I CHAPTER TEN, Misrepresentation 1 General 1001) Introduction. Ie was explained eae! that where a statement sean by one person whieh induces anodber to enter into a contract, x intement may take ellect ae a tame of that contract or a collateral Ue scr Te was, however, algo sald ther ¢ false statement may still give Spot rights and cemedice even though not effective as a term of the Bact ‘This distinction is offen expressed ab a contrast beiween = ‘SSurcanty’, in the broad sense of “legally binding promise’ and a ‘meré ‘MGtesuntation', Ta this chapter we consider the legal characteristics: ‘Srahsuch sacements ruse poses in order 10 be a source of righs and wrrGies under the law. of sarepretencation, the various types of Thmepresenttion’ andthe content of the rights and remedies themselves Although statutory provisions specifically designed to reform the law of imiwepresentation ate discussed in the present chapter’ more recent Tuturory developments in the area of misleading or deceprive conduct, Ghich are more broadly based (but impinge on the law of Inibrepresentation), ere dissed in the next chapter [1002] Definition and effect. A mistepresentation is «fae statement tire onateral fact made by one person (the representor) to another (the fepresentee) in order to induce cha other per 1o enter into the contract Sy atich se this effect, ‘The misrepresentation does not prevent the Contract coming into being.? Instead, the basis response of the law of ftlarepresentaion to this raisinformation is to say that because the Tepresensee’s decision to contrac ws besed on a fase understending, tbe representee should be perunitted to resile from the contract. ‘ince the contract i voidable, and not void, rescion i the principal remedy for misrepeesentation® Damages for breach of contract are fecesarily excluded unless the false satement of fact it also aterm ofthe ee ea). 1841 Se: reoo toa Ss (oa {ea Si [tow tora). See (Lose, 05m, or ‘Ses hap. Sco (1008 ‘Basen {108}, (200), 2260 (nz, ‘Petia apace priors. 3 3 1078, 0{Wom} VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDUCY onnae. Arey of anager may howe, be costed he wf [1003] Common taw, equity and statute. Pior co the fasion of we fac equi frdicton ‘ter ivepresetein was tareceed bol common law wad in equity. The ight of escoion fox mirerescn ick {as svlabc ona ouch more bral bas egy than at smo Gm the othe et common lw are cece «an scrard damages in casts of fad not general posse by ts oe soars. The fon of iw and eauly has cope petops in one arta imade ihe dtneon largely of tral ners albough i el Sopa to real the engin ofthe Caren preps In recent year the eal and able prioiples have ben afc by saute, For present purpose sulient to make tec pone Pies & ‘ight be expected, cera sopects ofthe law have best tlt ol Fnalsed © Second, the intodustion of waraory prohibitions on crn kinds of conduct by the Trade Prcncr de 194 (Ca) andl ang epg, his made he lw of misepesctauon le sigufcant toi bev Facial satements are slat examples of such cna Bard ees of thi ein oc wien that now wasn septs Shape. IG, a pecenc mereainyte crrn 1 franco lt under the Conc Reson ar 1980 (ASHI Se of “contract which is “unjust in the circumstances’, wow pes [1008] Types of misrepresentation. Misepresematins sve Slasied "either frauen fence cacgory of enact, Iisrepretenaton i eseentaly Fedo containing a oe-tanccens Taepretenabons. Falowing the reception als ienaty aneae e Regge mattatereat in Hd Bye © Co id Hear Panto ad as bocome unl, a lest for he purpose of ne, vo meee ‘category of negligent mistepresentation, that i one inade breach of & cluyy of care, [1005] When writing required. The part of $4 of the Sturte of Froud: 1677 (ing) ceauirng promises to guarantee the performance 6 fn obligation to be evidenced by writing was supplemented by v6 of Lard Tenerden's Ac (the Stace of Frets CAmendmend) Act 1828 (lop) This provided ‘that ao action could be troupht based upon a representation or sssurance a5 tothe ere or abil of a person eles it sin wrltng and signed by she defendant. ‘The provision, which seems Built be in foree in the Northern Teritory, South Austili and Westera ‘Aswlis, was entcted because af the scuowrention of 4 ay rleioes alleging "a fraudulent “maeepresemation of credeworthiness boc 9 036059, 10 Se [owe ive Ui Se i656, nora tre. 12 Se Chapt £3 Se AR Se ao 526 (ate pices tan, Serene 02-3, to se Bory 350 ISREPRESENTACION roan os he same fics can be found i the Auwetan Capi aeeae” amin and, Vis Bat in New South Wats and senand it has been tepecled.® gee iit Report othe Now South Wale Law Ref nmission!” provides strong grounds for repesl of the provisions which corr taloas fee tar sevens of writen evidences defence to se dann fe aden maepreretaton bot No tein ‘ie tren Mere egret of wig ion 0 eh munance ave been fepeaca hm vome Aue aie Gene ad‘ ferene pvovsion hat been enacted CO deal th (HE terete of ei contact" 2 Elements of Misrepresenzation (a) Representation Must be Factual (caus see tn semen miepeeatatns A a se ae ca sauna ra i ett el See ee a a eT aan Sat Sea tekee & Aimer Se Eisen 3 ele are Se td paren ieee, ren nee Bc eS eet apt CI Ty sce ewe a circumstances may imply a representation as 10 a matter of fect, especially ‘as to the state of mind of the maleet of the statement ?* . ere Te i ey See sano fy ron osu i in a Se te sea Lie Series carn, acre cee Sie ornare eae Ta peeing 008 Yo mo 5 a no int 1.0 nS Cag Seater a 1 Reem paki ett comin nn Che 2S ere 2 Sone Bee eae asin ama Spree imate aa Teepe anne cee sag ber 10, fn Damar 9 Hale 1846) ee ang en yo astHoos) | VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDLiCY suspend withdrawals by members, The plaints were promised that the «ule would noc be enforced against cher. Gifith CJ and Berton J pointed (uC that this was not a representation of an existing fact which cOUld give "be toa right co rescind a contrac ro take shares i the society, Whether words ace promissory or representational is a question of substance or effect, and not merely a one of grammar. A promo statement implies that che maker inends and believes that the promise sssurance will be fuliled. In Balfour v Hollandia Ravensthorpe NL sg sent for vendor of land told prospective purchasers that in two yeaee € they would be able to borrow from a particular building society sn amount equal to 90% of the value of the land on the tecursy of a fe prortgage over it It was held that a representation of fact had bec made, namely’ 9 representation (1) a8 to the existing policy of the building society; and @) a8 to the agent's state of knowlege of tat pokey, [1009] Statements of intention and opinion, A statement of one's present intention may not be fulfiled because of « change of mind or of ther ciceummstances, but cannor be presently true or false unless the incenton is not entertained at all A similar comment can be made of ‘expressions of opinion. Neither constitutes a representation of face In Risser © Witkinon'® far example, the vendor of = fain said that its acrying capacity in winter was 2000 sheep. ‘The primary question wae whether in all the circumstances this was a statement of fact oF one of ‘opinion. ‘The Privy Council said? chet in deciding this question i wes [proper to tke into account “the material facts of the teansacllon, te knowlege ofthe partes respectively, and thst relative position, die words fof representation used, and the actual condition of the subject matter spoken of. Emphasising that, ax both partes ksw, the vesdoe nee carried on sheep-furming on the unit in question, the wal hudges view {hat che purchasers were not justified in regarding the vendor's words oe soything more than an expression of his opinion’ was upheld. On the Separate question whether the vendor had honestly held that opinion there ‘was also a finding in his favour ‘Statements of intention or opinion at least imply thatthe state of the ‘maker's mind is consistent with them, that is, that the person holds the opinion professed. If this is not so, there will be a fraudulent imisrepreseneation. Edgington » Fusmaurie™ involved © statement in ¢ Drospectus of the objects for which the money raised by the intue of ebennares would be used. A subscriber saveht @ refund, alleging ‘rauduient miscepresencation. In a famous passage Bowen I] sid? 28 978 18 sasr a0, BR an once megan) SEE atone omits ey ssn ao ie saeco emma eocby hace Cuaeetattece a cawraecdenes Rei Maries ica Pais te Syeeemamer es Seas Seeses aa a2 MISREPRESENTATION 1010) so of pombe pups 1 hh porion ote money A era would not uve foods baer an seaon of Goce be must be a misstatement of an existing fact: but the state of a man’s ee er cu gen hates bar aapcult co prove what the stare of u man’s mind at a particular time i but ci be ancerained, iti os much a fict am anything cle. A. 1 ere ee a mn hee, 0 iscmement of fact Por ample a itr» Noh Sis Py Lad «vend: ugh For oamPmance ofa contact of sie and the, purchaser etd + ‘EEse nelle Iiepecnag by the ven ens ty ‘Sted sre ine par wel a ge ae Mace nt Weel nt bey ot made Lo ey ot srng wie wld be eweed wih eer fine or not "The gh Court eld that the representation elleged eat team awertion bythe agene that be believed thatthe area would be ret ele ar wi at ha ee was pee Seren ote hee oon cron Hence bon soya ea otsonuunly rps hat i ate known wih cold jut the opinion, In South « Land nd Hous Proper Co wich a fea he eines, rea of nc proper bra fot a Sond, Bowen 1 ia —— re Moy tae! tment fab ie Ue on i Oia {ate ere hese equaly wel Enown te prs, hone of then ye oe ber eae nchng bt at era A woe otc apo hb tee ie 2 Soe eal ine nal own mind ae neem tras atanepane oa he cpge tte ELMS Sete ene toes ony Sons arash baa ty en tenn a es SEA a ng ones try ey hat 4 at wl et Fors lnc wok cannot bea ome fd itso ting ch etd pvr ein SS te pono alg f rena atop, ae alo at face te toown to hie fa hal ne (Repo of tae - [oro ene te The gee wy eel ee sete at os sa opescuen fc ey aoe teem san awe mre common tah peepee aera ean Bas Magus of Londoner owe DAR ca 33 (979) 2 CLK en 34 nap 28 ch Dt 3p Prana Mend (988) 28 SR (NSN) 2882260. Seen Rw Woe (931) 45 Casal astHeio]YITIATING PACTORS AND MISLEADING AND DECEPTIVE CONDUC A cuiwepresentation of nw is thst witen you sate the fac and state ‘oncluion of lw, so to snguish between facts an las. The sas ae ‘no te fect taken to Raow the laws but hen ou sac st se hich no doubt iavelves, at mor facts do, a anchaion ofl at Sateen of fact and Hot 3 statement of ae Und ones eh whee rare oe SEEROSES SS tg tlh mrt rte eas Saameaar Gar Mau? aaa e a hae mom of a SR Aa SS hy eon ope mace ae Se get Tete ete ne See law hat ncn etree scp earch ater lw tne analy os FR Seana Meena eases on Sake SFE nue Sit Seed doc Een, Pome we taceeel ay Be come ot Be tory a POORER Ua! GU med he he way eae cg came soni he cnn ert einen ol ae eo UotnPrnate vghe and! stn eee ey un Meets atte snd tay I sore tnt SS SS sed pr cree re ota aE 0 Pr te i he so re SERGE Mee aneecots Ao ae ae SSL 8 Some ames GE a he pare oe Se Gr ceil evn sid ate dacs Sea hea we oe eed {ota} Pred, a peace Snappy eleepoeas he on een eet, ay ites te In Soc Fomor, ones Tae Ree om oan hp se Pa Rarer ta aan a PSR LIPS ci tnd oe 3878 semrnviascmemt Ti entero tudvcment tg rsutomy aan cae eee eercomnmncnee en ate se Sa coma nconesntmernanen-ane aU ine amrumsmnian none merce {2909 1 ASW) te Pl ade ed Sec Ina Coad ong Vea a eel 48 Ghar Phy (1207) L2H 149; Macken» Rye Be of Canada 998} AC ME a 406; an Lar nds Py tad D Mea Py Lal ION) TSE MER IS ‘4 a of Asti v Adame (1990) 8 NZL 9 (© Wax Lindon Gos Bast © Kin (1834) 13 QBD 369. Conta fp Letom is Py Lid B Fen Py La (91) 109 ALAA? m A) fpr ot sai casned by ashing pac Act oe fr). 