Scheme of Remedies for Misrepresentation

Scheme of Remedies for trickIn pre-contr guessual negotiations, one fellowship (the Representor) whitethorn make commissions to anformer(a) go bady (the Representee), which relate, by substance of affirmation, denial, interpretation or former(a)wise, to a averment of incident or present intention. If the patterns make atomic number 18 untrue, they whitethorn be termed refutations. The Representor whitethorn know that the statements atomic number 18 untrue or they may be c beless or reckless as to their truth. Alternatively, the Representor may hold an honest look as to truth of the statements do. more(prenominal)(prenominal) often than non in that respect is no positivistic calling to act honestly in incline Law a conjuring trick sightnot be made by silence and sluice where one party proceeds, fully aware that the other is conjureing on the basis of a mis infrastanding of close to fact, English legality does not proffer for a revivify. The exceptions are where the facts given are a half-truth, or where a statement is made, circumstances change and the ecclesiastic of the statement fails to come apart this. Further exceptions are where a contract, such as one for insurance, is treated by the legal philosophy as macrocosmness of the end good faith and requiring the contracting party to disclose all in all relevant facts or where the contract involves a fiduciary relationship such as betwixt a comp whatsoever and its promoters.European Law, by contrast, imposes a positive duty to act in good faith and sportsmanlike dealing, both(prenominal) during the course of negotiations and where a contract is concluded. It quits avoidance of the contract for double-tongued ( delusionful) non-disclosure of selective in fundamental law which, in conformism, with the principles of good faith and fair dealing, a party should divvy up a leak disclosed. The duty extends to situations where a contract is not even concluded for example, where negotiations ameliorate down, or where one party is meter wasting. This positive duty to act in good faith is common in other jurisdictions, including some common law systems.The scope of remedies for mis theatrical performance in English law depends on the type of disproof that has occurred. Where the illusion is dishonorable, the law sees the Representor as more find faultable and the level of return is not limited by, for example, remoteness, the duty to mitigate, and causative disuse. The reasons for imposing wider li superpower on the intentional wrongdoer than on the righteous misrepresentor are certainly moral, but as Lord Steyn notes, the law and moral philosophy are inextricably interwoven and, to a large extent, the law is entirely formulated and declared morality. It seems ironic, in that respectfore, that on that point is no remedy whatsoever are where one party deliberately fails to disclose a real fact an action that is intentionally dishonest, immoral and surely equally blameworthy.To be blameworthy means to be at fault or deserving of blame from a moral standpoint, it imp lives conduct for which a party is guilty and deserves impeach or punishment. However, on that point is a logical consistency to, and a popular policy of, not punishing intentional wrongdoers by civil remedies in English law the primary remedy for civil wrongs is to provide compensatory restitution, mensural by the claimants harm and the aim of providing a remedy, frequently cited, is to put the claimant into as good a property as if no wrong had occurred. However, the principles by which the remedies for tarradiddleulent deceit ca-ca developed do appear to go beyond this, having a punitive nature in their application.Fraudulent falsehoodWhere the Representor makes a statement of fact (or a statement of intention, which involves a representation as to the existence of the intention which is itself a present fact) either knowingly, with step u p judgement in its truth, or recklessly, i.e., careless as to whether it is true or false, and this fact, being material, induces the other person to enter into the contract, this is a deceitulent misrepresentation. It does not issuing that the Representee could get down discovered the truth or spurned the opportunity to do so.The test as to whether ruseulent misrepresentation has taken place is whether there is an absence of honest picture and honesty in this context refers to a subjective appreciation of resultant roles. The fact that the statement would not convince a comely person does not necessarily make it dishonest however, where the statement is made recklessly or carelessly, the Court may make a purpose of imposition, in that the person in question could not sanely have believed in the truth of their statement. In all lawsuits of fraudulent misrepresentation, however, dishonesty is a crucial factor damages terminatenot be claimed in prevarication on the bas is of recklessness alone since the basis of deceit is dishonesty.Where the misrepresentation is fraudulent, the Representee may rescind the contract a remedy available for close all types of misrepresentation and he may too recover any benefits that the Representor has enjoyed as a result of the contract being made, prior to the contract being rescinded. The Representee may also claim damages in the tort of deceit, and as note, the damages are intended to restore the victim to the position he was in before the representation was made.The test for damages in fraud is one of direct consequence, rather than foreseeability, with damages being dissever into two categories diminuation in value and consequential losings. Similar to damages for negligence, the theatre of Lords have confirmed that the Representor give be responsible for a chalk up representing the financial loss flowing direct from his alteration of position chthonian the inducement of the fraudulent representati ons of the defendants. Unlike for negligence, however, the damages do not want to be predictable as long as they have been cause by the transaction. This demonstrates that the Representors