Contract - Misrepresentation: Cases And Legislation

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| By Chriscullen
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Quizzes Created: 12 | Total Attempts: 2,486
Questions: 20 | Attempts: 193

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Contract - Misrepresentation: Cases And Legislation - Quiz


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.


Questions and Answers
  • 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.

    • A.

      Esso v Mardon

    • B.

      Helibut v Buckleton

    • C.

      Dimmock v Hallett

    Correct Answer
    B. Helibut v Buckleton
    Explanation
    The case of Helibut v Buckleton established the intention test, which makes it difficult to prove fraudulent misrepresentation. In this case, a company sold shares claiming to be a rubber merchant, but it was later discovered that they were not. Despite the poor performance of the shares, it was not considered fraudulent because it was challenging to prove that the statement was knowingly false at the time it was made. This case highlights the difficulty in proving fraudulent misrepresentation and the need to establish the intention of the representor.

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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?

    • A.

      Esso v Mardon

    • B.

      Helibut v Buckleton

    • C.

      Harling v Eddy

    Correct Answer
    A. Esso v Mardon
    Explanation
    Esso v Mardon is the correct answer because this case established the principle that a statement can be relied upon if the person making the statement had specialist knowledge, even if the statement is non-factual. In this case, Esso made a statement about the potential sales of a petrol station, based on their expertise in the industry. Despite the statement being inaccurate, the court held that Esso had a duty of care towards Mardon and should be held liable for the losses incurred due to the reliance on their specialist knowledge. This case set a precedent for similar situations where non-factual statements made by experts can still be relied upon.

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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?

    • A.

      Schawel v Reade

    • B.

      Bannerman v White

    • C.

      Routledge v McKay

    Correct Answer
    B. Bannerman v White
    Explanation
    In the case of Bannerman v White, the purchaser clearly stated that he would not buy the hops if sulphur had been used. This statement was considered a "term" of the contract because the purchaser would not have entered into the contract if he had known sulphur was used. The court ruled in favor of the purchaser, stating that a misrepresentation had been made by the seller, and the contract was therefore void.

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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.

    • A.

      Routledge v McKay

    • B.

      Schawel v Reade

    • C.

      Bissett v Wilkinson

    Correct Answer
    B. Schawel v Reade
  • 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?

    • A.

      Spice Girls v Aprilla

    • B.

      Schawel v Reade

    • C.

      Routledge v McKay

    Correct Answer
    C. Routledge v McKay
    Explanation
    Routledge v McKay is the correct answer because this case established the principle that a person cannot be held liable for passing on false statements if they innocently believed them to be true. In this case, the court ruled that the defendant, Routledge, was not liable for passing on false statements about the age and ownership history of a motorcycle because he genuinely believed the information to be true based on the log book. Therefore, the defendant cannot be held responsible for the false statements made by previous owners.

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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?

    • A.

      Yes

    • B.

      No

    Correct Answer
    A. Yes
    Explanation
    In this case, the conduct of the band member declaring an intention to leave the band before the photoshoot can be seen as misleading. By making this declaration, the band member gave the impression that she would still be part of the band for the photoshoot, leading Aprilla to believe that the pictures would be usable for publicity. However, when the band member actually left the band, the pictures became unusable, causing harm to Aprilla. Therefore, the conduct of the band member can be considered as misrepresentation 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?

    • A.

      Dimmock v Hallett

    • B.

      Bissett v Wilkinson

    • C.

      Edginton v Fitzmaurice

    Correct Answer
    A. Dimmock v Hallett
    Explanation
    In the case of Dimmock v Hallett, the court ruled that a "puff" cannot be relied upon as a "statement of fact." The defendant in this case argued that advertising two lots of land were let was merely an advertising puff to initiate negotiation for a third patch of land. However, it was found that this statement was a "half truth" rather than a puff, as the representee relied on it in deciding to purchase. Therefore, the correct answer is Dimmock v Hallett.

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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?

    • A.

      Redgrave v Hurd

    • B.

      Dimmock v Hallett

    • C.

      Bissett v Wilkinson

    Correct Answer
    C. Bissett v Wilkinson
  • 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...

    • A.

      Esso v Mardon

    • B.

      Keates v Cadogan

    • C.

      Attwood v Small

    Correct Answer
    A. Esso v Mardon
    Explanation
    In the case of Esso v Mardon, the court held that the representation made by Esso regarding the potential profitability of a petrol station was considered a term rather than a mere opinion. This is because Esso had specialist knowledge in the industry and their opinion on the amount of custom the representee would receive was relied upon. Therefore, the exclusion to the rule on opinions applies in this case, allowing the representee to rely on Esso's statement as a contractual 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!

    • A.

      Attwood v Small

    • B.

      Edgington v Fitzmaurice

    • C.

      Dimmock v Hallett

    Correct Answer
    B. Edgington v Fitzmaurice
    Explanation
    The correct answer is Edgington v Fitzmaurice. In this case, the investment was made based on the intentions laid out in a prospectus. The misrepresentee successfully argued that these intentions were solid enough to be considered as terms when they used the money to pay off existing debts. However, it is mentioned that in normal cases, it would be difficult to rely solely on intentions as they can change over 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?

