Claims of Misrepresentation in Contracts

Title: Ian, a music student, decided to sell his piano. Sheila, a fellow music student went to view the piano. during the viewing, Ian said the following to Sheila:

“They don’t make them like this anymore. It’s got a fine tone and it’s really cheap at £6,000. It was made in 1945 and I understand that Elton John played it recently at a concert in New York. It was tuned last week.”

Ian produced some more documentation relating to the piano but Sheila did not have the time to read it. Sheila played the piano for a few minutes and agreed to buy it at the asking price of £6,000, paid that price and took the piano home that day..

A few days later, Sheila realised to her horror that the piano had been poorly tuned and that, even more concerning, a number of keys did not play at all. She approached Ian and asked him for a refund and offered to return the piano to him. Ian refused. He did, during this conversation, accept that the piano had been made in 1970 but pointed out that this information was contained in the documentation he had let her see on the day of purchase. Ian also disclosed that he, not a professional tuner, had tuned the piano himself. Sheila has never heard of Elton John.

Advise Sheila on whether she has any legal recourse against Ian and if so, what such recourse is. In offering your view, you should analyse the facts and give reasons for your view. You should also refer to any relevant case law and/or legislative provisions.. You should assume that the sale of the piano was a private sale and that Ian was not selling it in the course of his business. The sale of goods legislation has, therefore, no relevance to this question.

ANSWER

ADVICE TO SHEILA

Sheila can be advised that this problem can be solved by the application of contract law and in particular the law of misrepresentation. Sheila is unhappy with the piano that she has purchased from Ian and this advice is targeted at determining whether she has any remedies at law and if so which remedies are available.

As a first step Sheila should be advised as to the shape and scope of misrepresentation at law. A legal misrepresentation can be defined as a false statement of fact (McInerny v Lloyd’s Bank Ltd (1974)^[1]) made prior to the formation of a contract which is designed to encourage the formation of a contract. In simple terms, a misrepresentation is a statement which conveys an unduly positive impression of the subject matter to make seem appear more attractive to the intended purchaser and to improve the chance that they will agree to the contract. In order to establish a legal suit the misrepresentation must actively induce the formation of the contract, be intended to induce the contract, and it must be material to the bargain entered into, as in Smith v Chadwick (1884)^[2]. There are three different categories of misrepresentation recognised at law. These are: innocent misrepresentation, fraudulent misrepresentation and negligent misrepresentation.

The statement made by Ian that may in part be capable of qualifying as misrepresentation is as follows:

“They don’t make them like this anymore. It’s got a fine tone and it’s really cheap at £6,000. It was made in 1945 and I understand that Elton John played it recently at a concert in New York. It was tuned last week.”

This statement can be analysed part by part. It is advised that “They don’t make them like this anymore” is not a statement of fact, merely a statement of opinion and it is too vague to constitute misrepresentation. In Bisset v Wilkinson (1927)^[3] it was held that a statement of opinion would not amount to a misrepresentation.. The statement “It’s got a fine tone and really cheap at £6000” is also likely to be considered not actionable as a misrepresentation because it appears to be another vague statement of opinion. Moreover it is unlikely that Ian would be considered an expert on pianos given that he does not deal in them and is merely a music student, so it is unlikely that his statements would be accorded greater significance as in: Esso Petroleum Co Ltd v Mardon (1976)^[4].

The claim that the piano was made in 1945 is factual and specific and is proved to be false.. Ian produced documentation relating to the piano which indicated that the true date of manufacture as 1970 but Sheila did not have the time to read it. The fact that Sheila ignored the documentation weakens her case for reasonable reliance on Ian’s false statement. She should have taken more care over investigating the potential purchase, as she no doubt now accepts. That said her failure to inspect the relevant documents does not necessarily deny her the chance to press a claim for misrepresentation over the date of manufacture.

Sheila can be advised that in the case Redgrave v Hurd^[5] there was a failure to examine documents that would have revealed the falsity of a misrepresentation. On appeal it was held that the omission to check the documents did not absolve the offeror of his misrepresentation and the suit against him was successful. Therefore the fact that she did not read the documents may not vitiate her chances of pressing a claim for misrepresentation regarding the date.

