MISREPRESENTATION

Opinions pg. 351

The court will look at the opinion and observe various factors i.e. who gave the
opinion, his/her area of expertise, what and how he said/implied etc. A false or
negligent or innocently incorrect opinion might amount to a misrepresentation i.e.
Esso Petroleum Co. Ltd v. Mardon.
http://en.wikipedia.org/wiki/Esso_Petroleum_Co_Ltd_v_Mardon
Silence pg. 352
The general rule is that you cant have a misrepresentation with silence. However, in
unusual cases, the mistake is fundamental in the contract and silence can be a
misrepresentation i.e. Spice Girls Ltd v. Aprilia World Service;
Concerning the sale of management rights over the Spice Girls. The party that was
buying the SG was unaware that one of the SG (Geri Halliwel) was going to leave the
group but the party selling the SG said nothing about her intention to leave the
group. After the contract was signed, sealed and delivered, Geri Halliwel left the
group. The original manager of the SG continued to say nothing until the contract was
confirmed. In this case, the court held that this was a matter of real interest and was
fundamental to the contract; the original manager had the duty to correct the statement
of purchaser. Hence, there was a misrepresentation.
FRAUDULENT, NEGLIGENT, INNOCENT MISREPRESENTATION
Fraudulent misrepresentations result in both damages and rescission. The motive of
the representor is irrelevant. Even if he had no prior evil intentions or if he assumed
the statement to be irrelevant, so long as a false statement is made knowingly with the
intention that the representee should act upon it, it would be a fraudulent
misrepresentation.
Negligent Misrepresentations are made carelessly or without reasonable grounds for
believing it to be true. Where the statement was relied upon and the other party
suffered loss, negligence could result in damages being paid. A non-fraudulent
misrepresentation carries the same liability as a fraudulent misrepresentation unless
the representor is able to prove that he had reasonable grounds to believe that his
statement was true.
Innocent Misrepresentation is a false statement made honestly and with care. The
common law provided no remedies for this but in equity (a branch of law that
developed alongside common law in order to remedy some of its defects in fairness
and justice, formerly administered in special courts), the representee is entitled to
rescission and, possibly, an indemnity.

RESCISSION
An operative misrepresentation entitles the representee to rescind/terminate the
contract ab initio (from the beginning; as if the contract never existed).
With regard to negligent and innocent misrepresentations, the court will look at the
position of the misrepresentor (if he has sufficient means to pay damages etc), time
frame etc before making a decision.
When the law disallows rescission;
Restitution impossible
The representee terminating the contract should return what he received from the
representor under the contract. If (at least substantial) restoration or restitution is not
possible, rescission will not be permitted. However, equity allows a representee to
rescind if he returns the subject in its altered state and makes an allowance for any
diminution in its value/ for any benefit he derived from using the subject.
Affirmation
Upon discovery of the misrepresentation, the representee may choose to either affirm
or rescind the contract. Upon affirmation (which can be expressed or implied by
conduct), the right to rescission is lost. The representee must have knowledge not only
of the misrepresentation but also that the law gives him a right to rescind.
Lapse of time
For innocent and negligent misrepresentations, the lapse of reasonable time may be a
bar to rescission even if the representee has not discovered the truth. This is not the
case for fraudulent misrepresentation.

MISREPRESENTATION ACT