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False ¢ Applies to statements, which are inaccurate, No requirement that the maker be dishonest ¢ Remedy may vary according to the nature for misrepresentation
`Statement of fact ¢Statement indicates that misrepresentation requires some form of words, or actions (nod of head) that clearly convey a particular meaning ¢Statements of existing fact ’(事實陳述 ¢Statement relating to future? E.g. speculation of property market? ¢Statement of intention or a promise as to future conduct? ¢Statement of opinion? 意見陳述)
“…where the facts are equally well known to both parties, what one of them says to the other is frequently nothing but an expression of opinion…” – “… But if the facts are not only equally known to both sides, then a statement of opinion by the one who knows the facts …involves very often a statement of a material fact…”
Will silence constitute a misrepresentation? Generally not but in any of these circumstances: ¢ If there’s a partial non-disclosure of facts — e.g. farm is let but notice of termination is received¢ If a person is under a duty to disclose and fails to do so — e.g contract of insurance: require utmost good faith ¢ Where it constitute a failure to correct a previous truth but now become not `accurate
The representation must be a material fact: To constitute a misrepresentation, it must relate to a material fact ¢It must be such as to affect a reasonable person’s judgment whether to enter into the contract or not
The representation must have induced the representee to enter into the contract -If a false statement does not affect the decision to make a contract ðNot actionable -A misrepresentation will not be operative if representee: – Knows that it is false and decides to contract anyway – Is unaware of the statement and contracted in ignorance – Ignores it – Verifies the truth from other sources and does not rely on the represntor’s statement
TYPES OF MISREPRESENTATION ¢ Depends on the intention of representor, misrepresentation can be divided into: ¢ Fraudulent misrepresentation (有欺詐成分的失實陳述 Negligent misrepresentation 疏忽的失實陳述 ¢ Innocent misrepresentation 無意的失實陳述
Fraudulent misrepresentation A false statement is made -with the knowledge that it is untrue -Or without believing it to be true; -Or reckless, not caring whether it is true or false -Burden of proof (舉證責任) regarding intention to deceive is on representee
Remedies for fraudulent misrepresentation: ¢Depends on whether it is a term of the contract or not ¢If fraudulent misrepresentation has induced the contract, but is not a term of the contract, the representee may: — (1)Rescind the contract; and/or — (2)claim damages in the tort of deceit ¢If fraudulent misrepresentation becomes a term of the contract, the representee may:— (1)Sue for rescission; or — (2)claim damage for breach of contract; or — (3)claim damage in the tort of deceit (欺騙)
Negligent misrepresentation ¢ A false statement of fact made ‘carelessly’, in the belief that it is true but without reasonable grounds for that belief ¢ Under Misrepresentation Ordinance: ¢To establish a negligent misrepresentation, the representee only needs to prove that there was a misrepresentation. ¢ The burden is then on the representor to prove that he had reasonable ground to believe, and that he did believe up to the time contract was made that the facts represented were true. ¢ If the representor cannot prove this, the representee’s claim for negligent misrepresentation will succeed
¢ Rescission — Involves returning the contracting parties to their original pre-contracting position. ¢ Bars (限制) to Rescission — The circumstances rescission is not available as remedy for misrepresentation, e.g. parties cannot be returned to their original precontracting position
Four kinds of ‘Bar’: Affirmation Undue lapse of time (takes too long to seek the remedy.)Unavailability of full restitution (原物歸還) Acquiring of contrary rights by an innocent third party (If return to the pre-contractual position will bring an adverse effect to an innocent third party)
Affirmation: ¢ Misrepresentation makes a contract voidable rather than void, meaning ¢represented may ‘affirm’ (確認) and carry on with contract when he/she is aware of misrepresentation; OR ¢ may rescind and cancel contract. ¢ Once the choice has been made, the represented may not change his mind
Duress means illegitimate pressure put on a person to enter a contract Duress of person Duress of goods Economic duress (Illegitimate economic pressure and coercion of the will) | Duress renders a contract voidable, not void | the party suffered from duress can either affirm or avoid the contract
Undue influence “A transaction can be set aside in equity if because it has been procured by undue influence by one party A on the other party B, it cannot fairly be treated as the expression of B’s free will.” Undue influence vs. Duress Equity doctrine vs. common law remedy (nature) The conduct of defendant falls short of duress, but still affect the exercise of free will of plaintiff (degree) Undue influence emphasizes on unfair disadvantage related to negotiation power (emphasis)
Illegal contracts has all the essential elements of a valid contract, but the courts do not enforce them because of illegality. May be illegal at common law or by ordinance E.g. Contracts involving sexual immorality; Contracts to commit the crimes Contracts promoting corruption
Consequences of illegal contracts No contractual rights arise from such a contract. No action can be found on such a contract even by the innocent party Money paid or property transferred cannot be recovered
A contract comes to an end in four ways: Performance Agreement Breach Frustration
Discharge by performance -The normal way in which contracts are discharged -General rule: both parties should perform their obligations precisely, completely and exactly under the contract before the contract can be discharged
Unfairness of general rule of discharging by performance: Scenario: If A contracted to sell 60 tons of rice to B for $10,000 cash upon delivery. If only 45 tons of rice were delivered, B is not liable to pay any amount of money
Four Exceptions to the general rule: A divisible contract Substantial performance of contractual obligation Acceptance of partial performance by the other party Prevention of performance by the other party