Contract - Misrepresentation: Cases And Legislation

20 Questions  I  By Chriscullen on May 3, 2011
A quiz to test and assist revision of the cases and legislation relevant to the topic of Misrepresentation. This quiz consists of�20 questions covering�17 cases and one act of parliament. Excludes Bars to Rescission. Will include some questions on�this or may make into a separate mini-quiz.

  

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1.  We know it is very difficult to prove fraudulent misrepresentation, as you need to get into the mind of the representor and know without doubt that they knew their statement was a lie... In this case a company sold shares representing that the company was a rubber merchant. The company was not a rubber merchant and the shares performed poorly. This however was still not considered to be fraudulent. This case establised the intention test which shows how difficult it is to prove that the statement was without doubt a lie when it was made.
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2.  The statement can be relied upon if there is a degree of knowledge involved in the making of the statement, in other words, if the person making the statement had specialist knowledge despite it being non-factual. Which case established this?
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3.  If you make a statement which is simply not true or not accurate, then the other person relies on this, a misrepresentation has been made. A purchaser requested hops from a hop farmer, but made it crystal clear that he wouldn't buy if sulphur has been used. The clarity in his language made this a "term" of the contract, as he would not have contracted had he known sulphur was used. Which case?
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4.  Look at my horse! But there's really no need to investigate - he's perfect! If you have been discouraged from further investigation then the statement becomes a term, and if it is false then a misrepresentation has occurred.
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5.  As far as I'm aware, the log book states that this motorcycle is a 1940 model, and has had 5 previous owners. Are you liable if you pass on false statements if years and years ago you were lead to believe these statements are true? You can't be seen to be liable for innocently passing on the false statement of a predecessor, but what case established this?
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6.  Misrepresentation by conduct is where the conduct of the representor is deemed to be misleading. In the Spice Girls case, Spice Girls v Aprilla one of the band members had declared an intention to leave the band before carrying out the photoshoot as promised by Aprilla. This was of course detrimental to Aprilla because when Geri Halliwell left the band, the pictures still included her and it lead to the publicity being unusable. But does this amount to misrepresentation if the contract was made before the conduct (the expression of an intention to leave). Was a misrepresentation established in this case?
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7.  A "puff" cannot be relied upon as a "statement of fact." In this case, the defendant argued that advertising that 2 lots of land were let (with the prices) was merely an advertising puff to initiate negotiation for his third patch of land. The 2 lots of land were infact let, but the representor had not declared that they had expressed an intention to leave. This was considered to be a "half truth" not a "puff" as the representee relied on this statement in deciding to purchase. In which case did this happen?
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8.  I think this plot of land will hold... Ah I don't really know - around 2,000 sheep I'd imagine...? Opinions are not considered to be factual - therefore cannot be relied upon in a misrepresentation claim. Who claimed that 2,000 sheep would fit in that plot of land?
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9.  As always with law, there is an exclusion and a case to support the exclusion which we have to cram into our brains along with the other billion cases... The exclusion to the rule on opinions is in relation to the location of a petrol station (big enough clue?), and because of the specialist knowledge of the company, their opinion on how much custom the representee would receive could be relied on as a term...
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10.  What will you do with our money? Well Dragons - as my prospectus says, I'll complete building alterations, buy some horses, and a new downstairs toilet for the verbal diarrhea I have been suffering... In that case - we will invest (on the condition you speak no more of your health problems in our presence!) In this case, the investment was made because of the intentions laid out in a prospectus, which allowed the misrepresentee to successfully argue that the future intentions were solid enough to consider as terms when they used the money to pay off existing debts... However in normal cases it would be very difficult to rely on just what they intend to do - as intentions can change with time!
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11.  You're looking for a house to move into immediately - the landlord knows this, but has dollar signs in his eyes... You find somewhere and purchase the house with little negotiation - you didn't question whether the house was habitable or not - and he didn't tell you... The landlord has no obligation to disclose facts unless he is asked to during negotiation... Which case does this sound like?
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12.  Again, an exception to this rule - a half-truth, if you remember in an earlier question this case was mentioned, the representee disclosed in an advertisement that 2 of his lots of land were occupied and gave the price, but didn't declare their intention to leave... So a half-truth (or avoiding certain relevant information) can be considered to be misrepresenting.
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13.  A nice easy one discussed earlier - in which case did a change in circumstances occur which failed to be disclosed? This is also an exception to the rule on silence
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14.  Arranging your own investigation nullifies a misrepresentation if you still continue with the contract based on the results of your investigation. The representee arranged for a group of experts to assess the mine he was interested in... The assessment declared the same results as were presented by the representor - however both were incorrect. But the investigation nullified any opportunity to claim for misrepresentation.
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15.  I'm retiring, take over my law firm, I earn £300 per year... £200 is accounted for, the other £100 can be found within this pile of paperwork... If you don't check the paperwork and accept the offer, can you still claim a misrepresentation has been made? The answer is yes - just because you didn't check you still relied on the misrepresentation. Which case is this?
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16.  On the issue of materiality, would the reasonable person have contracted based on the misrepresentation? In this case, a dispute between two insurance companies, A promised B that each individual customer would be assessed before given insurance. This work was delegated to other members of staff which B did not like. A reasonable person would allow that due to high volumes of customers and an increase in workload, work would need to be delegated. No misrepresentation was present in this case as it would be unreasonable to expect an individual to handle so much work.
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17.  Fraudulent misrepresentation is to make a statement with no belief in its truth. As you can imagine it is very difficult to prove the thoughts of a person - so very difficult prove fraudulent misrepresentation. In this case, the defendant had planned on building a steam powered train and sold shares as if this was the case. The issue arose when they were refused permission to continue the project. At the time, the representor had reason to believe that the permission would not be refused, and was more like a formality so had taken it as if it was already accepted. This was not considered to be fraudulent as the representee could not prove that he knew the statements were false at the time of contracting.
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18.  Negligent misrepresentation under common law is to make a statement without sufficient care, where a duty of care is owed. In this case, a contract between A and B... A asked C (B's bank) for their financial situation before paying B for advertising services. On the advice of the bank that B was "considered good for its ordinary business engagements" so A paid for the services, then B went into liquidation. The action was brought against C (the bank). It was held that although there was not a contractual duty between the bank and A, there was a special relationship. However due to the wording from the bank "without responsibility" excluded their liability for their misstatement.
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19.  With regards to negligent misrepresentation, the Misrepresentation Act provided victims of negligent misrepresentations with the same reward as if the statement had been made fraudulently. The term "fiction of fraud" is used to describe which obscurely worded section and part of the act?
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20.  Which of the following changes did the Misrepresentation Act bring to claiming a negligent misrepresentation?
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