1. society
2. work
3. contracts

-MISINFORMATIONA. What is the misleading statement?
The misleading statement in this circumstance was [……] which was stated before the
contract was made. This statement gives rise to several legal claims that the plaintiff
may raise to gain damages for misinformation.
B. Is the contract wholly written or partially written? If wholly – i.e. contract of
sale then skip to parole evidence rule to discount breach of contract.
As the statement was expressed before the contract was made it can be argued that it
was intended to be a part of the contract. A breach would allow for damages.
Intention:
Subjective test – Oscar Chess v Williams
An intelligent bystander would infer that a warranty was intended (Oscar Chess) as
the statement was clearly promissory given that [………]. It therefore goes beyond
mere representation (JJ Savage v Blakney).
1. Test in Ellul v Oakes (apply this in conjunction with Oscar Chess)
(i)
Time: When was the contract entered into after the statement was made? If
entered into straight after (infers term as no opportunity to seek true facts
(Ellul v Oakes)
(ii)
Importance: If P questioned immediately before signing, the importance of
the affirmative answer was more likely intended to be part of the contract
and be regarded as a term (Van den Esschert v Chappell
(iii)
Knowledge: Especially as [D]
i. If appear to have superior knowledge about [x], therefore easier
to infer in was a term than merely passing information – Dick
Bentley v Harold
ii. Was in the same position as [p] thus it was merely passing info
about the [x] and therefore not a term Oscar Chess v Williams
Courts will determine intention for contractual term. If found, gives rise to damages
for breach of contract. [Do you think intention is found here?]
The Parol Evidence Rule
The Parol evidence rule excludes extrinsic evidence (Goss v Nugent). As D’s
statement was orally expressed, not written (like the rest of the contract) it will have
no effect under PER, as the contract is wholly in writing (Equuscorp)v)Glengallan))
)
Collateral Contracts
PER can be avoided by arguing that two contracts existed, that the statement was a
part of the second contract: Sheppard v Ryde.
The consideration was the act of entering into the main contract as P would not have
entered into it had the statement not been made (Helbut v Buckleton)
The terms were consistent with the main contract (Hoyts v Spencer). If they are not
consistent then there is no collateral contract.
Thus by again applying the intention argument above (Ellul v Oakes) this
misinformation was a breach of contract, giving rise to damages.
Estoppel
If this argument fails, Estoppel will still apply to give effect to the pre contractual
promise (State Rail Authority)
D induced an assumption in P that [apply promise] causing P to rely on this
assumption, causing P to supper detriment through [apply]. It was therefore
unconscionable for D to act this way.
The likely minimum of damages awarded will be to reverse the detriment [apply].
-MISREPRESENTATION-
Status of the Pre-Contractual statement: Warranty or
Representation?
Silence, mere puff, opinion, sales talk – must be a positive statement of fact for
action in misrepresentation.
1. The statement was of fact, not opinion: Bisset v Wilkinson or mere puffery (i.e.
sales talk): Mitchell v Valherie. [Apply facts here!]
(ii)
Statement as to the future
• Not a misrepresentation, not binding unless statement is incorporated
into a contract
• If person knows that promise induced another to enter a contract,
which will not be carried out then they are liable - Edgington v
Fitzmaurice
(iii)
Can’t be a statement of law
• Excluded from concept of misrepresentation
• David Securities Pty ltd v Commonwealth Bank of Aus
(iv)
Non-disclosure/ false impressions
• If person knows of material fact then not a misrepresentation - W
Scott v Lloyd
• “Half truths” are actionable - Curtis v Chemical Cleaning
• A failure to correct (staying silent) true statement which becomes false
is misrepresentation - must correct! Jones v Dumbrell
(v)
Silence
•
Reliance & Materiality
False statement induced P to enter contract. Was material and relied upon as the
representation was part of the inducement for contracting. A reasonable person
would have been influenced by the misrepresentation in this instance.
No inducement if P knew of the true representation - Holmes v Jones (discovered
truth before)
Onus on D to disprove that it at least partially induced entry into contract - Holmes v
Jones
P not obliged to check (using independent research) on representations - Redgrave v
Hurd
Rescission
The contract should be rescinded as D induced P to enter the contract by the
misrepresentation of a material fact to put the parties back to their original positions
before the contract was made.
Bars of rescission must not apply to rescind the contract.
1. Not a Reasonable Remedy - Where Bars to Rescission apply
This is not a reasonable remedy as the contract is already complete and it is
impossible to return the parties to their original position as the rescission is barred by
‘restitutio in integrum impossible’ (Alati v Kruger).
(a) Affirmation
After discovery of truth, if affirms (continues performance) option to rescind
lost.
Must know true facts and have knowledge of right to rescind - Coastal
Estates v Melevende
(b) Restitutio in integrum impossible
Cannot substantially restore to original position → rescission barred
There need not be the possibility of precise rescission - Alati v Kruger (fruit,
declined) - can adjust rescission by allowing for deterioration/ improvement to
property
Justice may allow partial rescission - Vadasz v Pioneer
(c) Intervention of a bona fide purchaser
As rescinded before made available to third party not blocked - Car v
Caldwell (car sold to innocent)