Exam 5: Misrepresintation and Non-Disclosure

Section 2(2) of the Misrepresentation Act (MA) 1967 provides the courts with the means to award damages in lieu of rescission. Which of the following statements is false?

According to section 2(1) of the Misrepresentation Act (MA) 1967: 'Where a person has entered into a contract after a misrepresentation …, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently ...'. This is known as the 'fiction of fraud'. A number of advantages flow from this fiction for the representee when compared to the action for damages for negligence at common law. Which of the following statements is false?

Wesley has decided to sell his IT business and retire. Before buying the business, Francine inquires about recent industrial action taken by the employees in the warehouse and asks whether all labour disputes have been finally settled. Wesley informs her that all disputes have been settled, but forgets to mention that the employees in the software lab have been considering taking industrial action after the successes of their colleagues in the warehouse. To avoid liability in the event the software technicians strike, Wesley is considering inserting a clause into the contract. According to section 3 MA, terms which exclude or restrict liability or the available remedies for misrepresentation, 'shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977'. With which of the following clauses could Wesley evade the application of section 3?

Aquafun Co is looking to purchase a new swimming pool complex to expand its operations into South West England. After a long search, a complex built in 1970, owned by Waterplanet, is found. Aquafun has the premises examined and everything seems fine. After the property is purchased, the city building inspector sees that the water pipes are completely rusted and will have to be replaced. Waterplanet was aware of this, but, as Aquafun never inquired as to the general soundness of the pipes, Waterplanet never informed them of the defects. Can the contract be rescinded for misrepresentation?

Every misrepresentation can give rise to an action for damages.

Consider the following two statements. I.A misrepresentation can be made by both words and conduct. II.A representee, who is given an opportunity to investigate the truth of a statement by the representor, but does not take it, may nevertheless be able rescind the contract for misrepresentation if the statement proves to be false. Which of these statements is true?

Mick buys a suit in a clothing shop owned by Fred for £200. Which of the following statements made by Fred entitles Mick to rescind the contract if all the other requirements for an actionable misrepresentation are fulfilled?

Realex Ltd is active in commercial real estate and is looking to buy several properties for different purposes. Realex makes three purchases in the span of a week. In which of the following scenarios can the contract be rescinded for misrepresentation?

Surry plc, an investment bank, has received a prospectus from Innovatrix Ltd, an internet start-up which provides music downloads to registered customers. On the basis of the prospectus, Surry plc decides to purchase £20,000 worth of shares in Innovatrix. For which of the following statements contained within the prospectus will Surrey not be able to rescind the contract for misrepresentation?

Liability for misrepresentation cannot be contractually excluded.