46 Gani 2H ce {7 as London Geol Daok » Kia (188) 1) QBD 360 per Bowe Hare Prd ate rant Co (908, XB 538 hn Lee nd Py ad © DF HP Gost) 100 am ain cao, 8 fia) vs, 254 MISREPRESENTATION 01st ewes conse noe. In Ode» Lan «wet (han fn wparoun we se os ari fe eb ysiness and during the ytiations represented thar the rental coul ee ae i he ed ane ae ant aa re ate cul a rT Nee feed i ee Sn he acpeceguie er ote Sep ss ret See ee om dest armor ber aes ‘the ordinary rules mpply. ©) Representation Must be Fase usin ote thes et cnt cons Usama of fat, Whey er sn oi 3 {zrforthe cour anda single word ora nod or «wink ora shake of Ceoon ae sles eee ee ge, ose, set conte realy The sr i esi sean oa pene ne Sevres ke oie hy Sr ea seg erga eg mat ora es cee ee ae et Tucano ne ofsee Gs Din ce, Tet pn ithe nee pha ogy Oe ie inges y e ee.en ee = en pening woe cl sel es even, oe es setts reg ence Soe et aed i ek oe we nm a met cas Sea er a Rees ae on eo ee pen, ee ec eaarribtientsenore etter ape ees i 12 Gran Nain 9m ces ace 1g $ Gt tecnise ac GR jones ae tes 3) Sart SS ee Qe ond i 55 Dm ft gue Py 110) VLR 28 w 3, Doron Be bets Cai ek Ch Bel me tea sa Seem Wadcame recor Deaf Dic! Cua Sap LSE TOS IS Tr pla Gt sn Stans wee Neste Bie iecnaer ieguge se an fet Ct U9, uy » Gorm NC Leathe geal Sn he duty af daconee now rege by We eee Set Sion eis " a Se aia De A ER 20; Tt Tae Perens ass[W018] | VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDUC Acne ne te toca wer eden ett Sct rare Se Stee eyo eal et a cchcer dene eet mga utero Secretary ates Use en party era in vi al CES oe Setar oteth om vane an ae toe le Rens he ek Sena Siow, pee ge ra poercter segeer antares ono ter an rd ee a se Momo Ab » Nadal’ Jan 1 caine! ot anaes Sac ee sn! i iit! ftir cates, etree Pin ty ce ha ke tia gckeomtsora tee Uo Caen ccumeesthh age towen Seca cremasen, re gee tee ermal cir te haa sate SEU SON near rages i acre may ehhh ge Des ol he peng Ga pn a ale ie ees ah ey Sher un ou Sgt ny Saat a mae iat Bana eto a ah herrea ata ach ana Seat icon ts lo os eee Beg ae pote, aetteamertararaeness Be i at Kara Reta ees iiiee sd OTs ori ae Tn a se suctioracas ia neha ean TRE A ste pin pon th ae agence nS ee wer a te as ‘Segre Cede as td at scence Retna mar tna ok Signe ay a fages ue wea aac eee er ea > Penman ya ee maaan Scored sree anon ea te saiicansrascotns ees w figuns Get east Oct EPS i RS Ore ieveattraie manicemaoers ae 2 pa 2 Eee un sn uta ‘Saad es SUES me esc ge “ MISREPRESENTATION, 109) seme vy tty we gman my se ee Sone entor’s ywledge after the representation was mad and before Spel i te atta one ‘ct give rise to a presumption that the representation continues down: contact Sod Hoowledge by that tine of the tue facts makes che wo Resentation fraudulent. Where such subsequent falsifying ‘eprertgamces are anbeknown tthe repeseator, « misrepresentation # Seance we hen ocean sere ee eed + pen omy moi» is medi secret, Shy = gro oe (een Sey eng mig (&) Reliance 109] ners of te epee Tie sera mat we (tor) sereetaon fo tench and indice econ te sacl ei ia See ec I eh vurney" the plaintiff bought shares from existing shareholders in reliance a penne wit he poms had utd upon feat ote ore Bo sl ssc ane Sst Sora epee nl nncat we pin he Sea Rei Sees nt ew Seg Fie em eo ne Fey yy cma coer rg ce Sh pi hom eae cic ate tama be poses Teeoat aos een er . Se pane a ss nie de B+ ioermatn aca etn te a fe on Se an andlag ‘hae eestemtan 8 ee ee SS are, Seay mupegrames yA Se oe esis wf remeron td Res ane md acl Be hae wan a Se te Sc nd ese oy ter cn i cake a am) sas 0 mica het ech aime motte o panne mula he ste et aes, Sac wai wes soma os pape aan PR Pane NIN 2 PS a ar aa a Far ice eee neat 0 (eg as oe rene Berar Sime RIE a anme «remst Seis ceca h cee. tea PRS cepa ta Se ei canetadietartn eo ne 1 RE REARS sasen gene wy Babs Sei open a7MISREPRESENTATION 0m {He30) VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDUC? ode aya of incor of he tenent Sept 0 buy om 8 wey itr be cunts ork apes he popes and ste [Rid as @ result of the inspection contracted on the new basis. The High ket lta hee nx ined by the nirepecoinona mae Sy sen nthe Botan OG Teun ober et thown eha the represented in fc op cada Shem fs her own inate ot ies ducer wl RON Rpowed™ Ba ied ttf fm the nr xt ht he tare ttetce bes bed en gpm of wring the orf he ‘wet as hx bes at ace cane ce nt {1020 Reliance a question of fat, Whater « peso base Indeed by te rernetaton fo cme te cones oe ea item f conte” ns eae ce oe a ‘Nove hve rand de i af Be pe a “peal de wl espe nducerens eding othe fomatn a cote Ti paca te ore certs Sols ot nomnan pty in cna a foals meses Se dhe ler ance aa a iti ate sprees deca conte ee ste eat sn fede ie Whe you fer dacoags i broveht tbe acing in relunce on ine mimereceaneee ee dor eden tie be new fais to sow hat te statement wat SERS (8 oF damage which is an essential ingredient in that cause op | _ have neihes.evilenes hate Me chow that he did net actualy action. ‘ely upon the statement, the inference remains that he did so rely .". AR [1021] Burden of proof. ‘The onus of proof rests on the person | Thswntion would be a case where a vendor makes a representation setting up the misrepresentation. However, if the statement is one which concerning a propery, and the purchaser has the opportunity of ‘ts nature was calculated to induce the representee to contract, it will {nepecting it but does not do so: the representation may sill be held to be inferred that the representation did in fact induce entey into the Inve indueed the purchase, Other illustrations are cases where the Sout ae becom sae fae eae cH, ee tar oe Sau tre heen ket oy aniston of Senc Semee,Hhos he tec mt pro be hee Be Seat mail whe opens ‘Sans by theses er ur sprsentaon i en 8 moc “The prem of ndcemen i donget in eae 0 G.I Shi i at rey In Cir Cpe e Now okey Land cated te wae Re a etree hoe maton Bite fh sent su ots pce eon iw seat Mucor he on rove on oe se 10.8 particular end, which has been aeiaied by it to speculate opon whet of the plaintiff's shares in a family company to her husband. ‘The ih hve bo te nh fn 7 ne oom ak cn eae et ae co ae aie sot in eal of ee = Erte pp oe rer fe “he fea nose of indaceman ortny aes fom the mating of ea The eng et ate a fraudulent representations, and this imposes on the represcntor th onus t0. ‘wrong, The court sai i o if tation and that only if lead evidence to displace that inference, even though the ultimate onus of not necessarily negate the operation of & and en oi SSS Tae ete coat an ar nice Povo ducer sy one aaa te or cider oeeeany seed drs eee {i022} Discovery of te. poion, Hore the rapresce See Tatenctetnce rcs. nay ne ele Stree, ta le cnet Thee fae ki nena eee Se er aor Us eon Coane a ete ty te inl ha conn cnr et Ss eee etna ww opens af ase. cing nd psy” Se Seana cen wa wie aes ‘ ican nes Js fo Ean” ey SE (@ Mowriatiy Dope odtng ney ade lc sateen i EL presentation met be oa material fact, Tp he ae of SoBe oo Far pane fe enn 0 mea Fi eget agg emer “ee SSIES SS ef il te pr un at in py Opa an Seu Sarai vy ow formerly ken wie apc Been ee TE cae Henne, Sys ow Send oo 58 Rotor Ace ays ee leo hg 2 cn ee Ballet Fes Se NA hy Eh ae: Rnd 3 Austin Repel Ma Co Redd eo sey clade nage cra arma ay an a ne ca ar Nass an 135 Gould 0 Vagos (1984) 137 CLR.245, BE ecm aeag o Bonen ane 3588 18 CLA New Sh Wale Drs 920) 94 CLR 46; Bow Any (1965) VR 6. 33 Sr «Sei (100) 79 WA (NSM) TA 1 bo deena bin 2 Se Dalle) even 92 fom mower, 15 Ane ations Sh «een 1970] WAR 186019. Gein Sevan Allon» Ge 1883) 9 VLR 1) 3715{Ho23]__VETIATING FACTORS AND MISLEADING AND BECRPTIVE CONDUGE {fee er a ee nance mip ity, cis orgie ranean nis tesa en tee ey ‘cnt deree's bmn ven oh ges ook ‘vat taken, 4028 o coats & Laue ef consldcenon * Jurgens er einore rn peer sneraneni® se Puglans iy ony ope ary aceon ccs ites cent aera ae EEE Ste Gre meer ee Seer ls Sees nome Sto aereran ge ace are Tee be cone emt ane Shean Sita ana ree ements And in Smith » Lend and House Property 2 Bageallay apple sn rhs tere Sl ws fey necracr crea Ween wn Mec eerecg wena ee sere, creme ee 8 eer mern weeeptn nn Pa Faw a ov eee nee. einen nthe cae there ae usoaons of both a sbi pie Min coc of Ex ately i ine fctevant whether spied to ‘mistepresentation” orto “inducement” and isnot an insu to be parted ‘Theracrnt wrote rape infact othe migeptecateion ns Miah amano al ndocment ant eee hse that ‘materiality’ in an objective sense may still have some part.r0. play even in such cases. Fist, f'asttement is ofa kind ealecloted idee Pena oe tt pe my te i Feprsntr to antend sscesulytat Wan wndesod b tbreotn would understand nadie tense Bs ae tive approach?! and an ‘86 Sve further [1638]. Bur see 11062) (sale of goad) - Be Sao at Ct VR 10S oh an nd Pap {G85 oh Can w fay os) a Can is, OM Hoe Peto Cor See ftp wee 18 AR Wy HES a (972 09 Doral Pi Tad (980 2 FLA 242 nt 340-1 Se ao Dinesh» Hae (180) 9 ede 254 BS en tt MB, Sh rer 0916) 28 CLR 4595 Abram SS Co Lid w Weve Shipping Co La (1923) AC 779 at re in tan isi gH eh ees a ToMIAe bars Sc goes Mn ce ee Gh Ens een meres a a gegen aise 51 deere Rn 5 v3 2 rman 0 Sith (199) 42 COD 3 68 Richly Thomo 2020) VLR S34 a 856; Amen Sis Mining Cap Pa a ‘Goren 1900) 2 NSWLR 202 eM cmt 360 MISREPRESENTATION es) sn the objective sense of ‘calculated to induces relevant to whether the in Soemtoe ad the necessary intention to induce. cond, whete a statement ie of that kind, the cours are prepared to nies Chae didn fat induce the epresentee co concact.