Task 2: Misrepresentation

In this task I will be describing the law with respect to misrepresentation in a given situation, I am also going to be identifying factors which invalidate and vitiate contracts with regards to misrepresentation.
“Misrepresentation is a tort, or a civil wrong. This means that a misrepresentationcan create civil liability if it results in a pecuniary loss. For example, assume that areal estate speculator owns swampland but advertises it as valuable commerciallyzoned land. This is a misrepresentation. If someone buys the land relying on thespeculator's statement that it is commercially valuable, the buyer may sue thespeculator for monetary losses resulting from the purchase.” http://legal-dictionary.thefreedictionary.com/misrepresentation
The effect of a finding of misrepresentation is the contract is voidable which means that the contract exists but it can be set to aside by the representee. The solution available depends on the type of misrepresentation, but generally consists of recession and or damages. In some circumstances the right to rescind the contract can be lost. The law that relates to misrepresentation is found in common law with the misrepresentation Act 1967.
There are 3 types of misrepresentation: innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation. Once it has been established that a false statement was made and that it induced the contract, it needs to be decided what type of misrepresentation it is in order to determine the available remedy which can be any of the previously stated misrepresentations.
Innocent- this is a false statement which the person makes honestly believing it to be true. The remedies available are either: rescission with an indemnity, or damages in lieu of rescission under the courts discretion in s2 misrepresentation Act 1967.
Fraudulent misrepresentation- this is a false statement this is made knowingly, or without belief in its truth or even recklessly as to whether it be true or false.
Negligent misrepresentation- at common law is available where the maker of the statement and the party relying on it are in a ‘special relationship’ requiring a ‘duty of care’ and the maker of the statement acts in breach of this duty.
“Misrepresentation in English contract law and English tort law refers to a situation where a person is induced to enter into a contract entirely or partly by a false assertion (of fact, not opinion or intention) made by the other contracting party” https://en.wikipedia.org/wiki/Misrepresentation_in_English_law
Rescission –“In contract law, rescission has been defined as the unmaking of a contract between parties. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract (the status quo ante)” https://en.wikipedia.org/wiki/Rescission

Mistake-
“A contract can be voided under common law rules for mistake in the following situations: * Common mistake (where the mistake is shared by both parties, is fundamental and directly affects the basic definition of what the parties are contracting for). The mistake will render the contract void if it robs it of all substance. * Mutual mistake (where the parties are at cross-purposes with one another). If, from the parties’ words and conduct, only one possible interpretation of what was agreed can be deduced, the contract will still be valid. Otherwise it will be void. * Unilateral mistake (where one party is mistaken and the other knows or ought to have known of the mistake). If the mistake relates to the fundamental nature of the offer the contract can be voided.” http://uk.practicallaw.com/7-107-6849

Duress- this is pressure exerted on a person to coerce that person to perform an act that hey ordinarily would not do. The notion of duress has to be distinguished both from undue influence in the civil law and from necessity.
Physical duress - when a party is forced into a contract by violence
Economic duress- To prove economic duress, a party must show that (1) a continuous contract exists between the plaintiff and the defendant; (2) the defendant threatens to terminate the preexisting contract; and (3) the plaintiff under this duress accepts the defendant’s terms and enters the contract. Scenario
Paula, is wishing to buy a used Apple tablet on a contract, she searches online and finds that her local phone store sells the tablet on contract. She goes to her local phone store and is greeted by Bert. Bert is the sales assistant in store; she enters into negotiations with him. The store has advertised the tablet as brand new and 16 hours of guaranteed battery life. In reality the tablet has a refurbished faulty battery, the tablet has previously been used as a demo device and Bert is aware of that. The tablet battery life does not last more than 2 hours. In the course of negotiations Bert makes a number of statements including a (false) statement that the tablet has a good battery life and will last 2-3 days without charge he also points out that the tablet has never been used and is brand new with the cellophane still intact on the device.
Paula takes the details and goes home to think about purchasing this tablet, she checks her funds and a few days later Paula returns to the store and agrees to buy that particular tablet, because of the long lasting battery and the condition of the tablet. The written note of the transactions makes no statement as to the battery life or the condition of the tablet.

In this scenario Paula has been misrepresented, as she buys a tablet based on Bert’s false statements. The misrepresentation is not innocent because Bert knows that the tablet is not brand new and has been used before, the misrepresentation is also not negligent as Paula and Bert are not in any kind of ‘special relationship’. Therefore, the misrepresentation is fraudulent because Bert sold Paula the tablet knowing the battery life didn’t last 2-3 days without charge, it in fact only lasted 2 hours. Bert is in breach of the contract because Paula bought the tablet relying on Berts statements which were false therefore; Bert is in breach of the contract. A factor that invalidates a contract is illegal subject matter which are illegal activities that can’t be enforced in court, this does not relate to Paula’s case as Bert wasn’t partaking in any illegal activities that cannot be enforced in court. Another factor that invalidates a contract is Coercion or contract fraud, which means a contract, may not be legally binding if it was formed through the use of force or threats. This also does not affect Paula’s case as she was not forced or threatened to enter a contract with Bert.