An outline for discussion by Murali Kandasamy

“The remedies available for actionable misrepresentation are complex and confusing. They need
simplification.” Discuss

1. The issues in the question

a. The remedies available in misrepresentation are complex and confusing. Is this assertion
true or false?
b. Does it need simplifying therefore, if so, how and what needs to be simplified?

2. Identify possible reasons why the statement is stating that the remedies for
misrepresentation is complex and confusing.

3. Explain the difference between an action for breach of contract and for misrepresentation.

For breach of contract, once it is proven a promise/undertaking is breached, the courts will
award damages as an automatic remedy. This is because for breach of a contract, minimum
award is based on breach of warranty, Bettini v Gye.

4. Why is there a difference?

The courts draw a distinction between breach of a promise and a wrongdoing. Damages are
automatic remedy for breach of a term because it is based on assumption the contract is
properly done and therefore no fault requires proving. [refer to the loss of expectation]

Misrepresentation is an inducement, i.e. a tort, therefore the claimant [C] bears the burden
of proving few requirements before a remedy can be granted. In the absence of proving an
actionable misrepresentation, C, cannot be considered eligible for a remedy.

Explain therefore the fault must be proven to exist before the formation of the contract,
hence it known as a factor that vitiates consent.

Explain the requirements to prove misrepresentation, by use of cases.

5. Now explain if there are any difficulties in proving an actionable misrepresentation? Is it

complex and confusing or just complex?

a. What are the complexities in distinguishing between a representation of fact and

opinion?
Refer to Smith v Land House Property Corporation

b. Explain when and why a representation of opinion is not actionable?

What constitutes expert opinion?
If the representor is an expert does, he/she owe a duty of care or a contractual
obligation?
Esso Petroleum v Mardon.
How do we prove of care to exist in a simple contract?

c. By reference to Edginton v Fitzmaurice, explain the complex issue of proving fraud,

when a representor makes a representation of future intention.
Why fraud is a pre- requisite to establish a liability?

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d. By reference to Smith v Hughes or related cases, explain the general rule that silence
does not amount to a misrepresentation but what the exceptions and is it easy to prove
the exceptions if the representor does not disclose information.

i. Dimmock v Halet.
Statements of half-truth constitutes liabilities but how does the C discharge the
burden of proof that the Defendant made partial disclosure? Must the C prove
to the courts that the D concealed certain information from the C?
How do the courts balance the rule of caveat emptor?

ii. With v O Flanagan

The D is under a duty to disclose information if there are change in
circumstances.
Question arises, at what point in time of the contract is the D under a duty to
disclose the information?
How will the courts allocate the risk as to who should disclose or who should
check?

iii. Information is only known or privy to the D

Once again here the courts will be at the cross-roads between duty to disclose
and caveat emptor.

6. What about proving reliance and inducement on a misrepresentation?

7. From the above, in order to prove an actionable misrepresentation, you will submit some
form of duty of care or some form of deceit is seen from the cases illustrated above. Proving
a tort is much more difficult, [complex]. Further when there is an overlap between tort and
breach, it becomes confusing for one to advise the claimants in a contract.

8. Explain that this area of the law remains complex and it cannot be simplified as the courts
have continuously strived to draw a distinction between an action for breach of contract,
which attracts pure economic losses [loss of profits] and a an action for tort, which attracts
non pure economic losses [expenses only].

9. Submit that even if the C overcomes proving an actionable misrepresentation, the remedies
available to the C very much depends on the classification of the misrepresentation.

i. It’s worth noting that damages are available across all types of misrepresentation,
though the quantum varies. There is a huge debate that is making matters complex
and confusing, particularly Sec 2[1] of the MA 1967.
ii. Unlike damages, rescission is an equitable remedy and thus it is discretionary and
subject to certain limitations, [bars]. There is some level of confusion here, thus
some simplifications are required.

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10. Explain if the remedy of rescission is complex and confusing and is there any need for
simplification?

i. Explain the what is rescission and the purpose of rescission.

ii. Is rescission granted at common law as of right or is it at the court’s discretion?
iii. Similarly, is rescission a statutory right of the C under Section 2[1] of MA 1967
iv. How does the C rescind a contract? Car & Universal Finance v Caldwell
v. Particularly relate the difference between knowledge to the D and notice to D when
the C wants to rescind a contract.