™ these ways materelAy asst in proving both the purpose and the fant of inducement. Moreover, this exposition is applicable to innocent fact Spresentaions is ‘wal eto fravdulent ons, since ap intention and fect of inducing are essential to both 3 Fraudulent Misrepresentation 10251 Concept of fraud. Actual cshonesty, thet knowledge chat cae catins was untrce i the ballmar of fenud. Such dishonesty is {Be kiery element, additonal to thor aleeady considered, which must aeecten bers a misrepresent wil be charactrned as eaudaleat. “Pre modem inv hab is ongin in Derry o Peck” Sir Henry Beek sued ‘ne divecions of 3 tamray company for damages for Guudalent £25 cpresenaion by statement in prospectus that he company hed the mumtg ae steam of other mechasical power, em the faith of Which ee eats he applied for and war alloted share inthe company. ‘The Sale wes tht hex of peiament gave the company only @ contingent Tue hy of sotining the rhe refered to, dzpendent onthe consents of ie Bows of Trade and of the corporatons of Piymouth and Devonpor, we pees te wanspare, were refused a C0 & matetal porn ofthe Taming, Later, the company was compulsoriy wound up. Siting J SEEIRG Ue sedon bur the Rapioh Court of Appeal"® covered that SER helsing tar the defendants were liable vo te plano for the (ee sett ined by bum by season of his having taken te shares, and am ‘Roly arto suck los was ordered, The isi on which the diecfors were TERPAE Ghar they tad no reasonable ground for the bale they sincerely fntorained Mtns defendanss appealed to the House of Lords which held that lack of seamnabe grounds for believing tha tit statement Was true wat not Eaaan ie azceton” per and that ia an action for deceit noting lest fun cual faud must be proved. So long as the dizeciors honesty Sueved at their prospectus es trae and was ruled out, At best, ack erence able jouads fora belt i merely an aid determining whether the ble genuine al and int ene Kwan ute cee dat the Ui! cals dwelt only upon the statutory power &9 use seam an Gheiooned the condidon te which that power vas subiect. Thee ‘iectcuness was sotto be equated with decetines, Tete boys Peck, “fd! embraces stations i which the ropitinor tacked bt inthe truth of the seprenenation ce made i REESE" curing whether ie true or false? On alps actu 4 See Nhs Thong [1924] VER 54 95 See May « Ta 90¢ AC 24 35 Se (reo ea8) 3? Ges) 18 Ape Ga 57 ‘3 Sut na Per» Be Cia) 97 Cn s . 35 S02 Zan yt w Be (Utz 1 QHD 25%; Stoner Ptensure (1885 29 CoD {Sogo Compe 19723] ALR 08 sat(ens) VITIATING FACTORS AND MISLEADING AND DECETIVE CONDUCT ions ond veces my merge ck fhe in he th ota statement so that nowadays the test funy sued cra teiney oe the maker honey belee tha the rspmesenaton ie tae Hse aie ‘extent that moral culpability is vital in fraud. = (a Sane ores agp ta age aera 05 ts get a a ‘Stele ye fede tc which they were responsible. “ LET} Anton and motive. A penon ws es eum without belief in its truth will usually do so intending to cause loss, that is . i dena someone Bur thi net. an coe ese e Se Gein tht he ok tee cee em 8 sen, ‘Std att he erst inne tare erase ‘ech te plan andthe pat hold oper se ‘Eedonnctonsbewces nese popes cor ee ‘ish ninconny and mncing neeeee he es 12028] Pleading and proving fraud. Fraud mat be dsincl Aliged and prove. tis notorioulydiiatto pave, Ahoogh ea ae ial onus of proof appli that to sy prool on a prepoenre o Probable the qrviy Of the impuration i en ane seen ‘The dict in convincing the coutt (ren afer allowing lors doseing ef inerener of fat) ofthe presence of the nssexaty mer tre hee Jet many plats nsuecenal A further diel Of pro iy the ay cases felted fo purchnes of butnenes er ahatey hasbeen th a eh to pore lw or demage by conteaceng inland onthe temeeenn the Plant Purchaser has had to try to prove their value as at contract, ‘the only evidence readily available being evidence of the turnover during the period af the paint owm operation agama conte We fevud alone is pleaded ands nx prove, act wil not Be aien Ore footing thatthe evidence eablsher immacene mivepreacenon fot 100 Sse Grew Dion 1996) 6 CBNS 453,16 FR 13, Swit «Chto 88H) 9 heyy dita) Lal {0289 Qo eh 37 ke es et ‘Eh rt i ey Ba 907, 9S SH * Oe ter 64) {10 CLR 6B Se a Sgr Come 173-3] ALR 78, gon» Soh 89) ah CA Ye a 9 en po C480) 15VLR ane Gd (691 17 Lk a sn @ an C98) 2 VE oy Nat es Py ad «Kona ed Py Lf 1002 10 ALI 40a 440-0, 104 Seth hr © Modi‘ 1045) QUA 3, fe uta0y (190) 168 CER 317 ‘Sie Comes tf dias C81) 84 SWE at stat RIT 38 _MISREPRESENTTATION no rescinion flowable i inceentmiepresenition pleted nthe "i meio for damages for Gad lies against the dose, whowte thet in Moteve eseision i by te nature, walle only agine the oer ie tito coma For example in Calo © Thomson the manger PED’ ratant manager of 2 compeay oho Rowing joined wah Se ‘idctor inthe popasation ofc and Saudulencepora were held Hable stapes foe hued itso te plan, when be oat shares fe ‘E.Sun lance on the epore, dd aot ow of thes invalvement ot ‘rctreitts tbat knew of gave cet oly to he ivovement of te Srecors. Lord Westbury LC sai tat all pewonsdzeey concemed in ‘Re commisson ofa aud are t be treated ae principals" and are fable Secwitstandng cet heir preipaion was not Kron athe Ge ‘here fia cormmited by wn agent win the scope of the agsne’s authori, 2 ptncpal wil be fable f0 pay damages for decis an the atin dei may ale eting the contac wih penal 4 Negligent Misrepresentation {1029} Blements. Neligence, #8 tort comprise hee clement {ip = duty ote (2 french tha ry by the defends nd (3) low one phi evs bythe bese Wherein sconces duty consensus the doy in tori enpesd “rhe of cares theefore ene mapowed by Te, yay Which the [Rurhtise was owed oy the defendant tothe pls However since the Ghty in tcladon to tsrepreesaion ido tole’ extent Sect considerations of fort tw tuber than contrat cosiderion af [eotasmatance n whic the law implies uy of ie Berend te {eopelaf tn werk. The main objec ofthe dscunon below indste the relevant conaderatons, nthe praca comers, the ocasion for nosis of tort few ithe soaking of nepigenemiveprescaation or ratstomen, oF the ging of THERE Shipman or nice im bench cfs dy of cme. The ttce ‘lems of mepiance then become “apa duty awed by the epresentor © te epreseniee tke do ete to thre tat ny roprenntatons made ae tue aod aah (2 fey theses tte ch ded (3) damage cased by the fab ofthe presenti. ‘acters duty of cae exuts depends onthe creumsances.!° Unte acum in rape of bench of contrac» pln ene of action 105 Lado Charred nk of Aura Lange (ATS) LR 4 PO 7% indy» Sot GSS SRR RSey EG con Meche C010) 10 SR CN 4B dere Fake a fa Sk OW ar 2 Foti en td prs howe is ee rm he coat (1952-1083, OSs anf iy» Qo C916) 21 CLR A wp ot £25 ARS 199 Ligd © Gnce Smit © Co [1919] Ae 116; Sno Jebory CATA LK 9 QR 201, ‘ae ig oon Cs 1908 | RDS. Bsn 5s So Led Din pouty Ae 30 94. Bec De Groner (16) 5 CLIC AS 4 4 no Seton, 362laa2e) _ ViTtATING PACTORS AND MISLEADING AND DECEPTIVE CONDUGE tot for negligence is not complete without proof af los or damage. In most cases the damage is ‘mere economle lost’ rather tntn poytied Jnjury or damage to property or economie lass consesient on injury, (2020), Headey Byrne princile. Nenly 80 yen ater Dory Fah in Hadey Be & Col er & Pons Lad ae eae ot Lan ck the ep cs ad oa oper ibe oe ee ‘Scogutn af orion fos ato caion nate a oe Sonaung tn Oring nalts ne dus st anne at snag isthe ln oteved Senden how i ance seh nae Shih the reperetor may ave no tol. The ead bg he tere conomtef w cmpuay na dpi te Se it of epgnce't aa curr ave boat sdcant hed ee fo ke car tot to cue somone less the eek ate ten of wich ola gn tee pwn deen aie Ths Hawt Ckyon'® Dene Pan ta ce a Io ae pec in ete ath ea ine ese ane Sunn of respon orton ees eee oe scat alent meres nce he Bad i Pisce Therm equieent hat he heent be cul sezeseation, axles in he pate tones nad aber aboagh ee Congene wih ich oe. Tham nutmeg Sndehing, may cones saaren ae a pane achat ‘het on opinion wexprewe ace of aera oa be ee ie omen oft prey cut tele ote sea ak inp sepeem tn coe ae hen Opeeae Seen any event etn ay hie aura rape ee is escaminng te acca fhe sane {1031}, oreseabitiy not enough Unser gener! pies of on ls dtyof cae mya beste Gcede’ ald ey Sic hat epee wold wuss or damage oneness was not ec Ie However, cr hat eats eae eae iaocthe cto for sty fyi scien to nloomncon er see Snr he Hedl"Ubre princes Sontag mere aaron MISREPRESENTATION tue ee meni ipo en ma et sim nti pou en he seach an owe ie eee econ reg ls come les op he oe See ae ae cee Se eee nei doy oe ie eh Raber opi rnb, _The dy oa a We 9 se cinta, ca secon een gd dr tom tl te ay eee ih ee eos Sider pene te fr edo Brae 6 et ile Pare Ete ee ee oe Fare aT mola eee SE ee ac “Fatsmmner bite Bremen i ta eae of cessed pen imine rece of sce a gropcene ee eel eee aoe ery Bay Coupe i unl © Ce re te Bea see ce te ee a a ig ey Goel precast ce ee ee ee manson ming zie i ine s wae ange be eerie somes ioeetirnes ce ppc eerie cat ii me eo en meena ae tes vf Man ois Se ce a ee re pelt meg npn er rem ed o te Ben nero ca esa Sue ee a Reese ode Boe a Comet a as See el Do pe wr ee aay cea al tel aor hag ur ee aco coe ea cei a See 11 Se fre 1067, (2108 ee le ee ea 13 968) AC 405. Fars wot xeon se Whi Jens (1505)2 WLR 17, 114 ee ln 0 1. {senha ir 15 CAD oe CLR 39a 516, Hr te ply comideratione es Ben» Maly (109) UR ee ed Sn Dua Ca a a "Not Pormert Cy Gets 12 NSWLR 299 a 306,318,524 Sst ‘Shen hy Comets Henan 05) 157 CA a a7 Ste Gunn Aron 199) 2A 98 fast fie Tan 18S: ori Ce nn) a SLR 9 37, 120 Sem Juhi (968 199 CL 31 399; Suns Come $00) 1 CLR 04 Ser Shai en La ie dias Erm) ng ia 1) 160 CL 30, Heke Clas ene er ea 339 3. CFB w asp (1090) 1 WLR BET A Bee Copa interes AE Detmon 89) 256 603 OH LO ase 364 Sa Se Ct me 0 1), Se of CEe ONS ae ih A 11 Ser Shawn oy fale Masa anon te retort Pama ant Aeoment oy a easie Cobos a io ACT oT 2 IR ER tt reheat 30 18 Uo ta rk 1 1968) (23 CLR 903 72-9. CE Cop fea Pv ihn alt 8B oe vos, [3 Ss oun Am et 2A . Bre Sse as le Rats co omc 19 on 25 ee i ea Se Eala Somat ot Fae Act (£986) 162 CLK 340 wt 334, 971. See also Norns 9 Sibberes [1990] VR tet 970) 2A 605 265\29] _ VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDUCT 11033] Pre-conteact misrepresentation. In Exo Paroleam Go Lid © ‘Manion’? gn cil company wae held lible in damages for a nevdigent focecast or estimate of the gellonage conmumption or throughput of + petrol service sistion, made to a pervon who was induced thereby to become tenant of the station, Lord Denning MIR said!33 {Ea man, who as or profeses to have special knowledge si, kes representation by vitae teeat (9 another — be fe tice, infxration oF ‘opinion — win the intention of Inducing isa wo ener ino a contact in blr he it nde aeluty ote seasonable cate ro ae at the epee {© cocect, and that the advice sformation or opinion ia tebe, If be newlgenty sires unsoured advice or misleading inormstion or express a, tcroneous opin, and they induece the ober side ato a coact mah him, he sabe ta damages. Zo Peralenm » Mordon is typical, in tht usually representations by 4 contracting party will be mate because of the fepresentor's greater fauniliarty with (or cess to) information concerning the subject