Misrepresentation Case Study

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Representation that becomes terms
Se side 539
Types of misrepresentation
Fraudulent misrepresentation
The first question is whether the misrepresentation by A is fraudulent.


According to Derry v Peek (1889) fraud is defined as a false statement “made knowingly, or without belief in its truth, or recklessly, careless whether it be true or false”. Si noe mer? side 540.

According to Thomas Witter Ltd v TBP Industries Ltd (1996) a statement is to be considered reckless if he has no knowledge of whether the statement is true or false.

Since fraud is considered to be a very serious allegation, the courts have been some what unwilling to conclude that a misrepresentation is fraudulent.

The second question is what would be the consequences at common law
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In such a case there is a breach of the duty of reasonable care and skill in making the statement.

In case of negligent misrepresentation the misrepresentee will be able to rescind the contract and claim damages(unntak MA 1967 s. 2 (2)). There are two possible claim for damages. A can claim damages in tort for negligent misstatement or claim damages according to MA 1967 s. 2 (1).

According to MA 1967 s. 2 (1) a person who has entered into a contract after a misrepresentation has been made, then “if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently” that person will be liable “notwithstand 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 that the facts represented were true”.

Since the burden of proof is reversed in MA 1967 s. 2 (1), a misrepresented is more likely to base his claim on this section rather than the common law
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