Misrepresentation in Wilson vs Bury Case

A contract is an agreement between consenting, competent parties which will be enforced by the law. In the case, Wilson v Bury (1879-1880) [1] a contract was defined as “a deliberate engagement between competent parties upon a legal consideration to do or abstain from doing some act.”

Misrepresentation

Misrepresentative is an untrue statement of fact, which is made by one contracting party, the representor to the other party, the representee. This untrue statement of fact is one that is made before or at the time of making the contract and has the effect of inducing the representee to enter into the contract. It is a statement made which is false and sufficiently misleading to actually induce or influence another person to enter into a contract. Misrepresentation is a tort or a civil wrong.

To give cause of action a misrepresentation must be a statement of actually fact or a statement referring to the past event which patently false so it follows that as in the case study. If Gina is selling a computer and she said that it has a large memory and is reliable when in fact it is not, then such statements would be an untrue or false statement of fact.

Misrepresentations must be distinguished from mere ‘puff’ or ‘sale talk’ which are usually made when marketing or advertising goods. In Dimmock v Hallett(1866) [2] it was held to amount to a mere puff.

Representations of opinion are not misrepresentation as a general rule. So if the representor expresses his opinion about the subject matter of a contract and his opinion turns out to be baseless he will not be liable, Bisset v Wilkinson (1927) [3] . A misrepresentation must be material in that it must be something which is capable of inducing a reasonable person to enter into a contract. The second component is that the person or represent should have relied on the misrepresentation. In Attwood v Small (1838) [4] due to the surveyor’s reporting that the vendor’s statements were accurate, it was held that the purchaser was induced by the surveyor’s report and therefore the vendor was not liable.

TYPES OF MISREPRESENTION

Negligent misrepresentation is an untrue statement of fact made by a person who had no reasonable ground for believing it to be true. Hedley Byrne v Heller (1964) [5] .

Fraudulent misrepresentation requires intent on the part of the perpetrator so it is considered more serious that the other two types of misrepresentation (innocent and negligent). Therefore the court also allows damages. In the case Derry v Peek, (1889) [6] the meaning of fraudulent misrepresentation was examine. It was held that a fraudulent misrepresentation can occur when a party makes a false statement without honestly believing it to be true and knowing it was a deliberate lie or recklessly.

Innocent misrepresentation is a false statement which the person makes honestly believing it to be true.

Fraudulent misrepresentation requires intent on the part of the perpetrator, so it is considered more serious that the other two types of misrepresentation (innocent and negligent). It is the most serious of all types of misrepresentation and has the worst penalties. Therefore the court also allows damages.

Before the Misrepresentation Act 1967, damages could not be awarded for a wholly innocent misrepresentation (i.e. for one that was neither fraudulent nor negligent) if it did not have a contractual force. The principal remedy for innocent misrepresentation was rescission, though when a contract was rescinded, the court could make some form of monetary adjustment by granting an indemnity. This position was unsatisfactory since, in cases of wholly innocent misrepresentation, the entire transaction would have to be set aside (even though misrepresentation related to a matter of relatively minor importance) if any remedy at all were to be given to a representee.

Under the Misrepresentation Act 1967 damages are available in respect of:-

Innocent Misrepresentation

Negligent Misrepresentations

Under Section 2(1) of the Act damages are available for negligent misrepresentation. The maker this section of the Act provides that one party has to prove that there has been a misrepresentation, which has induced him to enter into a contract. The person making the representation will be liable in damages unless he can prove that he had reasonable grounds to believe and that he did believe that the facts represented were true.

DAMAGES OF RECISSION

Under Section 2(2) of the Act where the misrepresentation is an innocent one, damages may be awarded by the court. This section of the Act partly cures the defect by giving the court a discretionary power to rescind the contract and to award damages in lieu of rescission.

REMEDIES

The Court of Appeal established that the measure of damages is the same as that for fraud. The innocent part is entitles to recover any loss which flowed from misrepresentation even if the loss was not foreseen, Royscot v Rogerson (1991) [7] .

SALE OF GOODS ACT (1994)

The Sale of Goods Act (1979) which was amended by the Sale and Supply of Goods Act (1994) is what governs consumer protection. Section 14 of the Act outlines the terms implied into a contract of sale of goods.

Under Section 14 of the Sale of Goods Act the implied term are:-

Title – This implied condition states that sellers have the right to sell their goods in the course of their business In Rowland v Divall (1922) [8] it was held that the buyer could recover the full purchase price of the car even though he had used it for several months.

Description – Goods are sold by description when the buyer actually sees the goods but rely on terms describing features of the goods themselves. In Moore and Company v Landauer and Company (1921) [9] it was held that there was a breach in the contract description.

Satisfactory or merchantable quality – The law is that it is a condition of a contract that a good sold in the course of business shall be of satisfactory quality. This means that the goods must meet the standard that a reasonable person would regard as satisfactory taking into account all relevant circumstances. Quality means the state, condition, fitness for purpose, appearance and finish, freedom from minor defects, safety and durability. This is because goods have to be suitable for all common purpose, Shine v General Guarantee (1988) [10] .

Fitness for purpose – When goods have a normal purpose the law implies that one buys theas goods for the purpose unless otherwise stated. In Grant v Australian Knitting Mills (1936) [11] . It was held that the purpose of the pants was that they should be worn without causing any irration or other affliction to the wearer.

Sale by sample – When goods are sold by sample there is an implied condition that the actual goods supplied shall correspond to the sample. In Nichol v Godts (1854) [12] it was held that the seller was liable.

ANALYTICAL REVIEW / CONCLUSION

Based on the case study, the terms and conditions of the contract and if there were any warranties were not disclosed. However, what must be considered is there was a sale of a computer and there must have been a contract outlining terms and condition and length of warrants as subject to any electrical sale.

Gina could have used ‘sale talk’ or ‘puff’ to encourage John to purchase the computer but it must be noted that it was Hector’s report that influenced John to purchase the computer. When the problem with the computer first occurred it was requested of him to return the computer to the shop. If he had done so at that time the computer may have been repaired but he did not comply with the request of the computer store.

Now six months later John’s problem has escalated and he lost of his last two chapters and he also lost the computer by throwing it out the window.

John has no recourse because he did not return the computer when he was asked to it has been deemed to have affirmed the contract. As stated before in the case of Attwood v Small (1838), it was held that the purchaser was induced by the surveyor’s report and therefore the vendor was not liable. John was induced by Hector to purchase the computer and therefore the computer store is not liable for his dilemma.

BIBLOGRAPHY

Mortimer, T. (2007), Introduction to Business Law, Essex, England: Pearson Education Limited

Khoo,T. (2010) International Business Law, 2nd Edition, Essex, England: Pearson Education Limited

Bailey, S.H., et.al. (2002) Modern English Legal System, 4th Edition, Sweet and Maxwell: A Thompson Company.

Holland, J. and Webb, J., (2006) Learning Legal Rules, 6th Edition, Oxford.

Mayberry, G. (1993) Successful Negotiating, American Management Association

Morrison, W. (2007) Common Law Reasoning and Institutions

Treitel, G.H., (2001) The Law Of Contract, 10th Edition, Sweet and Maxwell

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