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Contract: Misrepresentation and Duress

Negligent misrepresentation and the Misrepresentation Act 1967

  • 3 things to know
  • A2 Units 3 and 4

Overview

Recall questions on Hedley Byrne and its application in Esso v Mardon, the reversed burden of proof, Howard Marine, the criticism of Royscot, and damages in lieu of rescission.

What you need to know

Answer each one before you reveal it.

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Evaluation

Why is the burden of proof under section 2(1) of the Misrepresentation Act 1967 an advantage to the claimant?

Numbers

Summarise the remedies available for a negligent misrepresentation.

Key term

What does section 2(1) of the Misrepresentation Act 1967 provide?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is negligent misrepresentation at common law?

    Model answer

    It is a false statement made carelessly where the maker owes the representee a duty of care, giving rise to liability in negligence for the loss caused by relying on it.

  2. 2

    What did Hedley Byrne v Heller (1964) establish?

    Model answer

    It established that a duty of care can arise in respect of a negligent statement causing purely financial loss where there is a special relationship involving an assumption of responsibility by the maker and reasonable reliance by the recipient.

  3. 3

    How was the Hedley Byrne principle applied to pre-contractual statements in Esso Petroleum v Mardon (1976)?

    Model answer

    The court held that a party with special skill who makes a statement to induce a contract owes a duty of care in making it, so the oil company was liable for the careless throughput forecast.

  4. 4

    What does section 2(1) of the Misrepresentation Act 1967 provide?

    Model answer

    Where a party has entered a contract after a misrepresentation made by the other party and has suffered loss, the maker is liable in damages unless he proves he had reasonable grounds to believe, and did believe up to the time of the contract, that the statement was true.

  5. 5

    Why is the burden of proof under section 2(1) of the Misrepresentation Act 1967 an advantage to the claimant?

    Model answer

    The claimant need only prove the false statement and the loss, and the maker must then disprove negligence, which reverses the ordinary position and is far easier than proving carelessness or dishonesty.

  6. 6

    Why did the defendants fail to discharge the statutory burden in Howard Marine and Dredging v Ogden (1978)?

    Model answer

    The manager stated the barges' carrying capacity from a figure remembered from a shipping register when the accurate figure was in the shipping documents in his own possession, so he had no reasonable grounds for the belief.

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Law Making in Wales and the UK
Delegated Legislation
Statutory Interpretation
Judicial Precedent

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Roles v Nathan ( ).
196319411945

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AThe defendant owed the victim a duty of care and breached it.
BThe breach carried a reasonably foreseeable risk of death.
CThe breach caused the death.

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Assemble a full-mark answer from its marking points, in the order an examiner wants them.

Pecuniary loss is financial and measurable.
TrueFalse

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