    • A.

      Central London Property Trust v High Trees House

    • B.

      Attwood v Small

    • C.

      Keates v Cadogan

    Correct Answer
    C. Keates v Cadogan
    Explanation
    In Keates v Cadogan, the case involved a landlord who failed to disclose that the property was infested with mice. The court ruled that the landlord had a duty to disclose this information as it was a material fact that could affect the habitability of the property. Therefore, the situation described in the question, where the landlord did not disclose the habitability of the house, aligns with the case of Keates v Cadogan.

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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.

    • A.

      Routledge v McKay

    • B.

      Dimlock v Hallett

    • C.

      Bannerman v White

    Correct Answer
    B. Dimlock v Hallett
  • 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

    • A.

      Schawel v Reade

    • B.

      Redgrave v Hurd

    • C.

      Spice Girls v Aprilla

    Correct Answer
    C. Spice Girls v Aprilla
    Explanation
    In the case of Spice Girls v Aprilla, a change in circumstances occurred which failed to be disclosed. This means that there was a change in the situation or conditions that affected the agreement between the Spice Girls and Aprilla, but one party failed to inform the other party about this change. This failure to disclose the change in circumstances can be seen as an exception to the general rule that parties are not required to disclose information unless there is a specific duty to do so.

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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.

    • A.

      Attwood v Small

    • B.

      Redgrave v Hurd

    • C.

      Avon v Swire Fraser

    Correct Answer
    A. Attwood v Small
    Explanation
    In Attwood v Small, the representee arranged for an investigation to assess the mine they were interested in. The investigation, although incorrect, declared the same results as presented by the representor. However, because the representee conducted their own investigation and still chose to continue with the contract based on the results, they nullified any opportunity to claim for misrepresentation. Therefore, the correct answer is Attwood v Small.

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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?

    • A.

      Attwood v Small

    • B.

      Redgrave v Hurd

    • C.

      Dimmock v Hallett

    Correct Answer
    B. Redgrave v Hurd
    Explanation
    In the case of Redgrave v Hurd, the question is asking whether a misrepresentation can still be claimed even if the person accepting the offer did not check the paperwork. The correct answer is yes because even if the person didn't check, they still relied on the misrepresentation.

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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.

    • A.

      Avon v Swire Fraser

    • B.

      Bissett v Wilkinson

    • C.

      Esso v Mardon

    Correct Answer
    A. Avon v Swire Fraser
    Explanation
    The answer is Avon v Swire Fraser because it supports the argument that there was no misrepresentation in this case. Avon v Swire Fraser is a case that dealt with the issue of materiality and misrepresentation. In that case, it was held that a misrepresentation must be material in order to affect the contract. In this scenario, the fact that work was delegated to other staff members due to high volumes of customers and increased workload would be considered reasonable and not a misrepresentation. Therefore, the reasonable person would not have contracted based on this issue.

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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.

    • A.

      Hedley Byrne v Heller

    • B.

      Derry v Peek

    • C.

      Spence v Crawford

    Correct Answer
    B. Derry v Peek
  • 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.

    • A.

      Hedley Byrne v Heller

    • B.

      Standard Chartered Bank v Pakistan National Shipping

    • C.

      Spence v Crawford

    Correct Answer
    A. Hedley Byrne v Heller
    Explanation
    In the case of Hedley Byrne v Heller, the court held that although there was no contractual duty between the bank (C) and A, there was a special relationship between them. A had asked the bank for information about B's financial situation before paying for advertising services. The bank advised that B was "considered good for its ordinary business engagements." Based on this advice, A paid for the services, but B later went into liquidation. A brought an action against the bank for negligent misrepresentation. However, the court found that the bank had excluded their liability for any misstatement with the wording "without responsibility." Therefore, the bank was not held liable for the misrepresentation.

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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?

    • A.

      S. 1 (2)

    • B.

      S. 2 (1)

    • C.

      S. 3 (1)

    Correct Answer
    B. S. 2 (1)
    Explanation
    The correct answer is s. 2 (1). This section and part of the act is referred to as the "fiction of fraud."

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  • 20. 

    Which of the following changes did the Misrepresentation Act bring to claiming a negligent misrepresentation?

    • A.

      Misrepresentor must prove they believed in the truth of their statement

    • B.

      Misrepresentee must prove the misrepresentor believed their statement to be a lie

    • C.

      There is no longer a need to prove a duty of care

    • D.

      Confusion as to whether remoteness applies or not

    Correct Answer(s)
    A. Misrepresentor must prove they believed in the truth of their statement
    C. There is no longer a need to prove a duty of care
    D. Confusion as to whether remoteness applies or not
    Explanation
    The Misrepresentation Act brought two changes to claiming a negligent misrepresentation. Firstly, the act states that the misrepresentor must prove that they genuinely believed in the truth of their statement. This means that they cannot simply claim ignorance or lack of knowledge. Secondly, the act eliminated the need to prove a duty of care in a negligent misrepresentation claim. This makes it easier for the misrepresentee to establish a claim. However, the act does not address the issue of confusion regarding whether remoteness applies or not in such claims.

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  • Current Version
  • Apr 07, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • May 03, 2011
    Quiz Created by
    Chriscullen
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