matter of the contract. There is novhing to taggeet tha the principle formulated by ‘Lord Denning MR should naz be applied in Australis. In cases where the plaintiff requests the information or advice, and the information o¢ ‘advice is given in the form ofa representation made with the intention of inducing entry into a contract, the duty of eave will be readily found nad lucated as breached if entry into a disadvantageous contract was indiced (at least partily) by the representation. [1034] Realisntion that statement will he relied upon, An gor jet in dering he eee of» Guy of ere the realisation on the part of the representor thatthe repreentce wil ely on the stement® In ely Dns & Co Lid alr Pores Lia the maker of the statement disclaimed Uablity snd this was solient to Drevent the finding ofa duty of eare™ There was no such diselaimer in L Shaddeck GF Asciates Py Lid v Pacramane City Counc,” case in which a loc! government coumel was held lable to pey damages forthe negligent supply of information to's prospective purchaser cf nd as 19 ‘whether the land was effected by any road widening propos [1035] Seriousness of the occasion. A istinction can be drawn, ‘between informal situations in which information or advice i sought, 132 (974) Qu 201, 35 hee. £3 Se oy St 990) 6 wt 153 GF Saw Sth Py Lod» Motor Aniniing she Enoiometl Paing ond dec et 2 CLR 39 3 | Se Son She Cored oman 1985) 157 CLR AR a 486 Lane Lipase ‘ier © Maus AGE Cadac) id 999] UR ET, Cl Suche Ba TRS 851 a 862, 11-2; Jes Muga Parr Gp Lad 2 ct non 1991) {QB 115: Ato Ones Co ew Hat Someat & Ce Ld [10911 Ce 298 soy ie ee Tea yt hac i 29 NSWILNG m 1e 1a Bata [0121 135 CH) 19. 2 ue (1095). Coren dy le 6 Lave Ce Rea ae fatieo eat 5 tne ” 6 _MISREPRESENTATION ne, wbere the existence of a duty of care is unlikely to be found, and more onmal occasions in which tt appropriate to Sad a dy of care." tn £ Shaddock G Anociaien Pry Lid v Parranaua City Council" the council had Unrough an unidentified officer, erally represented (i a {tephnone conversation) to the plain’ selicvor, @ Mr Carell thet Germain land” which they were contemplating purchasing for GSevelopment, was not aflected by any road widening proposal of the foun. Oa the following day Mr Cerroll lodged with the council an GPolicstion, in x standard form seeking a certifeate under the Local ‘Goverment Act 1919 (NSW), Ta addition i asked whether the property ‘ras ‘fected or proposed eo be affected by aay of the following. . Road “widening or te-algning proposals’ A fee for the ceriicate was enclosed, ‘but ao fee was tendered for the sdditional information, and none wes cacoinatly gent or required, Ip cesponse to his application Mr Casroll fectived a ceribeate from the council. The local road widening proposals ‘ere not 0 inchuded and there was no stanatory obligation to inchide the Jformation in the cerificate. Athough road widening proposals had not ‘been formally sdopted by the coun, here was litle doubr in May 1973 (Gohen Mf Carroll had made his oral and wetven inquiry) that they would be imolemented and woul seat fect ech espe, Ta ht the proposals were embodied in a plan in the council's records and. the oun hed refered to them in certifeates in relation to other land in the vicinity, Mr Caroll, relying an previous experience, believed that the tbsence of any notation a8 to & local road widening propesal indicated that there was no such proposal. The tial judge found that i was the Bracke ofthe eouncl 6 ance ng af the exitnce of rand ‘Widening proposels on the law statoner's form by making an appropriate ‘cedorsement on the certificate, and thet in the light of this practice Mr Gartall was led to believe, by the absence of any such notification on the cevifinte received by him, that there were no relevant roed widening proposal. The pisintids enttraczed ro purchase the property. "The High Court wae unanimously of the view that the Hedley Byrne principle isnot limited to persons who carry ona business or profession or persons who profes to lave skill and competence commenrurate with those who carried on rich 2 business or profession, and that it is not Timited to. the giving of advice as distinct from factual information, Accordingly, the council was held lable. [1036] Cause of action in both tort and contract. A general problem in the law of contract isthe extent to which causes of action in ‘otk ortand contract may coincids Theta is eal wit na number of places in this work! Take « simple cate of negligent advice by a Drofessional adviter. These are three obvious cases. Fit, the advice may ‘be given without contract, but conatieate the breach of « duty of care. ‘Second, the advice might precede entry into a contract. Thied, the advice 1a Sse No Sth [1090 R16 172. Tat Goes} iso exe as, Ter Focabcumion se, eg ACE Reon, Tac Acn in Coutacan Santon! (1985) ISieocieats hatin Coes "Tow ane Cones ny nao Core, 4 Ses fd Lis 204[How] VITIATING FACTORS AND MISLEADING AND BECEPTIVE CONDUCT night be given inde performance of contract. The pst of cause of fection in both contact and rors rea n the sceond and hind cance where the negligent advice may conse the bread of an expres ot innplied term requiring competent advice to be given. ‘That Is to'ay, te Bing ofthe advice nay contre «wort which oo a breach of ontace Gener se site have nor ben unvling > recog «chee a such ees between danages in tort or contract" Fer preset ‘he cru Saue whether, n the second ofthe three cas the igh oa obligations erated by te resultant contract supersede and eplace the fomtious duy of care. Buo Pevcin Go Lid e Mardon'® decies that does nat ‘The same approach has been taken in Canada and New land. Tes submited that this comet. However, iis pombe fo find expresions of contrary view. 5 Innocent Misrepresentation [1037] Introduction. As has been explained, under common lew Principles, restision was not permited for innocent mistepresentatin except where the misrepresentation wat so fimdamentel that the party ‘misled could establish # complete difference in subrtance Between What vas supposed to be and what was in face supplied." lowever, courts of sauity have always taken the view that the Tepresentor, notwithstanding the absence of moral delinquency, should not be allowed to enforce & contract against the represente.'3! Moreover, the repretentes, as the party misled, 1 permitted o rescind the contract ab initio, provided the atic can be restored, substandally to thelr pre-contractual positions." {1038}, The current approach. Subject to the discussion below! of sale of goods transactions, the fusion of the adminiswation of law and ‘equity has established shat the equitable rule applies to all cases of amlsrepresentation. Nevertheless, the position is still that under general 1A Ses ct Mien Bank Trt Goad a Se & Kn 1979) Ch 384, Fo 8 Go 985] Ch; Hane (2 Roper adh Un ale teed Co USE Qh 3s tem Pra (ORD Lv nT) QR 9H ‘Monet Sead 194) 3 WLR To Ck Camry Wr (988) 18 CAE 145 09te] Ger re 8a) Svs Nea’ Mane nd Deg Cod v4 Coae ‘eu unin) L9H 1 QDS Udit fanpop Sel of he sic Lad » Os Ge at (1973) 33 DL Cs. ‘fr eat Ma Eat Rh fi NLA 7 rn © 1a oan 14 Se ous Retna Py a Dar ner Ll 97) 2 NSWL 827 WO 5 ef Sore cher 6° Ca 1979) SHSWER 34 SD Te elk soa Sas ine saat {eta tbo uct to malt who commas Bre © Coupe (Ge on Ge 3p ot StL A et San a ad ec dey Co He (86,4 hd 7 Ponigu Ae tng SLs ‘ipo (1480) 16 VLR 95 ot 6 te! w re G85) 9 QL 135 Ae 0) {1918 THD bts ro Sa D0) 79 EH OTE 191 Ra eg re ov S80) ORAL bet La Ces: eee 152 See er 05) 046, 153 St iano 368 Sa snare vs tne tug ok ese fr tein he Fe ee a a Sac sees: ecm eon «me si aad ep Spe marge Be ee Eocene ey con Fat ake a ae a Sa we eh ta res mie 2 sag ge teen eso ae coeec mee Meare ma em hat en ay ee se hl 6 Rescission for Misrepresentation (a) Exercise of the Right of Rescission [1039] General, For all clasex of operative misrepresentation, the finocent party has right to rescind the contract ab inti, chat isto say, x fom the beginning, Although te representee’s consent to contract it fealy i has been given under s misepprchension ceused by the other onwacting pasty and the repretentee is entitled 10 choose either to ‘withdraw assent and be relieved of the contract, or to affirm it and ‘continue bound end benefited by i? Since che contact wld unl rescinded i creates righ an dus in the parties and may exuse propery to pass from one fo the other. Fight of the misled party should be seen primary as a eight tobe relieved fof the contract. Thi ie evident when the court dcare that « purported fesession Web effective, but even where it orders that 2 contract be set [side t docs to by virtde ofthe right to rescind vested in the party misled tnd that person's expression ofan election to rescind, [1040] Unequivocal conduct required. Rescission must be overt, thst ito aay, by words or conduct, Iris also said thet ic must be clear and luneguivecal so thatthe other contracting party will know whether oF not the contracts to proceed. Similarly, itis usually required thar the election te rescind be communicated to she other pary.®! But in exceptional cases this may not be necessary. Thus, in Car and Univeral Finance Co Lid v Caldeel!'®s fmadalent buyer pasted & worvless cheque und abscondsd So that it wae impossible for the seller to communicate his election to oo ghia 157 179 Hare» Ret ont Foe 1918) 1 KB 408 CF Wo esha Ce Co ECS ee Bence ree ee Se Eee ences ee en amma eee a roe bern nn ng Pe Gs roatrees oe an su Seiad SES nase ie ce ee i(1049) _VETIATING FACTORS AND MISLEADING AND DECEFTIVE CONDUCT ‘eacind, lowevee, on dscoverig the fad the seller informed fc ook oer tp whi tog not eounng to commana sepowession, were held to be suficien sone [1081] Position after Since an eff retstsion, Since an effective reiction far mistepresentation inducing a contract annuls the contract, it causes. x Bropery which has pasted or vested by rato ofthe contacto ener the pre-contract ower. Where a cours ad nt acessry, the Med args mere act of rescission cates tie to property to dives and vo a YesCin the party orginally ended. Where cout at neces) then ‘matters will be effected by its orders, pes cA wh cece! past wil be Sale afer rion we cuniay restitution, ana ne who bes taken delivery er posers Broperg il be Habe to return ie‘ st ebligatonnvver vag oe ‘i Seasonal caret preter the propery to enable etaraton of wht ‘eccivedy so fr this is extonably praccable, ed 4 day fot te the property without adequate notice tothe het pany (®) Restrictions om Rescission (9 Inwroduction [1042] Types of restrictions. The paradigm ca is : 9. The paradigm eas in which reschsion Bs ffi & where the contact has just been made ad eats wholly tony. Hota vig of crcumstanees may sett the exer Of tg Fight of rescision "These emwctions ae n addon to he decor, Sewer offset