contract. They differ from conditions or warranties in that they do not form a part of the contract themselves. However, they are extremely important, for without such representations the contract might not be entered into at all. They may distinguished from mere puffs, which are statements made in the course of the negotiations which are intended but by then the practice  to be taken seriously but are recognized by both parties as being mere hyperbole (exaggeration for the sake of effect). Thus to say that a horse is "the finest creature on four legs today " is a mere puff, and not intended to lead a legal action should the other party find a finer animal. A representation does lead to legal action. A misrepresentation is a false statement made in the course of negotiations leading to a contract which was intended to induce, and did induce , the other party to enter into that contract.

 As a general rule , there must be a positive statement; this is often expressed by saying that "silence is not a misrepresentation". This was shown in the case of Keates vs. Lord Cadogan (1921) . Here a landlord was held not liable when he failed to inform a tenant that the house being let was in dilapidated condition-even though he knew that it was required for immediate occupation. In some circumstances this rule operates unjustly , and the courts have long recognized exceptions to it.

 When the silence distorts or falsifies a positive representation. Thus if the vendor of land states that the farms are let , he must not  omit to state the further fact that the tenants have given notice to quit. This is illustrated by Dimmock vs. Hallet (1966).

A vendor of farms induced their sale by saying that they are let. Whilst this was true the statement was held to be misrepresentation because the tenants had given notice.

The principle also applies even if the original statement was full and correct., but subsequent events make it incorrect:

With vs. O' Flanagan (1955). In January 1955 a medical practice was represented to the plaintiffs by the doctor selling it as worth $2000 per annum. In May 1952, the plaintiff contracted to buy , but by then was producing less than $5 per week due to the illness of the defendant). The court of Appeal held that duty to disclose  had been broken -rescission of the contract was allowed, and to defendant had to repay.

The statement need not be expressed in words, but can be made by conduct. Thus it could be "a nod" or a wink" or a shake of the head or a smile.

The statement must be one one of fact and not of law , opinion, or intention. However, if a person expresses an opinion fraudulently, this is regarded as a statement of fact and therefore actionable. Here we can contrast  the cases of Biset vs. Wilkinson (1957) and Smith vs. Land and House Property Corporation (1959)

The appellant sought to recover the purchase money under the agreements for the sale of certain land but the respondents claimed to be entitled to rescind the contract on the ground of misrepresentation. It was shown that the appellant had stated that it was his belief that the land in question would carry 2000 sheep of property worked but in fact it had never been able to support that number. The contract would not be rescinded on the ground of misrepresentation as the statement as to carrying capacity of the land was merely an opinion which the appellants honestly entertained. (  Cracknell"s Law Students' Companion)

In similar fashion a fraudulent statement of intention can lead to misrepresentation:

Edginton vs. Fitzmaurice (1907), The directors of a company issued a prospectus inviting subscriptions for debentures and stating that their purpose in issuing debentures was to complete alterations to the company's premises, purchase horses and vans develop trade. The plaintiff advanced money on certain of these debentures in reliance upon the statements in the prospectus and in the erroneous belief that the real object of the loan was to enable the directors to pay off the pressing liabilities. The mis-statement of the objects for which the debentures were issued was a material mis-statement of fact which rendered the directors liable in deceit although the plaintiff was influenced by his own mistake as to effect of the transaction. (Cracknell's Law Students' Companion).

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