When people can recover for errors regarding facts
Notes
The law fails if the truth of the alleged facts fails, this is similar with contracts:
If a contract is premised on a certain presumption of fact, and this fact isn't true, the contract is void
There is a lack of True Consent
The party did not agree to the contract under the other facts (no meeting of the minds)
If the promisor is negligent in determining the facts or expressing the facts to the promisee:
If the promisee suffers a loss because of the poor information or absence of necessary information the promisee can recover damages from the promisor for the loss
If there is an error but it doesn't go to the heart of the matter then the contract remains valid:
But if the promisor has caused the error by fraud the promisee can recover damages suffered from the error
Heilbut, Symons & Co. v Buckleton
If party can’t show a warranty it is just an innocent misrepresentation: how to show warranty
Issue
Ratio
Notes
P buys stock believing he was told some information
Is there evidence there was a collateral agreement
A person is not liable in damages for an innocent misrepresentation, no matter in what way or under what form the attack is made.
A representation made at the time of sale is a warranty if it is shown on the evidence that the party intended it to be so (intention must be proved)
“intention of the parties can only be deduced from the totality of the evidence, and no secondary principle of such a kind can be universally true”
Bentley (Dick) Productions Ltd. v Smith (Harold) (Motors) Ltd.f
If the representation was made in the course of dealing for a contract for the very purpose of inducing the other party to act on it, and it actually induces him to act on it by entering into the contract
That is prima facie ground that it was meant as a warranty, it was intended to be acted upon and in fact was acted upon
This claim of warranty can be rebutted if the maker of the representation can show that it was an innocent misrepresentation, in that he was in fact innocent of fault in making it, and that it would not be reasonable in the circumstances for him to be bound by it.
P is selling a share in law firm ownership and a house as bundle.
D buys but finds out law firm is worthless
P wants specific performance, D wants rescission.
Can they rescind?
A party is not to receive benefits from false statements, regardless of whether they knew the statement was false or not.
If a material representation is made to induce someone to enter into contract, it will be assumed that that representation was relied upon when they entered into the contract, it is then the burden of the opposing party to give evidence shows that they did not rely upon the representation
If the representation is false it will be grounds for rescission
Material false statement: a statement that’s untrue is a sufficient ground to rescind the contract
Newbigging v Adam
With innocent misrepresentation you don’t get full compensation, only get back obligations of contract, no “damages”
Issue
Ratio
Notes
D misrep adequacy of machinery
P enters into partnership on this
P wants out, wants buy in back, want indemnify
•In common law with innocent misrepresentation, you are to be returned to your prior state BUT with the limitation that he is to be replaced in his position so far as the rights and obligations which have been created by the contract into which has been induced to enter:
1.He may get an advantage in the shape of an actual benefit, as when he receives money
2.He may also get an advantage if the party with whom he contracts assumes some burden in consideration of the contract
•The contract is rescinded and the party is able to receive the benefits of this, but is not able to recover any money lost through the operation of the business?
If he lost money in venture he could not recover that but he can recover the stuff paid or done to enter in
Kupchak v Dayson Holdings
Did a party affirm a contract induced by misrepresentation by minimizing damages?
Issue
Ratio
Notes
P purchased shitty hotel from D
D was fraudulent, but already sold P’s land
Can’t go back
D says P affirmed by running the motel
Attempts to minimize damages suffered under the fraudulent contract (ie resale/fixing fraudulent issue) does not amount to an affirmation of the contract.
Rescission of a contract for innocent misrepresentation must occur within a reasonable time limit (just as rejection of a contract for breach of a condition must)
An innocent misrepresentation will not supply grounds for rescission if a rejection of the contract based on a breach of the misrepresented condition is barred.
"a condition is a term of the contract of a most material character, and, if a claim to reject for breach of condition is barred, it seems to me [this gives strong evidence] that a claim to rescission on the ground of innocent misrepresentation is also barred.”
O’Flaherty v McKinley
What is this about
Application of concurrence exception from Redican; woman wanted and asked for a 1950 model of a car, and was told by salesman that is what she was getting but actually she got a 1949; externally identical but internally substantially different machines (innocent misrep, salesman truly believed it was a 1950 he sold her); despite K being fully executed, exception applies because based on the innocent misrep, she received something entirely different that was she expected. Recission granted (P gets her money back and D gets the car back)
Murray v Sperry Rand Corporation
Manufacturers who have made representations about products are liable to customers regardless of privity
Issue
Ratio
Notes
Manufacturer made brochure which made certain representations, the goal of which was to induce the customer to purchase
The customer did and the thing was junk
Is the manufacturer liable, even without dealing with the customer directly?
An affirmation made with the intention of inducing contractual relations is a warranty
Since manufacturers would be liable for breached warranties if they had supplied the goods directly to the owners, they are equally liable in supplying the goods indirectly
