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Cheatography

Contract Law Cheat Sheet (DRAFT) by

contract law cheat sheet

This is a draft cheat sheet. It is a work in progress and is not finished yet.

ACTIONABLE MISREP­RES­ENT­ATION

Unambi­guous, false, statement of fact, addressed to C, induced C (need not be the only reason but material)
C to prove objective inducement AND D to prove C was not induced, OR C to prove subjective induce­ment.
No duty to check misrep­res­entor's statement. If unreas­onable not to check/­neg­ligent check done - possible contri­butory neglig­ence.

Mere Puff - Not Misrep­res­ent­ation

E.g. 'desirable reside­nce', 'fertile and improv­able', 'a fantastic investment opport­unity'

Silence - Not Misrep­res­ent­ation

No duty to disclose facts which, if known, might affect other party's decision to contract.
Impossible to know precisely what should be disclosed.

Statement of Future Intent. - Not Misrep

Cannot be true or false at the moment it is made.
Repres­entor makes a promise and then it is preven­ted­/ci­rcu­mst­ances alter so they change their mind.
E.g. wife says she will not remarry and this is her intention. Later, changes her mind and remarries. She did not misrep­resent her current intention.

Statment of Opinion - Not Misrep­res­ent­ation

Same facts held by D & C. Honestly held by D.
E.g. D said his 'idea was that the land would carry 2000 sheep' (when land has never been used for sheep before).

Statement of Fact - Misrep­res­ent­ation

E.g. statements of law, statement asserting a given state of affairs.

Contracts uberrimae fidae - Misrep­res­ent­ation

Some contracts necess­itate one party in partic­ularly strong position to know material facts and disclose those.
E.g. insurer must disclose material facts in a contract of insurance.
E.g. fiduciary relati­onships like, company & directors; trustee & benefi­cia­ries.

Half-T­ruths - Misrep­res­ent­ation

Statement that is techni­cally true but mislea­ding.
E.g. selling property as 'fully let' knowing all tenants have given notice to quit.
 

Statement of Opinion > Fact - Misrep­res­ent­ation

Repres­entor has superior knowle­dge­/ex­per­ience than repres­entee.
E.g. 'This will make 200,000 gallons of petrol per year' - said when repres­entor had enough experience to know it can't be true.

Statement of FI > Fact - Misrep­res­ent­ation

Where X states they intend to do something but know they cannot do it/do not intend to do it.
E.g. 'I will buy it next month for £1000', knowing they cannot afford it or having no intent to buy it.

Continuing Misrep­res­ent­ation - Misrep

If statement is made initially which is true but becomes false before contra­cting, repres­entor must correct misrep­res­ent­ation.
Existing fact which was true but later becomes false.
E.g. selling a shop stating income of £1000p/m. If income falls to £100p/m, must disclose.

CATEGORIES OF MISREP­RES­ENT­ATION

Remedies available depend upon the category of the misrep­res­ent­ation in question.

Categories - Fraudulent

Proof of fraud: false repres­ent­ation made knowingly or without belief in its proof or made recklessly careless whether it be true or false.
Delibe­rat­e/d­ish­onest failure to disclose
Motive = immaterial
Burden of proof on C (extremely difficult)

Categories - Negligent

Where repres­entor cannot prove that they had reasonable grounds to believe (and continued to believe) the statement was true up to time of contract.
Burden of proof on D to prove they had reasonable grounds in believing their statement.
E.g. X told Y £100 cost taken from Doc 1. True cost was found in Doc 2. X failed to show object­ively reasonable grounds for disreg­arding figure in Doc 2 and relying instead on Doc 1.

Categories - Innocent

Repres­entor had reasonable grounds for belief in the truth of their statement and believed it up to time of contra­cting.
Burden on neither; innocent is simply a statement not made fraudu­len­tly­/ne­gli­gently.
 

Rescission

Repres­entee must commun­icate intent­ion­/in­itiate procee­dings for rescission
Only awarded where parties can be restored to original position pre-co­ntract.

Bars to Rescission

Affirm­ation
Contract was affirmed through words/­conduct
Lapse of time
Action for rescission must be brought promptly
Third party rights accrue
If at any time prior to rescis­sion, person acquiring goods under contract passes good title of those goods to an innocent third party, cannot rescind.
Imposs­ibility
If it is no longer possible to restore parties to previous position.
E.g. change in nature­/status of shares after being induced to take shares.

REMEDIES FOR MISREP­RES­ENT­ATION

Voidable but not void.
Rescis­sion, damages, indemnity

Indemnity

Covers expenses for obliga­tions assumed as direct result of contract
Where action for misrep­res­ent­ation gives damages, indemnity NOT awarded
E.g. If repres­entee induced into buying leasehold property, obliga­tions arising from this (council tax, service charge etc.) would be covered by indemnity

Damages for Fraudulent Misrep

Places innocent party in position they would have been but for the misrep­res­ent­ation
C must mitigate losses as soon as fraud discovered
Contrib. not available as defence
Damages reduced by value of any benefit C acquired as a result of contract

Damages for Negligent Misrep­res­ent­ation

Places innocent party in position they would have been but for the misrep­res­ent­ation
Damages can also be given in lieu of rescission
Contrib available where loss was partly fault of repres­entee

Damages for Innocent Misrep­res­ent­ation

Only entitled to rescission and indemnity (if applic­able)
No automatic right to damages
Court has discretion to award damages in lieu of rescission

EXEMPTING MISREP­RES­ENT­ATION

Cannot exclud­e/r­estrict liability unless it satisfies requir­ement of reason­abl­eness.

ALTERN­ATIVE CLAIMS TO MISREP­RES­ENT­ATION

Claim for breach:
Where misrep­res­ented statement is incorp­orated into contract
Claim in negligent missta­tement:
Where duty of care exists in tort