Contract Law: Misrepresentation and Rescission Analysis

This assignment solution addresses a contract law case study involving a dispute over the sale of study materials. The central issue revolves around whether a contract can be rescinded due to misrepresentation made by the seller. The solution defines a contract, its terms, and the concept of misrepresentation, differentiating it from a contract term. It outlines the legal requirements for proving misrepresentation, including false statements and inducement. The solution then applies these legal principles to the case facts, determining if the seller's statements about the exclusivity of the materials constituted misrepresentation. The analysis considers both fraudulent misrepresentation and the impact of silence on the part of the seller. The conclusion determines that the buyer can rescind the contract based on the misrepresentation but not the seller's silence. The assignment cites relevant legal precedents and legislation, offering a comprehensive analysis of the legal principles involved. The solution follows the assignment brief requirements, including the format, page limits, and citation style.

Running head: CONTRACT LAW
CONTRACT LAW
Name of the Student:
Name of the University:
Author Note:

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Question 3:
Issue:
The issue involved in the present case study is whether Charlie can rescind the contract
based on the representations made by Abby.
Relevant law:
A contract can be defined as an agreement which is legally binding giving rise to rights
and duties that can be enforced in the court of law (Poole, 2016). The agreement of a contract
contains terms of the contract that denotes the rights as well as duties of the parties involved in
such contract. If any of the parties does not act in accordance to the terms of the contract, then he
will be liable for the breach of contract.
Representation is not a term in the contract and hence cannot be regarded as contract’s
part. If any party to the contract makes any statement which is false, he cannot be made liable for
the contract breach. However, he will be held liable for misrepresentation when the elements of
the misrepresentation are present (Taylor & Taylor, 2019).
Representations are usually made prior to contract formation or during the formation of
contract. Misrepresentation refers to a statement which is not true that induces the representee to
create the contract with the representer. As a result of relying on the false representation, the
representee suffers losses.
In order to prove that the representer had made a misrepresentation, two main criteria are
to be fulfilled. They are as follows:

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 False statement,
 Inducing the representee.
The statement in doubt of misrepresentation made by the representer must either be
related to any past fact or present fact and not to any future incident or fact as entrenched in
Edgington v Fitzmaurice (1885) 29 Ch D 459 case. Only a mere opinion containing statement
or showing intention if tentative will not be enough to prove misrepresentation. But if such
intention or opinion is given by the representer when he has knowledge that there lies no
reasonable ground for that opinion or intention at the time of creating contract, then such
statement is actionable. It is observed in the landmark
Smith v Land & House Property Corp
(1884) 28 Ch D 7 case. This is due to the reason that he is mis- stating the fact regarding his
opinion or intention. It is seen in the case of
Bisset v Wilkinson [1927] AC 177.
Misrepresentation can be made orally or by writing or by conduct also. Though in
general, silence does not amount to misrepresentation as seen in
Walters v Morgan (1861) 3 DF
& J 718 but it is actionable in some context or situation where silence shows what has been
stated as incomplete or false or when there lies a affirmative duty to disclose something as seen
in the decision given in the
HIH Casualty and General Insurance Ltd v Chase Manhattan
Bank [2003] UKHL 6 case. Thus although silence does not result into misrepresentation but if
what has been not said results into what is stated to half true, then it will be considered as the
misrepresentation as observed in
Dimmock v Hallett (1866) LR 2 Ch App 21 case.
The second element to be proved in order to make a statement actionable is that the
representer has made such statement with the view of inducing the representee to enter into the
contract as observed in the case of
Horsfall v Thomas [1862] 1 H&C 90.

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Remedies for misrepresentation are given in common law as well as in the
Misrepresentation Act 1967. For misrepresentation, the representee can rescind the contract
where the contract will be set aside as well as nullified both retrospectively and prospectively. As
a result of rescission, the party will be put back to their pre contractual places.
Application:
From the facts of the case it is seen that Abby wants to sell his study notes and text
books. For this, she posted an online advertisement to sell those notes and books. To this
advertisement, Charlie responded to buy them. Abby further informed Charlie that that “Since
there is only one set of materials per module for sale, the materials are exclusive.” This is a
statement made by Abhie to Charlie is representation in course of transaction for sale of text books
and study notes.
Few days later, Charlie discovered from his classmates, that Abby sold them the same set of
materials. This showed that the statement made by Abby is false regarding notes and books sold by
him as he claimed them to be exclusive. Further, she was trying to convince Charlie to purchase her
books and notes. Charlie was making enquiries regarding the materials to which she replied this
statement. Thus the representation made by Abby in the form of statement amounts to
misrepresentation as it satisfies both the criteria for misrepresentation; the statement was false and
was made to induce Charlie as per the landmark case of
Horsfall v Thomas. Further, it amounts to
fraudulent misrepresentation as here Abby made such statement knowingly it is false. Thus on the
basis of this misrepresentation, Charlie can rescind the contract with Abby as per the provisons
enumerated in
Misrepresentation Act. Moreover, such representation was not related to any future
facts as per
Edgington v Fitzmaurice.

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Further, Charlie requested to Abby that the materials shall be organized in a neat manner and
also machine bound to which Abby was in silence. In this situation, Charlie is the representer where
he requested Abby to organize everything neatly and get them bound by machine, it will act as a
request. To this request, Abby was silence. However, it will not amount to misrepresentation as it
neither amounts to incomplete or false statement nor amounts to a duty to disclose anything of good
faith or half true as seen in the decision of
Dimmock v Hallett. Thus silence of Abby will not
amount to misrepresentation as per
Walters v Morgan. Thus, on the basis of silence in response
to the request made by Charlie, Charlie cannot rescind the contract based on misrepresentation.
Conclusion:
Hence, it can be concluded that Charlie can rescind his contract with Abby on the basis of the
misrepresentation statement made by Abby but not for her silence to her request.

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References:
Bisset v Wilkinson [1927] AC 177.
Dimmock v Hallett (1866) LR 2 Ch App 21 case.
Edgington v Fitzmaurice (1885) 29 Ch D 459
HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6
Horsfall v Thomas [1862] 1 H&C 90.
Poole, J. (2016). Textbook on contract law. Oxford University Press
Smith v Land & House Property Corp (1884) 28 Ch D 7
Taylor, R., & Taylor, D. (2019). Contract Law Directions. Oxford University Press, USA.
The Misrepresentation Act
Walters v Morgan (1861) 3 DF & J 718