tnt eet ofan equtable ature Howsrey fe Sei Enea miepresenarion (Crepe where eight ef nose itd partis intervene) there a o tral Hght nthe repeventor te ace ‘he nnowet prs chim 0 be ewe of te conc. "Opce ake ot ‘ha he hing he deen anno const eng nay eee “The following restreons on recaion are not matully ‘same facts may establish more than one. iy excl: the 6 Imposibtc of retttio i integrum [1043] The process of rescission. Rescission is both a right and « process, The elements of excrese of the right were explained above [References there to matters auch as the vesting of property thistrate tive rescasion has important consequential effects. In this separdrescion ig also. procar of sfraion, The row rescsion expensed in the ceguiement of reututio fo nea se WGapeempryeawaian Steer I a tae EE ace mens ann are Fe a avon ino ars wae ven 167 Ser ery a sores 20 eet ta to 1 ona ep (452) 1 De OM & C 6d 7, 6 UR 16a 28 pr Le 10 e100 an 70 3; Ser BNE Fae Lat [MISREPRESENTATION. owt ‘essence an expression ofthe conclusion thatthe rights not available ithe Sd cannot be sasaconly completed. In order fora vad reason Biot pre contract musrepreventation, both parties must make restitution 3 B osualiy expresed in terme of a requirement that the partes be ‘Roored to thee pre-contract pestions 170 i follows from what fas boen tai already, that although i ie sufficient forthe tepresentor's rescision to achieve festinuo, ir i not necessary ‘Rewvided that the court may do 40 by appropriete orders. For example, if proeract for the sale of lend i rescinded by the purchaser, the ‘quirements thatthe purchaser must be able to restore tothe vendor the [eect property a the state in which the vendor hed owned i before the Eenrsct And i that can only be effectively done by means of court rders, these willbe made in favour of bork partis if resituin is possible ndoubtedly, however, there will be cases in which reattutio is not potable, and in which the eescsson will be invalid notwithstanding the REpresentee’s right of rescission, Por example, in Clarks v Dickion'? the ‘nif had subscribed for shares in e mining company to be worked on The cont book principle. The mine wes worked in 1854, 1855 and 1856 tnd the plaintiff wes paid dividends fa the form of bons shares. In 1857 the company war converted into a limited liability company. “The ‘Company was wouad up. ‘Then the plaintiff discovered that femudulent Fcpresentatione ad been made prior 10 entry into the contract. ‘The Sieinuffs shareholding in company incorporated with limited liability Bie not even substantially what be had received initially: resitutio in [Enegrum was impossiole, quite apart from the intervention ofthe rights of thied pares which the winding up itself involved, ‘What must be considered, therefore, isthe extent t0 which cestitutio must be posible before a rescission will be held valid, {1048] Common law and equity. In relation to rescision, the ‘Common law courts did not exercise a jurisdiction to adjust the rights of partes so an t9 make allowances for changes in postion singe contract. In Consequence, # misled party's rescission of the contract was either itself land without the neceisity or possiblity ofa court order, tually effective to anol the contract (where perfect restitstion was possible) oF totally Jnetictve (where perfect resucution was not possible) Although in the former ease an action for restitution, in the form of 2 claim ro recover roney for 8 total filuse of consideration!”? would succeed, it followed that, in the latter cate, a plains action to recover a sura a8 money paid Would be defeated by tesson ofthe defendants part performance."”? 170 Sees Blane Nae Sobre Phe Co (188 9 App Ca 1218 m 1278, 185 il Mabon Co fy Lady als (931) 4 CLR 20 515-4, Abo SS Co Lid © ‘revel peg ofa (102) AC 73. Bot se 538) 1 1888) BB as (2 ER tb, Compre eases lng ihc acon of contac {utcue thas not ava ene wing up fhe chpany he rence: Cake Fegan (1467) ERD HL S25 Tmt» Cay ef ne Ba 18TH 4 App Ca ESTES De a ye Ps 8 17 Forebemeaing of te ee (ate 133 Elowb.s Rona Ney eld ond Atlan Roa Mas QL LACT 12 QB 580 SBI See Mao a Co, Lav Atlin, 1983, ara 1320, 103, alune VITIATING PACTORS AND MISLEADING AND DECHPTIVE CONDUCT ‘This strict rule of precise resttutio was the necessary conclusion ftom the strict rule of a complete diference in rubmance applied by the ‘common law cours to innocent misrepresentation.'™ The requtemeat of Festtutio in equity was substantial restoration of the parties to thelr pre- ‘contractual positions, or more simply, substantial reution.” Tt ag ‘equig"s more flexible approach to remedies which mede rescission available more liberally. Where it was not possible forthe representer t9 achieve restisati in integrum, equity by its orders would often be able 12 achieve it. And the more lenient requisement of a iaterial™® fmlsrepresenration ensured thatthe representee would be far better placed in any claim for rescission, Nevertheless, even in sich cases it tnt be possible to ‘do wit is practically just between the parties’!"” [1045] Equitable rule prevails. Subject to the discussion below of sle ff goods contracts)" the position today, following the fision in ‘administration of law and equity, is that the equitable rule prevails and bowerns the sequirement of rstnutio in itegram. ‘The leading case is Alaui » Kruger The buyer of a fruit business rough reaction on the ground of fraudulent mireneentation. The _misrepresentation was proved, and the buyer had certainly pusperted 10 rescind the contract. However, the property w be handed back had ereriorated since contract, Moreover, th lease had been assigned by the saller, the buyer had actually earied on the business and made & lors, and the business had ulimately closed down. Dixon Cj, Webb, Kirto and ‘Taylor J} noted that the impossibility of predee resitutio would have precluded rescission at common law then eded:1® ac ici necessary here co apply she cectines of eau, and equity Han lars regarded 8 valid the cafernanee of = contact faduce Wy fad ve tg preche et in itegem oat paly ithe sation Such tat bythe eerie of te power ncladng tbe powe acne Of profit atl fo det teques to lowatoes prope toe made Aetrorstion ican do what paca jo brenen the pati, ad by 90 doing restore them subg dhe ans qu’ lage Nee Svcs Praiphas Cs Brno» Ste Spence» Ganfind'® is oo st coals ‘ey power ys dee aay cnet ht dere Pay rah o cation, ant eve propery te ew ae Oe Dery cannot ae. Resin for opresctaon 3 aieays the tt the Bary Mima Rens River Stor Ming Gov Soah'™ The uncon Ca {curt in which procesigs forrest se lken to acne span ‘liiy oft purported duatirmance a an act roiing the tastes 26 ake pear, HSE Moe nd Car, Rainin Lai ai 195, ce 1908, 1918 He Se a ” me 1 Se [ta dase (10) 100 iB Gein ace 'WO.Ar 2004 See so Kroner w Dera (88) 55 SR. ONS 388 OSatoen © Masaponen ony and Was Lal Te) GB AS, Decals © Se bs ‘rg ner Pa 0 38 Nv Se 9-2 14y Geto app Cas iba 278 ao 2s 34 CL Lo a 0,19 15 liam] S.A a8, 104 finn Ce a7, m MISREPRESENTATION. tuo frit, and He vad, wo ge fect te i and mabe appropri auenal onde: ce Abiom 5 Go Lad w Wamale Shopng Coad ‘SSe"diteenes beoreen oe lol aod che eqaabe tales on he aabjet Sinoly nao tin ego, heviog meas hich the comeaon lew iced #0 MAD cn and prvi ft aljmament neces oe made Detween aris mers where a simple handing beck of Brpery or repent of Femey would aot pt emt sa god pone a belore they ener ta {Ba gorse war able oss the pony of ret npr, and Retyonc to concede the tar of lefaades par to rxcing, = ach ZS teaty of cas an those which the commen lw cold cecum a “ering of exclo, Of cour, x eciien whch he common iw courts SGU noc acepr a wld canner of oe fone revs the egal ee ‘oper wth had ped, burs cure of egy woud rent oes Betaulable ie wossen propery roms upon te resin. “Thus, the rescison ws hela vali hou the poskion mig have cea diteen the Boyer had abandoned the busines 0 tat ceased to 1046). Tusteations. In Balow © Hallands Rovewhorge NL it was ASG, ie decrsatn es Soure ance wae cape by toe artery ott ground for denging fect to the: purchases! RiGee of the contacto ale for fades mscepresentation by Te TSndorr employee, but that to the extent that the dewiorsion as ‘Sed bythe perchance act (ex int fom diuvon fave du © hebger thd economy) they would be regered to make compensadon foe " Jn Brown » Smit, a purchaser of land who had entered into pomenion tad inproved the land wes alowed 0 Fescad and to eave ‘Eeraon @) te tle ih He had asd to che nd by hee rmmarent ngrovements Which were nt mic male of fasted ‘njorment and () te coe of necesary repay but nov bis ellatera” Tole arg fom te conzach such losses cured fn caring on & ‘sins onthe end ‘cour willbe tae more ready to ait the mile partyin nes where she repre fur dace rene ‘occsone, That sto sy provided ars the subantel enti of ‘Sbjct amr exis cure wl be he more ea owt powers SS mate ender for compenseton or indemwaty much cases (9 Affiomaon wu 1007] Afiemation as o restricton on rercision. We have sea thes owing» teres mareprescraon, the deen to rein aS wth nerepreeter, The dai fo rsind ew pres flection tod we regress prey endo lest fig tae conten. The ‘i'n tet one sch an Seen saben pac, ezaion coves tbe TMaishe Atma isle «bre acute, The boos ofthe le tas oem ac 73 12g See Bnd «sky [1960 SASR Ie ori a lpn) 34 CLR 0 ES Soc Pages Sco Lod Lape Sycae Ll (095) 2 D 292 et Rey Us ‘jens Cami [030 3 ASR 9s Bons Bonen & Ge et] WAR 12 anbiol] VITIATING FACTORS AND MISLEADING: AND DECEPTIVE CONDUCT 's that ‘rescission’ and ‘affirmation’ are mutually exclusive: it is a condition of the enjoyment of either one that the other be sbandomee, ‘AMfirmation may be express or implied. That iso say, the representee may consciously choose to affirm the conteaet,o¢ the choice gay be infereh (or imputed) on the basis of what the representee hss ssid and dove. The former is much easier to identify than the latter, In exsence, the boss for inferring affirmation isa finding thatthe representee has behaved in t wey ‘which is consistent only with an clecion in favour of effrmation ving been made, Analysis of the restriction requires a consideration of the elements of| sfiemation. Aldiough here i a substantial body of law in the contest of ‘itepresentation, it should not be thought thatthe Iw ie pecalar to that ‘context In fect, alirmation is no more than a specific application of the _general requirement of election benween inconsistent rights An elastog ‘ust be made in clear and unequivocal terms," and s0 an election t rescind or to affirm will not be found unless there are cleer and ‘unequivocal words or conduct. fas] Keene terpenes Te qo eeion a Remedy there Ta cig of acon Saag rm meds tli rome ines mean ted os oso se oars as ih od eyed i a Scout rail treat cee ct po ee apd ee cna ac > a