Cra Misrepresentation - LAWS202 Law of Contract

CRA Misrepresentation Saturday, 11 September 2010 4:06 p.m. S 6 Contractual Remedies Act (1) If a party to a contract has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made to him by or on behalf of another party to that contract... (a) He shall be entitled to damages from that other party in the same manner and extent as if the representation were a term of the contract that has been broken, and ... So misrepresentation requires: * Statement of fact ? Through words or conduct e.g. King v Wilkinson * Incorrect * Inducement ? Must induce AND be intended to induce. * Materiality ? "A material representation is one which would have induced a reasonable person to enter into the contract - separate from inducement" # Savill v NZI Finance * May be innocent ? Unknowingly false statements still attract liability. But a misrepresentation cannot be: * A representation of opinion honestly held ? Bisset v Wilkinson * Predictions and statements as to the future ? Ware v Johnson - 'real nature' may be representation of present fact. * Puffery ? Mitchell v Valherie * Silence A misrepresentation is an incorrect statement of a past or present fact. Truth of a statement is not mathematical - measure if its effect on the mind of the representee. If the discrepancy between the facts as represented and the facts as they existed would have reasonably influenced the mind of a normal representee in considering whether to alter his position as he did, the representation is false. Opinions "The state of a man's mind is as much a fact as the state of his digestion. A misstatement of a man's mind is a misrepresentation of fact" - Edgington v Fitzmaurice (1885) - Borrower says money needed for stables, in fact pays off debt. Bisset v Wilkinson [1927] PC from NZ Bisset sold farmland to Wilkinson saying that it would carry two thousand sheep. He had never use the farmland exclusively. Held: no misrepresentation, statement of opinion. "If the facts are not equally well known to both sides, then a statement of opinion by one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion." - Smith v Land and House Property Corporation per Bowen LJ Balance of knowledge meant that a reasonable purchaser would understand what was said as opinion, not fact. + buyer was aware that seller had never farmed land. An erroneous opinion gives no title to relief unless fraud is established. Test: if a reasonable man with the appellant's knowledge could not have come to the conclusion he stated, the fact that it was an opinion will not protect him from a claim of misrepresentation. Evidentially found to have honestly held opinion. Parapine timber products v Reddington (1993) Parapine purchasing forestry land asked Reddington for assessment of how many trees it held. Reddington (tree expert) stood outside, made visual estimate, with parapine aware that this was how the estimate was made. If purchaser was willing to run the risk of inaccuracy in that way, they can't complain if there's misrep. No representation of fact, merely expert opinion which was authentically held. Predictions as to the future Ware v Johnson [1984] HC Ware purchased kiwifruit orchard from Johnson. Johnson had told Ware that the trees would bear fruit in two years. In fact, Johnson had poisoned the trees using pesticide. Held: representations as to the future are not actionable. But: the real nature of such representations was in fact a representation as to present fact. e.g. Here Johnson implied that the vines were in such a condition that they would produce crop in two years, but they were not. Esso Petroleum v Mardon [1976] UK CA Esso built petrol station on strength of modelled estimates with pumps facing to road - but built with pumps away from road due to resource consent. Set targets for Mardon (tenant, franchisee) based on original forecasts of profits, which were impossible to reach. Held: the statements of future fact were intended to and did induce entry. Fact that there was a prediction makes it harder to show it was objectively intended to be contractual in character. But expert knowledge and skill can transfer what would have been an opinion into a representation. New Zealand Motor Bodies v Emslie [1985] HC NZMB buys Emslie based on strength of Emslie's profit forecasts. But these forecasts were very speculative, unlikely. - Forecasts did induce entry - were outside the normal tolerance one could deem reasonable for a document of this nature Contract Page 63