In
most cases it can be proved whether a statement is false, but the following
situations need consideration:
•
Where the statement is a half-truth, it may be true but misleading because of
facts not given; it will be treated as false. In Dimmock v Hallett when selling
property, it was truthfully stated that a farm was rented to a tenant for £290
per annum. The failure to indicate that the tenant was in arrears, had left the
farm and a new tenant could not be found rendered the statement false.
•
Where the statement was true when made, but has subsequently become false before
the contract was concluded, the change must be notified to avoid misrepresentation.
In With v O’Flanagan in January, the seller of a doctors’ practice told the prospective
buyer that it was worth an income of £2,000 per annum. By the time that the
contract was concluded, its value had dropped substantially, to only £5 per week.
The court held that the representation was of a continuing nature and, as it was
false when it induced the contract, the buyer was entitled to rescind. The obligation
to disclose changes relating to a representation of a continuing nature was
affirmed by the Court of Appeal in Spice Girls Ltd v Aprilia World Service BV
A
statement
There
must be a written or oral statement. There is no general duty to disclose information,
except in insurance contracts; silence does not generally amount to misrepresentation.
In Turner v Green when negotiating a dispute settlement between T and G, T’s
solicitor failed to mention other legal proceedings he knew of which made the
settlement to which G agreed a ‘bad deal’ – one he would not have made had he
known. G was bound by the settlement; he was not induced by a misrepresentation,
as silence is not misrepresentation. However, it should be notedthat there have been cases where courts have found
that there is a misrepresentation by conduct; for example, Gordon v Selico and,
at first instance, Spice Girls Ltd v Aprilia World Service BV.
A
fact
The
following statements will not amount to representations because they are not facts:
•
Mere sales puffs – the statement must have some meaningful content. Thus, in Dimmock
v Hallett, it was held that a statement that land was fertile and improvable was
not actionable as a misrepresentation.
•
Statements of law – everyone is presumed to know the law and, therefore, in theory,
no one can be misled as to what the law is.
•
Statements of opinion – these are not actionable, because they are not statements
of fact. In Bisset v Wilkinson the vendor of previously ungrazed land in New Zealand
stated that it would be able to support 2,000 sheep. This turned out to be untrue,
but it was held that the statement was only an expression of opinion and, as
such, was not actionable; the purchaser knew that the vendor had no expertise. However,
in Smith v Land & House Property Corp a statement that the tenant of a
hotel was a ‘desirable tenant’ was a misrepresentation. Though descriptions like
‘desirable’ may seem to be subjective opinions, here there was expert knowledge
that the tenant did not pay on time and was currently in arrears. That being
so, the statement implied that there were facts on which it was based when there
were not.
• A
statement of intention – this does not give rise to a misrepresentation even if
the intention subsequently changes, unless it can be shown that there was no
such intention at the time it was stated
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