eee astertece areca easton em ht pa he eon Sarat ei aed rama spe oie ke nga oh oh ac ecg Se ne ee pe at er aon and abe ee nk te aes ps te oe of Sheena Smeal a om eae oa Tr Ct Bae Py a » Ata deur prac aa ny aly deed Melos pacha se ST cea ane uo op Nose Be on fam or eter ese ats hed sind wren Uae cee mire lw nce he mn aes rar web seid Thal cae ee zach al Sel by pet 'Ba eons ees hare me Mc ay a eeigy =m Fe ewe nears Re + hos 4 4. BS ree esa ao Soper faces ag TO a en BE Te EE es nm oe oman DEN aes le tee oe a4 MISREPRESENTATION Hoss pete ct mn Te ns ned See 133 Reeser mil re Se ian occ eee a ee i guy ne gu pay sit ree foie Hyams comer agers wd pean od Mn eyes Oe el td en na eee ice rence Nt i eae ee, ese sitters ner! een Seid ln ra hae sei aN em Re srs, ree, oe ee che arenes bees ores nn aimee rmerigeeees Heroes naris gate ey Hiner, Nk semen tempers Sogiaeas Sree iy i eso is fg Snr ren oes th eh fan era dasa rare ohne madi wna ia Siw ose ge na mane Se i i ne ean ele ie a ee aig ao ie of ti ee no fees epic Be re akties toa nae Se ee et i Metco fr ln ef rent psi ye ae Pe sara tine ae co in eae St er aa Sigreauea iemcnenwaertnine See ce er cna ere eat ae re ge mt ce Sr gee ty ata gs orga aie aka wh ne Sars Swoon St a and vm sek es ancien ees 2 ere ces Seen nee wen einen mateo ea nak wings RETA NA pw me c0 nas Raat aan Se esc ana ne ANC{Hoqs} _ VETIATING ¥ACTORS AND MISLEADING AND DECEPTIVE CONDUCT following iseepresenstion there ab knowledge ofthe Hight to fac Ae e epiined ltr the High Court hea open he coe a the eats tn rede, What seas to ste appopeate rons Sing tat the daincion berween ped ph nad cee copy Centered eyonetn toa fv principe a secon ie Conc wig onsite) of conduct They rey on he ntereacerlepameately dene fom the cond of people with Knowacge ofthe ceeomanen eae tse ogy andvegpest that gue lohinte to dra an ines ‘Simaion here pean doc at income sh the aces oe the ight to resend Simla conaderations led Pincus ine Hafan Se fare Wore Soin’ to rope the dstncton and to est rowan ft the fics ws enough fo a buading detion to afoncren In exes ot fe Tens, however be concede that inte absence of Encl of he sah to eed, condor, parley Ince of omy tee be nor convincing sos by potty showing an ean fig cr by shown tke serch f propery ahs oe cms hha ‘Sven the oer payor to hb oedema 1049] Conduct of the represetor. One other feature of conduc Should be noticed. Because prnipes of clestnn eoncetate on he fondu of the party rege to lect not woul nscesuy 16 onvir the condact of the ether par in this context te represen However, a representee may tind thatthe right of resceion ft avleble flowing reliance by the epreentr onthe words oe conde ot the represeare. Ths isthe aplication of Pec of etopel For examples Cosel Enaces Py Le © Maton Shale 1 the denuded pry does ns Eno ths he hv a eit orci De is bound by watch te eof them ae ee Say oe incon to ales the contac sre) tone fie atone ee Caposte pane bere) te) ave samy ce wk bars Pes tn he asd pty no pean re to him by te eonoactee Acspe so Ch ben pone y Sit some ec ence 1c significant tat the tepresentce may be bound by the acs where sheet no knowledge f the ight co fein, Thi shows tha, even thee is no election wali, clea and unesuvoca condutced spon bythe representor may preciade the repeientee fro eset a Secige of ihe ight of seacision, at lest where would be Unconcinable far the repreenee fo it onthe ht ot cseaon Buss urn, 202 Cat 8 ALR 14 12, 203 Gt Sey «Ma 961 SAR 0 1-5; Of Rare Po 197) 4 SASK 204 et Trt ad xe Lo Canons on nd none C ak 94 SGA wos ey Somer» 45 Dootpacn Lat 970) BH CLR 0 0 St Kadir Bre Maiag 8d {1973) T NOWER AO 3 105 Sex ea, 0) i isa va ovacaih 3% [MISREORESENTATION nest pein win don exis se es, Dal tins il ein be He Tie og Mert ele ce gu Ge ae Se ey ei cei Bao rome eae ere s fonts ening neem prey Garg anes ey Set en scl de eoperen ona aap ceo ener eed Seder ae, te particule Penequivocal conduct amounting ¢o affemation. Normally, Cece men ee mmm ct ey ee ae se he i we ne Set gees th rags a Pagan reg cemolng mtg fm alte eg Ee rene preteen iS re Sy tcaet emt a ce seals nics Bes nt oe Se ch ne Ste cen (ih Saigo ge ocak Geeta gy ee aE Ae abi rh aa ‘pon fat sebo na, the same cnuct may give det bath bar st etmon Te verse ees Up ope fapmnn, Me et oe rihanna Beare rg emna aera aPyaate coe er ry eB cele Sencar BE ei itemonngurmseas Heitor vemmtara muse TE encarta tedte0 coarse aa eS etn See eo, ore ammy CSR Scr chit sat aaa a(008) _VITIATING FACTORS AND MISLEADING AND DECEPTIVE CoMDUCE (6) Third pate’ rights (Rs tren of ig of rd parses reve ec een fot ott rte grr mn pete iy tae poeta gue wt aa Zeer ir Cea Bday ns a ec ssbnjetaes’ dll yu avd hun emmncneetent oe af mete toned os Se ee es 3c contecting pecye taht of fescidon a hance, teak ‘ep fp cae Sane ea 11053], Iustration, Asan station, conier a cate where a buyer ot goods (B}, by a faudalent minreprerentation induces the owes (A) to sell to B and that after the sale B purports to sell the goods to an nnupeting tind pary (C). B's Snutulenr mineprscntaden mit be 2 Mey, he mpage bang a Seon seme a 1¢ misrepresentation might induc: A (a shopkeeper) co sel is to B on cei ater which sale cs or oberon daposce SFaheaC ae takes them witout nosce of the faud and for salable concn, before Aas rescind the erntact of sale lav te Sight fo seed 25a so cannot recover the goods fom C2 11'A were sil alemed to ‘ei, woul hve 0 hand the goods back to snd wuld Se fcleated to an action for damages sesinet By which my well pone feuiteas™ Bat as in Car ond Uniereal Frnnct Co Lado Cldecs 22 he scl (i ale te sind the coe before te onecent tid parr ‘pi gi in he ood then A een wl eben er, (e) Bxecuion ofthe comract 0054] in Seddon’ case. th reset one 29 nay at sntract has been ‘executed’ means that it has been discharg , Complete peformane inal especin Some cate mage tet ete OF he contact a bart rescaon fr innocent seperation ‘The enected conzetrettion tins desebed at thee in Seon ese «race 0 Seen Noth Bane Se Cesk ioe router's ite » Gin A puch af fd soe fesciion efter the contact had ete complies by the cosronee ee Sb The ground alnged was tat the vende had Prue coed the clstenee ofa deed paint i bt ie purines heed ak the evidence dt ot eal nad a pleated Lard Cangbel sa tat aio the cou wl et conpal par complex cmt nace 1 nonfauuleot maeprectetton, onc the tater hes pase es pn fo tapegnag im oman ame Impose yt epson of dregs fein ao biacit cored See gE yearns 2a ERTS om “owe 223 See also (1295) (mistake), » Eines 8 MISREPRESENTATION nese) contrac: to conveyance the court will not intervene in the absence of SORET faut. Fle observed that there would be no certainty if wansactions 2Eal be set aside upon citeovery at distant times that x pre-contractuat representation had been fale ‘sere is some fustfeation for applying the restriction to. lend wansactions where contract rad completion are distinct lege steps. the archaser having te opportunity ater contact (o investigate the vendor's Pals and to make objections and raise requisitions in accordance with the ‘Snuraet’s terme before being compelable to complete In Australis the SBleuted contracts exception bas been considered applicable to land {tantactions!*” and contrac for the sale of a business. 2 Bur in Seddon’s {Ee,Jeyes J suid the rule applied to an action for rescission by « purchaser tt shares," suggesting e broader application than land contracts, On the ther hand, even allowing for exceptions Seddon's case has, been Girunguished and criticised?" The idea that the equitable doctrine of ‘Reclstion for innocent misrepretentation should be excluded by execution df he contract bas been dererbed as “cusious'>¥ because the representer ‘ray only Know of the misrepeesentation after ile and possession have ‘Seen obtained. Lord Denning repeatedly said? both that the supposed fle bad been too ely stated by Joyce J, and tha it was to be limited to Iisrepeesentations ato tle in Ue ease of contract for the sale of fan. ‘Significantly, an alternative ground for Joyce J's decision was that the purchaser hed tired the contract. It i often the case that once Bwnorthip has passed, act of afirmation will occur which will bar the ecreue ofthe buyer’ right of rescission Further, Joyce J doubred chat ‘here wes a misrepresentation a all eis thought that the dangers wough< te be avcided by the rule are adequately provided for by other rules sult ir the sentition implied by the requirement of substantial resiution,?* {he impact of affirmation the contract,® and the interposition of rights of Innocent third partes" The observation of the Privy Council in Senanayoke v Cheng seems to be of general application: ‘Of greater Fmportance than seking ina case sveh asthe present to atach the label of fone or other ofthese words [‘executed’ or ‘exccutory’] ae the questions 226 Tha hea pple 1 mene Jy OLE] 1 KB 66, Et Reon Doran 1985) 5398 NSW) 33a el Cont Fronon (1997 98 WALK 128 Fy Ld» Coes Psing Lo (1980) 6 NSWL 73, Bere ret he Cnn Be Fr i Lon Siping od Siam LiL ey sare tote (190) Re Bi SAI atameinay ‘Stony Nor an Sa Ce (108) 530K 99 Bi sieeee sfcue ] 2B aw as 55S Sl cr Bs Le facie Gai 0 28 i Gas (0893 Lies ep 8 aaa ne tes mao! Gens 990 2 B86; Com Ud 85] 2 AUER At 33 se foayion) 3% line Lest 2375 0s Lr att ta 300 BPC 83 w 9, Ande Han» Fp 1810 14S NSW 291 ones of re GN rr ions gran eu ee ein od ” Meco Co Agcy © He: 888) +Hos) VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDUCT whether restitutio in intogrum i eubstantilly possible and whethe rescission is timely and just and fair” Ce) emo afr, Ror i od he ade SP pr ote, ah i et cnet SCE Sass tate Sate ce aes eta ad eS wg ie we rnd BS bt ae ores nl eer Sen at Sateeey pean mmr Seana Se eat ter Aefoe s poemnae e SERS kha cre moran, es ike rican os TLE on scsi ner es si ft cms eon of tt weighty factor than the dividing line between contract snd conveyance, 20 mle hs real ne Sires mig ettineansng tape anaes ipa gaia a mo on Some ee core [2056] Statutory amendment. The rule has been sbolished in the Australian Capital Territory and South Auttralia.