Wholly Innocent Misrepresentation

1 January 2017

In order to advice Chris and Angela, it is necessary to consider the law relating to misrepresentation. We will analyse the situation to see what laws are applicable and advise Chris and Angela. When Chris and Angela have bought the house, they signed a written contract. In this written contract, the terms have to be contained into. If David’s statements are not in the contract, it is only representations. The statements were not in the written and signed document, so they are not a term. Misrepresentation is a tort, or a civil wrong. It needs not to be intentionally false to create liability.

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Misrepresentations In this case all of the statement are an oral contract. “It is much harder to tell a term from a representation”. (Business Law and Ethics). Here, all the statement was very weak, and one of the parties had more knowledge, so for the other party it is likely to make representations. All of these representations are false according to Chris and Angela. But may be David can prove that he had reason for believing that all the statement were true. – The first statement is a negligent misrepresentation. David made a false representation as to a past or existing fact.

David did that because he had the intent to induce Chris and Angela to rely upon it. They relied on the representation, without knew it was false. As he is the owner, he is supposed to know the truth. If he can’t, it is a negligent misrepresentation. Otherwise, if David can prove that for him the statement is true, it will be a wholly innocent misrepresentation. This is the burden of proof in non-fraudulent misrepresentation. The authority for a negligent misrepresentation is: (Howard Marine v Ogden [1978]). – The second statement about the new gas is a liar from David, and it turns to be dangerous for Chris and Angela.

The gas central heating system must be replaced, and it will cost ? 6,000. This statement is a fraudulent misrepresentation; because Chris knew it was a false representation, and it is made with knowledge is false. David knowing it was false, and he lied to Chris and Angela. In this case, the innocent party, Chris and Angela, is entitled to rescind the contract and have some damages. The authority for that is: (Derry v Peek [1889]). – David told Chris and Angela the neighbourhood was very quiet, and he “barely knew they were there”. After they move up, Chris and Angela discover that their neighbours were very noisy.

They are a party with less knowledge, so it is likely to make representations. This is a wholly innocent misrepresentation; David can say that he believing the statement was true. – Concerning the area, Chris and Angela, who just were potential buyers, didn’t have the knowledge for the future development of the area. As David said ‘in my opinion”, it is a statement of opinion. A statement of opinion is not a misrepresentation. This statement, which not represents risk for Chris and Angela, pushes them to buy the house. David gave his opinion, and Chris and Angela decided to believe him, without seek to know if it was true or not.

The authority for that are: (Bisset v Wilkinson [1927] ; Smith v Land ans House Property Corp [1884]). 2. Remedies Chris and Angela can rescind the contract when it is established there was a fraudulent misrepresentation. In the case of misrepresentation, “the innocent party become aware of the misrepresentation”. The burden of proof under fraudulent misrepresentation is high. Each party gives back the benefit, which they have received under the written contract. But is not always possible to rescind the contract and have damages.

For the case of the first statement, about the “first class condition throughout”, the representation made knowing that is was untrue. Misrepresentations are civil offenses. The remedy for negligent misrepresentation is that of rescission. The court will act like the contract never existed. If Chris can prove that he actually believed that his statement was true, the misrepresentation will be a wholly innocent misrepresentation. Otherwise, it is a negligent misrepresentation. Royscott Trust v Rogerson confirmed in case of tortious damages, remedies for fraudulent misrepresentation is also available for negligent misrepresentation.

Chris and Angela can ask damages for this misrepresentation to justice. (Royscott Trust v Rogerson [1991]) – In the case concerning the new gas, the misrepresentation is a fraudulent misrepresentation. David knew that the gas central had to be changed, even if he said that he changed the central. Fraudulent misrepresentation is the most difficult to prove. In this case, Chris and Angela can sue and have damages for tort of deceit. The representee will be entitled to a remedy in equity for the fraudulent misrepresentation, and to recover damages in tort for deceit in respect of the fraud.

For the wholly innocent misrepresentation about the quiet neighbourhood, the loss of the one party must benefit the other. They are no damages usually for innocent misrepresentation. Chris and Angela do not have many options, because they have no right to claim damages. (William Sindell v Cambridgeshire CC [1994]) – We know that the statement about the development in the area in a statement of opinion. David has no facts to support such a position, so this statement is not capable of being a misrepresentation.

Chris and Angela can’t do something in this case. Chris and Angela can try a lawsuit for the fraudulent misrepresentation about the new gas central heating system. With the help of a lawyer, they can have some damages: firstly David will have to repay for the new gas, and secondly, for the week that Chris and Angela have spent in hotel. The contract can’t be rescind, so Chris and Angela will keep the house. In fact, the contract is affirmed so it is impossible to rescind it. If they want to sell the house, the price will be lower, taking account the statements.

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