Ian’s claim that Elton John played the piano recently in New York seems to be an extravagant and blatant lie, but it is irrelevant for the purposes of misrepresentation because there is no reason why that statement should act as an inducement to Sheila, given that, apparently, she has never heard of Elton John: see Edgington v Fitzmaurice (1885)^[6].

The final possible misrepresentation is Ian’s statement that the piano was tuned last week. In fact he tuned the piano himself. Although this is perhaps not what Sheila inferred (she may have inferred it had been professionally tuned), the fact that he did so himself means that his statement is true as far as it goes. Therefore it probably would not be held to amount to a misrepresentation. It is possible to argue that the statement was a so-called half-truth, which is a true statement that does not reveal all of the facts and is misleading. If Sheila could convince the court that the statement about tuning was a half-truth she might have a case for misrepresentation as in Dimmock v Hallet (1866)^[7]. However, this is considered unlikely. The statement will probably be treated as a whole truth. The piano was tuned as claimed and that is the extent of the claim. The court is likely to take the attitude that Sheila had the opportunity to ask more about the tuning if she was concerned and she also played the piano before purchase and was presumably satisfied with its tuning at that point.

It is noted that several of the keys do not work. Although direct questions should be answered accurately the law does not impose a legal obligation on the parties to volunteer all the information relevant to a potential general contract such as this. Ian has however made no claim whatsoever about the specific operation of all or any of the keys. The principle caveat emptor (let the buyer beware) is applicable.. The fact that Ian did not mention the faulty keys does not of itself amount to misrepresentation: non-disclosure is not actionable in this context. Moreover Sheila had a free opportunity to inspect and even play the piano and still decided to make the purchase.

Sheila must be advised that she has not acted with all due care in making this important purchase.. She can also be advised that many of Ian’s statements are unlikely to qualify as misrepresentations. The only statement made by Ian that is likely to found an action is the misrepresentation concerning the date of manufacture.

Further investigation would be necessary to determine whether this particular misrepresentation was made innocently, negligently or fraudulently. It is submitted that when viewed in light of the claim about Elton John it is unlikely the claim about the age of the piano would be considered innocent (made honestly and on reasonable grounds: Boyd & Forrest v Glasgow and South-Western Railway Company (1912)^[8]). The brief does not offer sufficient information to enable a precise conclusion to be drawn.

Given that the piano is actually newer than claimed further information is also requested as to how this would affect its value. It is uncertain as to whether Sheila has suffered any material loss due to the misrepresentation of age. The remedies available on a successful claim of misrepresentation would be rescission or damages and in this case, which seems in conclusion to be relatively trivial, damages is the likely remedy.

SUMMARY OF ADVICE

Sheila may have a weak case against Ian for misrepresenting the age of the piano. Much of what was said by Ian will not qualify under the strict criteria that need to be satisfied in order to establish a case for misrepresentation. If Sheila does press her claim against Ian it is uncertain what compensation she will receive for acquiring a piano that is 25 years newer than she anticipated – no claims were made about the piano having any special antique status. The best advice for Sheila is that she must take much greater care in making future purchases, because in this case she has been in large part the author of her own misfortune.

THE END

WORD COUNT FOR TEXT OF ANSWER ONLY: 1284 (excluding footnotes)

BIBLIOGRAPHY

Cases as footnoted

Halston R.., Contract Law, (2001) Longman

Keenan, D.. and Riches S., Business Law, Seventh Ed, (2001) Longman

Poole J., Textbook on Contract Law, (2006) Oxford University Press.

1

Footnotes

^[1] 1 Lloyd’s Rep 246.

^[2] 9 App Cas 187.

^[3] AC 177.

^[4] 2 All ER 5.

^[5] (1881) 20 ChD 1.

^[6] 24 ChD 459.

^[7] LR 2 Ch App 21.

^[8] SC HL 93.