™© Trig rot a bar to fetcision thet a conveyance, transfer or other document hasbeen registered ata public rgisty offs in purtvance ofthe contact ‘The rule has also been ebvlished, in the context of sale of goods, 5 4(2a)(b) of the Sele of Goods Act 1923 (NSW) 3" wots oy (0) Pre-contrac representation alo trm ofthe contract 08) “Te alge esa, hese ein SOL arte 9 oma ace cu kis wine be eee Sve Ses Sea th Ces ande ne me ygpaje = Oman pre state BEETS restr enmnn BE tegnv ones nema EEE ppm amy oto nanare wo fa gacieet hat noyarem assconsmeng caro ecm pan: on & sf ne ny east scp 0B AES mts at son ‘248 Added by Sele of Gands(Amondaon) At 1968 (NSW), 5 3, Sch 104 SSRIS lt tne acm an sin, 380 n smasnureesmeerarion ros uscion ic not a temedy for breach of concn othe qucton aie whether the reprecenon can rey on he representation #3 4 Yo for rescuson. in some can {hat been. suggested hat the eemeauon of the represenetn ae + term imply tat the next of "SSon ih no longer avaiable However there tuborky fo he Sec thar rescission a6 for 8 procontact.sisepresenaion remains eeftule*? In our ew thew delsons should be acceped as correct in EU'ibscnce of evidence cf an intention thc the par niehts and ‘Souter o be found exe in the contact sel ‘Unuays the, fact that Ki 4 tet means tat the Ghiyy of dhe sepresentition iso a breach of conte: sounding in damages. Bven if We'rue has valid in the content of anocent mareprexenaton, there {tay sll be a right of temarion for breach of the tem, fox example, ‘echue it posseted the character of «condition *™ However, cae of {ere of termination docs not have the same effect an sescion since {he contacts dncharged at to the fare ony [1058] Nature of the misrepresentaion, Where the misepre- Mhaton i finualeny retin i evaiable yen ifthe representation fan bevn Incorporated’ ax x contractual team." Therefore, the neo eradon resticton if vad at all, epics on to cases where the reps TEuntion is innocent2 ‘The rationale would be tat de remedy of ‘rchsion ceaes to be avaiable Dectuse the satement has lost i harscter ob a tepresentcon [1059] Statutory amendment. Following egslesve reform i Engng" ts sow provided in she Assttian Cepital Terry and South Australia tatincospration of a misepreentation a term of the ontrack does ot br reseision. Scion 1002) and 118) of he Cut At 1958 (i) ae tt oraon is nota barn consumer sales and lesues, Andy in the conte! of ale of goods, 2 4(23)) of the Sale of Goods Aer 1923 (NSW),2" provides that incorporation of a representation as a term of the Gomer dow noe depeve’ the septesenter of the remedies for ‘mlreyrescoaton. ears FE Rpn apnee cure 0888 1232 Chop i Chis dee Paro eon Siping Co 1030 Sr rma cemeteries oR ie ea wo Garam MIN Scam Soave 35 atc Rog O038 94 CLR 216 a 24; Kemer Medal (1970 NSW 145 & 134 eo UR 6025 3 Scheme naa ora Se Mri nea 480 SA Mg Sachi 2a tg sige sna Gt in 8 6. 21N060) _VETIATING PACTORS AND MISLEADING AND DECEPTIVE CONDUCT. (9 Sat mt Ug rem tag, To re cna fr he ‘goods call for comiment:28? for te se of 1 shee tena ef eon 1 sn 0) Be a eT OT peed n+ tw 166) ABPy agate rn, Unt coven ben seen cmt te, Uae een er Cpe se npc a rt ates amet dpe es BERL Gm eee een ely oe eaten a he Sia ae Ee Se OEE he tac mn we nea ee RESALE Sa oai's Me Fs ec ine teem, tee cees ne Ge ane Ra dt re Sere rg SS gle Be a ayn ee alstes Sees Meroe, S, at SSC MEM rns remem eee ee Sa Naar te carrer gee ee reas Wien eaten oe See Scat Reese mee ac ote ite pone Sar ase? en ae eee ee ty Py cr cre ham toe ots Snel tether pei tt Rod Sends sac gait at Some a aT te eager SE Aa rae a neice SOP hones ers 209, 3 De Maven we Mas Sal Ena Pins du ‘Grote Canes (985) 20 UOC Li 99 aC 390, NSW Law Rete Comet, aot Sere Se of Goal oe IRC 1987, Chapter 2 * yea OER ia Win Tas Coa 242 em W161) 10 CNS as 4 465 Kea Roa Md tr Son ul 86) 2 0 3387 (oe 31), There wm sn ture saerhy er ae penton ae Sal pues SES Bey as SE SL St hw in td Hom ty as as as he pas were er fae “A GO LOUD We als Se ef ptic Sous cravat et AU SENET Sit i 98, NOW: al f On 1999, <0 Sik nt A SO a eS ee as Sa rips ag A 8 87s eS 8 sa 24s Te one rn bt each ee The ae oe ete we iy et pi at 190,99 12-15 Fra Gur 1988) tap CLR Bans SAE Go 258 ted ard wei 39 NEES Bw Mada (059) VR 8 ‘Hlsbnes © Burgess |1975} 2 NZLR 311. boat - a2 _MISREPRESENTATION, 19681 expressed” ond in the majority of cesesi#¥ the courts have simply Doomed that the remedy of rescission for innocent miscepresensation [fable under equitable principles, "The fact thet equitable jrisdhtion was not invoked inthe sale of goods context prior to the Judicature reforms and eale of goods legislation # not good ceason for continuing to exclude the remedy today, and the beter ‘hw is thet, io legislation intending to codify the law, “common lew" neous ‘non-stetutory” lawl ‘Moreover, inthe Australian Capital ‘Fenreory and New South Wales?” the issue has been settled by provisions ‘sang thet equitable rules apply to mistepresentation [1062] Effect of buyer's acceptance of goods. Once the buyer hes [ecepted’ goods under # contract for the sale of goods, the contract temaot be terminated for breach of ¢ condition of the contact. In Leaf f Imernarional Galerii#® Denning LJ suggested that a miscepresentation Gihich induces she contract is Jess potent than such a teem, 20 that Eccsptance also prechides rescission for misrepresentation. However, the better view i that since termination and rescision ace distinct rights, the qoas of one does not accesrerily imply the lose ofthe other?” Tn many cases where acceptance has occurred, affirmation will also have ‘caused. Yet there wil be some sitentons in which accepeance will occur before the represeatee knew or could reasonably have kaown of the Tisepresentation, and s0, before the repreaetee was in « position ether {0 allem of escind Moreover, in New South Wales, #38(2) of the Sole (of Goode ct 1923 (NSW)! expressly provides that rescission for ‘inefewnttn is govane bythe gel iy aa aa he poaan {governing acceptance: © 38(1). And s 100(1) o . Slows revation oa consumer sale before, of within a reasonable period ‘after, acceptance of che goods. 7 Damages for Misrepresentation (@) Introduction [1063] Remedies for deceit. ‘The mest elemental system of justice ‘wil afford « remedy to the perton who is induced to rely, detsmentaly, da another's fraud. ‘The limited remedies which eventually came t0 DE lowed for ionocent misrepresentaton stood in contrast to the more 26 sehen 080) 8 SASR 4 CE id Eri Ri Py a Rae ‘iaprishatks ts ech ae Gil 950) 2K 6 Lag» a (1958) 2A ER As ESLen ler et sb te Fy 2 De Fm Py tat ADH Da a ees eae pL Wan fm tr © Ce Beh) Gis facaoe) 2 See nan Lan dL 9 61 LOR 98 SSS pi ae yet a Se eA ed BAe Gad can oes uy 29 Shh) na 8 Rate el lc le ee Con Rene A OF 40) 3rs 19002 i 96 90-1. Ct comp Lod 198 2 AN ER A Fb Leap feast My Lad eetane! Pct cob ad (1990 20 PCR 3M at $i soa ce eis En a 9,8 7 icy Subp So ones OS SW #3 8818. aalb0e) _ViIATING FACTORS AND AUSLEADING AND DRCEPTWE CONDUGY cone ut wk ste Sa. Te cone soe eters Sn Se tn Se Be ahr snc an als arte ‘Sine a apes Ea ls go pie The Bree ig ral eae ini one Chan aes te we acs te in oy Chane aks to ge aS ee Uo) Reto, ond damae: 8S hone Ect he iy Sty Me en See a ta hata a ‘Siere hela wceaame cs an Sinumnc operates arse imine aes ar and ae eee although damages may be recovered whether or not the innocent pasty hat cece ae a Sete ae ae “Se hc ine Eee sh vg who rescinds for mistepresentation cannot sue fer damages for brea ‘contract because the rescission is 2b initio and the contract is gone. sh of Une tgs neu” ear ne ese ane so gs 4s see serge Se A pat eee nig a ace a atone aaa i nce cia eta Be tin pe En eet yes ‘roe leg eee arate ier go tat eau tes erecta pee Set no THe" Sehr wees ean hone sal Sa Re Steyr men Seen ty ni ere eta en ie nena significantly, damages may be available under statute. 2 on (®) Damages at Common Law [10661 Proof of damage essential. A plaintiff . if suing in tor for deceit, OF negligence wil fll lst or damage ie proved to have besa sued Bp bom-ton Gm 491.2 CLR 40 pe Gri hi Meche Manepm Py Ea ret 218 Seg Oko Ta Far Gl [1918] OS 20 on w Rann Co 10% sop Ras hi ao ie ND Sete 3 Senet Chai 23, 38 Seg toe» Hr 1881) 29 CD Nig dam (1886) 34 Ch {aire ah nr Aan w Nb (880) 13s Cas 300) Re, ve RTA SWI Otte Bg Ne Soni Pepe (783 oy ok 263 Se etry tna tig, NETL AL Tom 3986 [tt ener Cher me MISREPRESERTATION (aos) ving acted up the mireprsentation 3 The casi statement 10 Hein Baier J jadgmant in Pacy © Promen™ “fr Toudton of ts ston i ud aa deceit ose defendant, sd Peso te sui nt the aieioa wher sn se oe SE, Sa tte fa cn of tw, Ra wba amigo ‘rig hon: sno ato acon be whe se wo coche Sector les No comiabe lots or damage occurs where 4 pein is induced by fea puter an exating legal cblgtion, fr example, to perfor & [iting donsace® Nor ithe rouirement of lose or damage tied ey pres! that te plain! Sk now make the proSe whi would Tir deen irl ithe operenntion hed bezn rue [1067] Accrual ofthe cause of ation. Since les or damage i an St lent fen of es fr eo epee ete on general acrucs nly when tht om rage xi tat 0 seprhea the truant contact proves te be deatmntageosn, The ‘Sloan peiod unr the stunte of Tniatons fr commencement of ‘stcedngs begat fo nin Eom the sufleng a the on or damage By Repeats the fmtaion pevod in an action for brench of conract ‘Semen! to un when he contract breached [106s] “Causation and remoteness. Its expsind Iter shat wo Udperea as be presen in order fora pit recoeesubetantn Stones for breach of contact. Fin the lon or damage ia repect of Stich the Pai came comperastion rat beve been caaed by the lendan?s breach. Soondy the low or damage ust wo be to romans ‘Thea ewe resuemens apply alo t0 an aeton for damages tor hates fr det we npligence™ "Tac wit of caunalon i the sume in both desit or negligence?! once, ihe femotenesteeson i mote. gnerou i deat han egigence" tn coe of deceit the pina, subject principles fetching mitigacion of lous ented to recover any los which Etre unt marl consequence af ag on the mrepeentation®™ On Shooter handy de Gent ceesion hate lo or damage most have 284 Sex cise Manse Py Lid are (188) 4 ALR 7008707 His Gran) 3 test ar sey 00 BR 5 a i nan ea AN apo 930 32. 