11. The next area that may be complex and confusing is in relation to classifications of
misrepresentation. They are:

a. Fraudulent Misrepresentation within Derry v Peek

b. Negligent Misstatement with Hedley Byrne v Heller and Partners
c. Innocent Misrepresentation.

12. Explain that the question arises as whether they are still relevant with the MA1967?

 Many will speak about the common law without making relevance to it.
 What is the difference between common law classifications and misrepresentation
under the 1967 Act?
 State clearly the requirements that must be made and therefore there is nothing
complex nor confusing about common law and the 1967 Act
 Explain the purposes of the Act.

13. Now proceed to consider the MA 1967.

 Section 2(1) of the MA 1967

Where a person has entered into a contract after a misrepresentation has been
made to him by another party thereto and as a result thereof he has suffered loss,
then, if the person making the misrepresentation would be liable to damages in
respect thereof had the misrepresentation been made fraudulently, that person
shall be so liable notwithstanding that the misrepresentation was not made
fraudulently, unless he proves that he had reasonable ground to believe and did
believe up to the time the contract was made the facts represented were true.

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 Section 2(2) of the MA 1967

Where a person has entered into a contract after a misrepresentation has been
made to him otherwise than fraudulently, and he would be entitled, by reason of
the misrepresentation, to rescind the contract, then, if it is claimed, in any
proceedings arising out of the contract, that the contract ought to be or has been
rescinded, the court or arbitrator may declare the contract subsisting and award
damages in lieu of rescission, if of opinion that it would be equitable to do so, having
regard to the nature of the misrepresentation and the loss that would be caused by
it if the contract were upheld, as well as to the loss that rescission would cause to
the other party.

14. By reference to Sec 2[1] please refer to the key words:

‘………..the person making the misrepresentation would be liable to damagesin respect
thereof had the misrepresentation been made fraudulently, that person shall be so liable
notwithstanding that the misrepresentation was not made fraudulently…..’

a. Here explain that there seems to be some complex and confusing issues has been brought about
by the interpretation of the statute.
b. Issues relates to the quantum of damages under Sec 2[1], is it based on tort of negligence or tort
of deceit?
c. What was the interpretation before East v Maurer and Royscot v Rogerson. What were the views
in Doyle v Olby
d. Is assumption of fraud, or known as fiction of fraud reasonable?
e. Have the courts in Royscot v Rogerson gone beyond the intention of the Parliament?
f. What are the views presented by Dr Ewan Mc Kendrick?
g. In Smith New Court v Scrimgeour Vickers, Lord Steyn, argued that the damages
of quantified under section 2(1) is too harsh. However, his lordship did not
conclude whether Royscott’s case was correct or otherwise.
h. In Grant Gelato v Richcliffe. The courts in this case stated that contributory
negligence can be considered as factor in award of damages under section 2(1).
i. Explain that the opinion of the court is wrong for contributory negligence is not
a factor for assessment of damages under tort of deceit. It’s only a factor for
assessment of damages under tort of negligence.
j. Explain that the indecisiveness of the courts has led us to be in this difficult
position.
k. Go on to suggest that until the courts resolve this issue, the award of remedies
for misrepresentation will remain complex and confusing. This is because there
are too many differing opinions.
l. Explain that the case of Spice Girls v Aprillia Motors seems to have approved
Royscott’s Case recently.

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15. Apart from the above said, explain that confusions also arises in relation to interpretation of
section 2(2) of the Act.

16. Firstly, prior to William Sindall v Cambridgeshire CC, there was uncertainties in relation to
quantification of damages. Post this decision, the uncertainties were resolved, i.e damages
are awarded based on the difference of price between the represented value and the
current market value.

17. Secondly, even if that confusion has been resolved, there is another complexity and it is
confusing . There is a continuous debate that is going on as when the plaintiff has a right ot
recover damages within this section.

18. Explain the differing view of the courts in;

a. Thomas Witter v TBP Industries
b. Government of Zanzibar v British Aerospace

19. Based on the above said, state your conclusion.

Conclusion, which areas of the law needs simplification?

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