1 How do terms arise

1

• 1 How do terms arise?
• 2 Types of terms
• 3 Misrepresentation
• 4 How does representation become
  misrepresentation?
• 5 Remedies for misrepresentation

2
1 How do terms arise?
1.1 Express terms 1.2 Implied terms
3
Case 1 The Moorcock (1889)

• Jetty(Pier) owner made a contract with ship owner
  allowing him to moor (unload) ship there.
• They knew the ship would be grounded at low tide.
  
• When the ship did ground, it was damaged by a
  ridge of rock beneath the mud. Ship owner asked
  for compensation.

Court of appeal Y. It was necessary to imply
such a term to make the contract commercially
effective.
4

• Case 2 Hutton v Warren (1836)
• A lincolnshire farmer was asked to quit the
  farmer. He asked the owner to pay allowance for
  seeds and labor.
• Court Y. It was agricultural custom there.
• Case 3 Bakery trade a dozen means 13 rather
  than 12.

5

• 1.3 Exclusion of implied terms
• (1) Terms implied by statute cant be excluded.
• (2) Terms implied by court can be excluded by
  express terms.

6
2 Types of terms
7

• 2.1 Conditions and warranties
• (1) Conditions go to the root
• (2) Warranties dont go to the root

8
Case 1 Bettini v Gye(1876)

• Bettini, opera singer made a contract to give a
  series of performance over 3 months period. He
  should attend all 6 days rehearsal. He fell ill
  and missed half of them. He broke the term. His
  employer argued it was violation of condition and
  demanded cancellation of the contract. Bettini
  argued it was merely warranty.
• Court

Warranty.
9
Case 2 Pousard v Spiers (1876)

• Similar contract. Mrs. Pousard seriously ill 5
  days before first performance. She missed first 4
  performances of her 3 months contract. Her
  employer sacked her and found a substitute.
• Court

Y. Condition.
10

• 2.2 Innominate terms
• (1) The term with no name.
• (2) Distinction
• Backward looking conditions and warranties
• Forward looking innominate terms
• (3) Innominate terms have not replaced conditions
  and warranties.

11

• Case HK Fir Shipping Co v KK Ltd (1962)
• KK, defendant chartered a ship from plaintiff for
  24 months. The engines were in poor condition and
  the crew was inefficient. They lost 5 weeks
  immediately and another 15 weeks for carrying out
  the repairs. After repair they still had 20
  months to operate. One term saying the ship
  should be in every way fitted for ordinary
  cargo service. Defendant cancelled the contract.
  Plaintiff disagreed and argued it was merely
  warranty.
• Court of appeal

Innominate term, which could not be classified in
advance. The defendants whole benefits of the
contract were not deprived substantially. There
unable call the contract off.
12
3 Misrepresentation
13

• 3.1 Written contract terms and representations
• (1) Express terms
• (2) Statements not in written document are
  representations.
• 3.2 Oral contract terms and representations
• (1) Harder to tell a term from representation.
• (2) Objective test opinion of reasonable man
• Strong statement are likely to be terms (how
  strong)

14
Case 1 Schawel v Reade(1913)

• Schawel was considering buying racing horse.
  Reade said, You need not look for anything the
  horse is perfectly sound. If there was anything
  the matter with it I would tell you. 3 weeks
  later Schawel bought the horse which turned out
  to be utterly useless for racing purpose.
• Court

The statement is a term.
15

• Case 2 Ecay v Godfrey(1947)
• Ecay bought a motor cruiser for 7500. Godfrey
  said that the boat was sound and capable of going
  overseas, but advised him to have a survey before
  purchase. Ecay bought it without survey and soon
  discovered it was not sound.
• Court

Mere statement.
16

• The reliance placed upon the statement. (how
  serious)
• Case Bannerman v White (1861)
• Bannerman, hop (flower plant) trader sent around
  notice to his entire hop farmers saying he would
  no longer buy hops treated with sulfur as the
  brewers wouldnt use them. In buying a
  consignment of hops, he asked if it was treated
  with sulfur adding that he wouldnt buy them at
  any price if so. White said he did not do so, but
  he did.
• Court

Whites statement was a term.
17

• Knowledge of the parties (How much knowledge)
• Case 1 Chess v Williams (1957)
• Chess, car dealer took Williams car, private
  motorist, in part exchange. Williams told Chess
  it was 1948 model. Chess believed because the
  forged registration documents indicated so. In
  fact it was 1939 model and was therefore worth
  far less.
• Court of appeal