blameworthiness is important since the benefit of limiting liability to only foreseeable damages is not permitted to the dishonest person as it would be if the representation was made negligently per Lord Denning in Doyle v Olby, it does not lie in the mouth of the fraudulent person to say that they could not have been reasonably foreseen. This decision was reaffirmed in Smith New Court.Further, the fact that the Representee had every opportunity to avoid the contract or transaction in question, or could have taken proceedings to rescind it, or asserted his rights to have it treated as void in proceedings brought to enforce it, does not bar his claim for damages. Once again, where dishonesty is involved, the law does not allow the misrepresentor any opportunity to reduce his liability, even wher e there is fault on the part of the Representee.Similarly, the causative negligence of the Representee does not apply to reduce damages for the tort of deceit. Again, this feature has been applied because the tort involves dishonesty regardless of the contributing(prenominal) negligence of the Representee, the Representor will have to pay for all damages because the law views him as blameworthy and cannot justify restricting his liability as a result of this. The Representee may also claim for consequential losses, although he is cause to take all reasonable locomote to mitigate those losses on discovery of the fraud.The type of damages that may be deed overed to the Representee may entangle both special and general damages, as for A v B, where the claimant Representee was authorize to an concede of 7,500 in respect of general damages for distress even though his distressed state had not required medical attention.Although the electromotive force heavier damages available t o claimants may make a claim in fraudulent misrepresentation seem more attractive, it may be elusive to prove the Representors dishonesty and failure to succeed may result in an action for defamation a claim under class 2(1) of the Misrepresentation act upon 1967 (MA1967) is more likely to be pursued for these reasons since the remedies available are similar.Negligent MisrepresentationThe misrepresentation may alternatively give betterment to an action for damages in the tort of negligence, if the statement is made (a) knowingly, (b) without belief in its truth or (c) recklessly, careless whether it be true or false and a special relationship exists between the parties. A finding of dishonesty is not necessary provided that it can be established that there is reasonable foreseeability of reliance on the statement and of the harm caused by that reliance. As established in Hedley Byrne, the Representor has a duty of care to do all that is reasonable to make sure their statement is accurate, regardless of the existence of a fiduciary or contractual relationship only a fit degree of proximity between the parties is necessary for an action to be sustained. such proximity would arise in professional relationships, such as those made with barristers and estate agents, and also in purely commercial transactions where the Representor has first-rate knowledge and experience to that of the Representee and it is reasonable for the Representee to rely on statements made by them. In all cases, it must be just and reasonable for the duty of care to be imposed.The remedies available to the Representee are rescission of the contract and damages in the tort of negligence and, unlike a claim for fraudulent misrepresentation, damages will be subject to a test of reasonable foreseeability. The Court may however take account of benefits that the claimant has missed out on as a result of the misrepresentation.Despite the difficulties in establishing negligence, it should be n oted that actions for negligent misrepresentation have the advantage that they are not limited to misrepresentations that induce contracts nor are they limited to statements of fact. A parallel can be drawn with principles of European law, which recognise liability for losses during the suffice of negotiation, even if a contract is not made. However, whereas for negligent misrepresentation in English law a duty of care must be established, in European law no such duty is required. such(prenominal) losses in European law include those incurred as a result of failure to act in good faith and fair dealing a positive duty imposed on the parties, which may include failure to disclose pertinent information.Section 2(1) Misrepresentation Act 1967More commonly, an action for misrepresentation will be made under Section 2(1) of the MA1967 where the misrepresentation results in a contract. Unlike an action in negligence, which requires the Representee to prove that a duty of care existed, th e burden of proof is change by reversal the Act requires that the Representors prove they had reasonable grounds to believe, and did believe up the time the contract was made, that the facts represented were true, and unless they can do this, they will be liable. This can be difficult to prove a mere honest belief is not enough.Remedies available to the Representee are similar to those available for fraudulent misrepresentation unless the Representor is able to discharge this burden of proof (and if the Representor can discharge the burden, the Representee may still plead innocent misrepresentation with its consequent remedies). Effectively then, per Royscot devote Ltd, damages in respect of an honest but careless representation are to be calculated as if the representation had been made fraudulently this has attracted much criticism as it means in effect that the Courts are required to treat a person who is morally innocent as if he was guilty of fraud.However, under Section 2(1) the loss recoverable does not go beyond the consequences that arise from the negligent misrepresentation this is narrower than the recoverable loss permitted for fraudulent misrepresentation per Doyle v Olby. In addition, unlike damages for fraudulent misrepresentation, the Court may reduce the sum if there is evidence of contributory negligence