0, 1s Howl's Desner © Pe fo 1960) SAS 8 HS See eg Howbis © Gano (SHH 168 CLR 959, CE UAE Lal © Boopeen Aven ses Bate 7 LEAST Jou Tue aia pronklonsappecning ccpocsbty onthe bat of cotbutny eigen (re E129) wl tual net wp tees of Be Aone & Lace [yang Sse # Essay Lt (1993) 1 WLR 482. ane 292 Tar aro femora may be mere gente i shan coat Se (2125) 3ts See Sou cua Jaon C1002) 42 AL Tel 188-7, 233 Sq ex Nea te DA) CAR DA Strat nd» Me 1 ateww y Lol (001) 104 ALR S97 41, 204 Gla Urata (1930) C28 a 60; Dox ly Crome) Lad 1945) 2.1338, only Yong (1980 137 CLIS15 Mowe Smet dace Cn) © No 1 Reboom oiled (Sy Ton ALR 997 ae 385[W068] | VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDUGY Sean etnsly feeble tls da for damage fr nein Sern sent oo 2 ei {10691 Measure of damages, The measure of damages intr fader ngipence chaste pvc or doadrnte cea aan ofthe eresetes sein al psoas’ Tar aoa oy Docket tts htt sey, haw mach laa eco roe Eon of eng a upon te misrrsenaten Body Sons ge diteene been te ancl pousos woh te operas wot ive been tie fe sorte tad nt beer te a ‘ene acu psiy Ante corchenabe wa) of hag Pockion boy at eS Inrange mon aco fs odin eo een Seige pal comes ote nunc opr a ‘eli cimitshed by any onesponctag advantage fo money moneys ‘Woh obtelned by hm oa the ober se mney money iota ptr ia eine eg See Gat ein 0 Sons hei see oe a cent Sistem denn Perce a SASS arg hdien acemaee emerge i ee seni Ba en er got eet om See Tar ae ae eee ae ries era's sane mara SATS ans Aled ee a the owner of such property." Sit TATE Cane e met oo ead et wares eta Senior cris herrea eae ‘O'Connor J said: " * 1 promise) rs he oy ne tn erates este os ote pe tes Symon phoneme men ee nema Ey rebel rd ae ape ith cece ancsiarcey ewe Sonate cetegramena wae paecnn Sos ee ee 205 Se sno Ted nas (195) 67 CLR 47 a 650; Wandey dpa La » Se ‘Wr neti (pa) 115 Ci i400, 8 7 Wan AL Sef 290 Be i 0 eh CAR 8 07 pr Dan Je Ta noe (105) ST CLR G4 se s0-t Cul «Veep (fond) 197 CLR AS oS Sess Soe Denar» Gis ry Goating ert Py Lat (191) 22 NSW SE at 37, ar tan ta ta Sef ea (9 1 AR TN 429Rr cone Cada's Win Ld (1029) 25 SR NST) 5 San v pe 1937 91 SR OH a0; Neh oF (830 VER 19; Bom» Sosa © Co AR 249 ion scx on 301 (0m) TELA i a0 5a en 4 MISREPRESENTATION, ott sco that pion be must be revompensed for dhe damage e has sotined by energie the notch. “The contract here ie between putting the plaintiff in the potion which would have been occupied had the contract been performed (contract) (hd indemuifying the plant for loss or damage suffered by reason of Entering into the eonteacr (Cor). This contrast means thet «profit wich would have bam cared had the repetition been tre is sot Reoverable as damages for minrepresentation.™= Tt is nevertheless true {het loss of « business opportunicy may be recoverable, where ent into the contract deprived the represente ofthe opportunity.» [1070] Relevance of market value. In applying the measure of Sasages enunciated sbove the frst question 10 ask i€ whet the plaindiT parted mith in reliance on the fraudulent misrepresentation. Where the isnt isu buyer this the total contract price which was paid, If what fhe plaintiff received in retuen was valueless, the tora price paid i= the measure of compensation. But ifthe propery received and retained by the plaintiff wae of some value, damages must be reduced by its value st the tine of receipt, any subsequent decreate (or increase) in value being aregared at being too remotely connected with the inducement. >> eis the ‘eal’ of “fai Value which & to be regarded and not the ‘marker aloe, ‘which may, after ll, be inflated by the very faudulent ‘mlsrepresentaton in question The assessment refers tothe tal price land the foal contract. Tn Toff v Amonas™™ the vendor of a business froudulendly misrepresented ube takings. ‘The conteact apportioned the toral price of £2200 between goodwill £200, plant £1750 and stock (£250. Tae fair value of the business as & going concern was £900. The {tial judge awarded damagee of £200 on the basis thet the imisrepresentation related to the goodwill alone, bur the High Coart held {hat the misrepresentation had induced the purchaser to part with £2200 for the business a8 a whole and that damages of £1300 ((2200-£900) sould bave been awarded. [1071] Position where contract affirmed. Assume that « seller (S) maker 4 fnudolent misrepresenuation concerning the quality of the property sold. Assume aso that if the representation had been true the propery’s value would have been $150,000, whereas infact is fir value {3 $100,000, I we further assume tat the Buyer (B) was induced by the fraudulent representation to buy it for $120,000, but that B afi the transaction and retains the property, the measure of B's loss is the {ifference between the price paid and the value ofthe property>” Thus, 26 Sefer 07, 07, 305 SS Sh | eT Pom $986) 179 CLR 32, cecay at 395 wre he Sardar ef prot i capnc C E Mu (1991) WLR 401 ee Jason SEGA (Geb fn LOR Se Siow ian, 999 60L7D. 304 Pas At (0) 64 C2 2303 Ror ait (194) 4 CLR 29, For the een date e Saunas (1987) sos casa a7 CLA oe 308 Sees 952) $9 CLR 647 a 650; lar Kr (1999) 8 CLIC 216m 235 eke tecats tata Stan f Woe Aneto (OND CLR SLA, aMoH] VITIATING FACTORS AND MISLEADING AND DECEPTIVE CONDUCT the out of pocket test eniles B to $20,000. B canaot in nddition, recover '$30,000, since there e no breach of contract. 2 If the fair value ofthe land had in fact been, say $125,000, instead of $100,000, no damages would be payable a all for misrepresensaion, even though, had the statement been a term of the contract, B could fave recovered $25,000 for breach of contract” 12072} Position where contract rescinded. Rescission of the Contract in the first example given above?” would entide B to a refund of the purchase money of $120,000. The value ofthe property is intlevane If the land had heen worth $150,000, instead of $100,000, B is sil Jimited, in claim in restitution of in tore, €0 recovery of the purchase Drice, However, there is a contrast with the loss of bargain’ fcasure, ‘which would apply on termination ofthe contract for breach by S30" Ths Would produce an additional sum cf $30,000 as compensation, thet is, the ifierence berween the contrac price and the marker price ‘Now assume this change in the figures. If the land had in fact been ‘worth, say $125,000, and had made a representation which, had it been ‘ue, would have made the land worth $120,000 no damages would be payable av all for breach, had the statement been a term vf the contract ‘The measure for ‘loss of bargain’ would be nominal, since 8 has made a bad bargsin. B ib entitled, by rescinding (or terminating) the contract, to recover the total amoutc paid. But B would ‘ail in an action for ‘additional damages (other than for cons incurred) because B has sutired no los. (© Damages Under Statute (9 Inuroducion [1073] General. Legislation affects the law relating to damages for ‘misrepresentation inducing contacts in two ways. First, there ate startet the object of which is to reform directly” the ‘common. lay of misrepresentation. Second, there are statutes which, in conferring Fights Of damages, for example, in respect of misleading or deceptive conduct, impact on the law of misrepresentation by mokcing anslysis of the common Jaw incomplete, We consider the frst of these in this section aad the second in separate chaptes.3 (G) Miirepreseasionlegitation [2074] Application of the legislation. The origin of legislation ealing specifically with miscepresentation is the Mivreprsentation “et 309 le « Tha [1969] WAR 39; Suan & Sui v Barbch (1869 WAR 46, ‘Aa contra Carel Rem er (97 OD, 302 Sees Jo 7) 4 ER te. Bit See iar z10u) 10 Hus Bom 6 Pie Ll 965] SASK 98 ad 0 he coc tne? sae ee 2100, 313 See Cheer 8 MISREPRESENTATION or (1. Sine legion Nee Deen enced inthe Mic ae mation Act 1972 (SA) and the Law Reform (Misrepresemtation) Act nin de er a oman Aet 1972 (SA) applies to misrepresents Th et aan Ee the pups snc maiden to make 2 contrict or 10 pay money or dispose of property. Tt se ts sete Bre fetes yoko Pade ot akes i conducted and the actual representor, who are both Hable to a dom idromeed Ae WT (ACD hare Net rene mre ate tthe tore of ie race concer, however, i he expansion ofthe chi remedies for Speman Hes] Damages nig ori, The ono Ors, age i ei aan oe Tae es a oe sal aed bch Sasa red xomales " ron Right amegee, The mnt signant impact of the QO nT ag coma oss bee sn cach woul nt ie Tat ut gina commen ee a a ee Semace had oy te Py se epvenion ett hve been mde by & certs {defendant sho ie person who git be fosely deveribed as one who ee a eye ata ay be anos Paty oe ae aaron la a enn 4 pena gure Peay ar Sion tel ings ot we ne amon ie conse Sane ere cs mun be auch thatthe defendant (her oe a ay he panes had bet Fee ee Ee ale cnening rey ed Sie tn pe show Semen ioc nt aa ee ate aaa come an oer mowed Ere asec fhe provisions subject oy defense ‘ators tad munnre af damages. Te damage coven Narr defi edaten nein he are of age the ot Sa ne anc way noch ean he Th Reo of ibe Law Rater Commits Cond 1782, 162. Seen PH rand Asn Cane, “Decee Daag soe Nepean As 867, $200; Uppal toto a0 mere 515 Bo tel a Law Reber Conenisin, ert ot aan Minepemo,ec. $e: RCT: Law Reform (Migs) 107, 3305 SA: Mimraion de Metin CTS See Waa Stal Pew Canad Cony Goo 98) 1 WAR SIT SECRET: aw Rom (Mingrmitin) Ae TT, 84; SAS Mignon Aes S10 £0 Same Monin (I988] Ch 390 Cenowles Faget at) snd we ake for 289[HOTT] VITIATING HACTORS AND MISLEADING AND DECEPTIVE CONDUC? foperatex, Rather than deeming the representation to be a term of the contract*? the legislation, while not changing the character of the representation, confers a right to damages where the misrepresentation, though innocent, would have given rise to a lability ia damages had it been fadaient 2 1k follows that the relevant measure of damages is not the expectation bass as on a breach of contract” Rather, the court must astest how ‘ouch wort off the plaintiffs by reason of having made the contract It also follows hat the ionivus test governs remotenest, and it has been held that the effect of the characterisation of the award is to incorporate the ‘eneral rule in relation to fraud? shat the representor is Habe for any lost which i 8 direct’ und natural contequence of acting om the ‘miseepresentation.» However, given that it is no defence for the Fepresentor to prove an honest belief inthe truth of the representation®®> this seems a peculiar resule. [1078] Statutory defences. Absence of belief in the truth of the representation, or knowledge of is falsity i, at we have seen,™* the basic terion for deceit. Absence of reasonable grounds did not constitute leest, though gross negligence may have suggested that degree ofrecliess indifference for the truth which bad come to be treated es absence of Deli in the truth of the representation.™” A consequence of the Hedley Bye principle is that absence of reasonable grounds may amount © ‘and give rise 1o a ability under thet principle = Honesty alone would be suificict to defeat a common lew action for deceit and exercise of reasonable cure would preclude a claim under the Hedley Byres Drinciple. Iti, however, a statutory defence to the action for damages lunder the misrepresentation legislation that the defendant acted. both honestly and reasonably. This means thatthe represcator must not only bhavebefeued thatthe cepresentation was tue, but also have hed reasonable rounds for that belie, D8 Ae ser the Cont Remote 1979 2 wich es ees Burke pao doc nc aed SO thc: Gn Nene Shin $20 Burt planutf doe no pen eau oe at fhe di: Gade Nene Eile Geena arte cso Crp {09901 Lissa ep 990 (ee Rican Fooly Gs) 107 £083), 301 Buel ito Sigal Pew Combi Coy Coe 326 See Ronee Tr ale Rag (19) 2 QB 297; Wiliom Snel eo Contig {ity Goan 1994 1 WER TOLe. Ce Cxufrd's Poa U99HS 108 FLA SOL see er coms) ace AJ Calley, 1992} Yo oon Wace, (1092) 33 MIL 698, ee BEES comtem BET coo ty Ee i Ne ng it snp Tone rem et ee SEs aaie 390 rv seumesorare ws i.e eas gen Sct es ena ot rt en ols ie ma ir eh ere ene a sopiesent on atars waere a Slims an ce te sere ice comme eh See Siete ee eel nee Goes a