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Contract: Misrepresentation and Economic Duress

Inducement and reliance

  • 3 things to know
  • Components 2 and 3

Overview

Why a false statement is only actionable if it drew the other party in, what happens where the claimant investigated for themselves or never knew of the statement, and who has to prove what.

What you need to know

Answer each one before you reveal it.

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Key term

Why must a misrepresentation induce the contract?

Key term

Must the misrepresentation be the only reason for contracting?

Numbers

What happens if the claimant never knew of the statement?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Why must a misrepresentation induce the contract?

    Model answer

    A statement that played no part in the decision has caused the claimant no harm. Inducement links the false statement to the loss claimed.

  2. 2

    Must the misrepresentation be the only reason for contracting?

    Model answer

    A misrepresentation need not be the sole reason for entering the contract. Inducement is established if the statement was one of the operative causes.

  3. 3

    What happens if the claimant never knew of the statement?

    Model answer

    A claimant unaware of the statement cannot have been induced by it. Horsfall v Thomas (1862) refused a remedy where the buyer never examined the concealed defect.

  4. 4

    What if the claimant relied entirely on an independent investigation?

    Model answer

    Attwood v Small (1838) refused relief where the buyers commissioned their own experts. Reliance on the buyers' own report broke the link with the seller's statement.

  5. 5

    Is a claimant under a duty to check the truth of a statement?

    Model answer

    Redgrave v Hurd (1881) held that a claimant need not verify a statement made to them. Failure to inspect the papers offered did not defeat the claim.

  6. 6

    What if the claimant knew the statement was untrue?

    Model answer

    A claimant who knew the truth cannot have been misled by the statement. A claim in misrepresentation therefore fails in that situation.

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