on the part of the Representee.The damages under Section 2(1) will be based on direct consequence (as for the tort of fraud/deceit) rather than what was reasonably foreseeable (as for the tort of negligence). In Royscot Trust, the Court of collecting held that the correct measure of damages was based on the tort of deceit and that the Plaintiff was entitled to recover all losses even if those losses were unforeseeable, provided they were not otherwise too remote. Therefore, the measure for damages for innocent misrepresentation under Section 2(1) is the same measure as for fraudulent misrepresentation. This has since been questioned, howev er, and in Smith New Court Securities, Lord Steyn asked whether it was correct to treat a person who was morally innocent as if he were guilty of fraud when it comes to the measure of damages. This measure seems incorrect especially as, per Avon v Swire (where representations as to the rising were presented as statements as to existing intention), the section may be used to produce damages on a scale commensurate with fraud where otherwise the contract would allow no damages in the event of breach and there would be no damages for negligent misrepresentation in tort.Innocent MisrepresentationWhere the statement made is innocent, in that there is no provable fault, the remedy is rescission of the contract unless the Court awards damages at its discretion under Section 2(2) MA1967 alternatively it may award rescission with an indemnity the aim of the Court in all cases being not to unjustly enrich the Claimant. The equitable remedies that the Court may award discretionarily may inclu de the setting aside of a deed or other instrument and the restitution of property, with any pecuniary adjustment that expertness be necessary on either side by way of accounting for profits or allowance for depreciation. Although there is no indication as to the level of damages, it is considered that this should be lower than the damages awarded under Section 2(1), as implied by Section 2(3).The Court exercises its discretion in accordance with the principles of equity and so there may be no remedy offered if the facts as a whole make it inequitable to grant the relief, or if there is improper conduct or suggestion of a rough bargain on the part of the Representee.Mispresentation and blameworthiness shapesIt has been noted that misrepresentations can be made intentionally, carelessly or recklessly, or innocently. In each case, there is a remedy for the Representee but the value of that remedy varies based on several factors. We have seen that where fraudulent misrepresentation is proved (for which dishonesty is required), the level of damages awarded may be far greater than for other types of misrepresentation the Representor must pay all financial losses flowing directly from the misrepresentation. There are few limits to this the damages do not charter to be foreseeable and matters of the Representees conduct, such as the fact that he had the ability to avoid the contract or to discover the dishonesty, does not bar his claim. Similarly, his contributory negligence is irrelevant to the calculation of damages. The only restriction is that Representee needs to take reasonable steps to mitigate his consequential losses. Following the recent case of A v B, we have also seen that general damages may be available for distress suffered, even though this is not medical. beneath the MA1967, we have seen that a Representee can claim damages on a scale commensurate with fraud even where the representation was innocent, although these will be limited by any contri butory negligence. It seems unjust that the Representees contributory negligence is ignored in fraudulent misrepresentation this is fault per se on the part of the Representee and if the reason for allowing wider damages is blameworthiness, surely the blameworthiness of the Representee must also be a consideration. The European commence of considering all circumstances, including, but not limited to, whether the Representee could reasonably acquire the information, seems fairer. The flexibility of this approach, in contrast to the illimitable scope of damages in English Law permitted for fraudulent misrepresentation, may demonstrate a better approach to the calculation of damages.The European approach may be contrasted to awards made for innocent misrepresentations in English law, which dramatize equitable principles in such cases the conduct of all parties is taken into consideration before reaching a decision. The fault of both parties is balance in order to reach a decision th at is fair to both, and such a system would make a more just compromise between the heavy benefits of a successful claim for fraudulent misrepresentation.It has also been noted that it is entirely illogical that the law should take such an iron-handed approach where the Representor makes a positive statement which he knows to be incorrect but provide no remedy whatsoever when the same person dishonestly fails to disclose a material fact that he knows would have a material bearing on the contract. James notes that the EU is taking tentative steps towards the abolition of national contract laws of member states, and the replacement with a individual European code. If this happens, we will see the introduction of a positive promise to act in good faith, both in pre-contractual negotiations and in the formation of contracts. This obligation on contracting parties to be open with each other in negotiations is foreign to English law it has previously been avoided because of principles o f contractual emancipation and economic efficiency. However, a model which requires honesty and diligence on the part of both parties, and provides for remedies to either party where there is a loss to be made good, with each partys conduct assessed for fairness, seems a far more balanced approach than the present system of remedies in English law for misrepresentation, and accords more with the principle of restitutio in integrum that is inherent throughout our contract law system.