Williams statement was representation.
18
Case 2 Dick Ltd v Harold Ltd (1965)

• Harold, motor dealer sold a car to Dick saying
  the car had only done 20000 miles since having
  new engine fitted. In fact it had done 100000
  miles.
• Court of appeal

Harolds statement was a term.
19

• Statement of opinion
• Case Esso Ltd v Mardon (1976)
• Esso persuaded Mardon to take on a filling
  station by telling that it would sell 200000
  gallons a year within 3 years. It soon became
  apparent that no matter how hard they worked,
  they couldnt achieve such figure.
• Court of appeal

Such a term was implied that the opinion had been
made using reasonable care and skill. Mardon was
entitled to damages.
20
4 How does representation become
misrepresentation?
Statement of fact
Induced other party
Misrepresentation
Representation
No
No
Silence
Mere representation
Only 4 situations
21

• 4.1Definition
• Untrue statement of fact inducing the other part
  to make the contract

22
4.2 Two requirements

• (1) The statement must be one of fact.
• Case1 Bisset v Wilkinson (1927)
• Bisset bought a farm as Wilkinson told that it
  would support 2000 sheep. Bisset knew it was
  never before used for sheep farming. In fact no
  matter how hard he worked, it couldnt support
  anything like 2000 sheep.
• Court

Just an opinion.
23
Case 2 Smith v Land Co (1884)

• Smith offered his hotel for sale saying a rich
  man Mr. Fleck occupied it. Before sale, Mr. Fleck
  went through bankrupt. Land co found Mr. Fleck
  was badly in arrears with his rent for some time.
  They refused to buy it.
• Court of appeal

The statement was misrepresentation.
24

• (2) The statement must induce other party to make
  contract
• Case Attwood v Small (1838)
• Attwood bought a mine as Small greatly
  exaggerated the capacity of it. Before buying, he
  used his expert to check the statement. His
  expert mistakenly agreed with Smalls statement.
• House of Lords

Not misrepresentation as Attwood didnt rely on
it.
25
4.3 Silence

• (1) Silence normally cant be misrepresentation.
• (2) Exception 4 situations
• Change of circumstance

26
Case With v OFlanagan (1936)

• A doctor selling his practice said it was worth
  2000 p.a. This was true, but as the sale went
  ahead 3 months later it was worthless since he
  had been ill.
• Court of appeal

Failure to reveal such change was
misrepresentation.
27

• Insurance utmost good faith
• Fiduciary relationship doctor-patient,
  solicitor-client
• Silence makes statement misleading.

28
Case Nottingham Co v Butler (1886)

• A solicitor selling a house for his client was
  asked if there were any restrictive covenants. He
  replied that he was not aware of that. This was
  true, but it was because he didnt read the
  document. The buyer agreed to buy but pulled out
  of the contract when discovering the restrictive
  covenants.
• Court of appeal

The solicitors silence was misrepresentation.
29
5 Remedies for misrepresentation
30
5.1 Fraudulent misrepresentation

• (1) 3 situations
• Knowing it was untrue
• Not believing it was true
• Recklessly, not caring if it was true or false
• (2) Two remedies

31

• 5.2 Negligent misrepresentation
• (1) Made honestly but unreasonably
• 5.3 Wholly innocent misrepresentation
• (1) Made honestly and reasonably.

32
5.4 Losing the right to rescind

• (1) If the contract is affirmed
• Case Leaf v Intl galleries (1950)
• Leaf bought a painting from International
  Galleries due to an innocent misrepresentation it
  was by Constable. 5 years later he found this
  wasnt by Constable and immediately applied to
  the court for rescission of contract.
• Court of appeal

N. Too late to rescind it.
33

• (2) If third party has acquired rights
• Case Universal Finance Co. Ltd v Caldwell (1965)
• A rogue bought a car with bad cheque. The rogue
  sold it to third party in good faith. Before
  sale, original seller found the
  misrepresentation. It couldnt locate the rogue
  and told the police and the AA.
• Court of appeal

Telling police and AA was sufficient to rescind.
If it failed to do so before resale, it couldnt
get the car back.
(3) If subject matter no longer exists.