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10 Cards in this Set

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Contractual Remedies Act 1979

section 6 - These damages are "as of right". Misrepresentation qualifies for damages if they have 1) been induced to enter into a contract by it, 2) whether innocent or fraudulent - they are entitled to damages as if it were a breached contract.




section 7 - allows for the cancellation of a contract in cases of misrepresentation of an essential matter or has substantial consequences for an innocent party.

What is Misrepresentation?

Hedley v Byrne - Where something is not represented as it is. If negligent an action in tort arises.




Derry v Peek - The three point test: It is done 1) knowingly, 2) without belief in its truth, and 3) recklessly or carelessly, whether true or false. In this case one may seek damages for deceit and be allowed to set aside the contract.




Ware v Johnson - "some existing fact... and contains no element of [truth]." Future statements are not misrepresentation - has to be about present. Must be relied upon by other party. Misrep. to an agent is equivalent, and Manderon v Volich affirms s6 pits them against the party, not the agent. It was also held damages may be found for loss of profit.




Edgington v Fitzmaurice - Intention may be misrep. if that intention can be proved as misrep - thereby deceiving. However, Marston v Lane held a statement of intention was not misrep, and so is difficult to prove.




ME Torbett Ltd Kierlor Motels - Statements about the past can be misrep if they directly influence the buyer's decision, or vendor's choice to sell. This is about transparency and certainty.




Bisset v Wilkinson - Opinions cannot be misrep, as in McAlpine Snowline v Wethey.




Smith v Land - If an opinion is not genuinely held or they should have known better in their position, there may be misrep (NZ Motor Bodies). You cannot state opinion as fact (Reese River Silver Mining).




Brown v Raphael - The representor in a far more KNOWLEDGEABLE POSITION has a duty to know the facts.




Taco Co of Aus - Misrep may just be 'misleading' for purposes of s9 FTA.




Esso v Mardon - Experts being used means information should be more accurate (eg. budget forecast).

Can Silence Constitute Misrepresentation?

Fox v Mackreth - General rule: silence is not misrep. Failure to disclose a mere fact that may prove prudent for one party.




Walters v Morgan - No general duty to disclose defects in quality of goods or land. It is only the ASSERTION OF FALSEHOOD with silence that is misrep. There is "no fiduciary duty" between parties. In Spooner v Eustace a purchaser had no action when not told that a building encroached on neighboring properties. In Deverick v Hedley - silence on not telling them about a prev. death in the house.




March Construction v CCC - being alerted to errors before does not entitle them in the future.




Oakes v Turquand - Silence distorting truth may be misrepresentation - venturing to make a statement of fact based on this silence forms a partial-truth. Wake v RH was saying "no more competition grants to be given" when some had already been issued. Henry J said it "painted an erroneous picture" - followed in Ladstone.




Clarkson v Whangamata Metal Supplies - Silence can be misrep in cases of innocence as a positive representation. Preferable view.




With v O'Flanagan - Silence on changes in circumstances since initial statement is misrep if it affects the purchaser's decision based on his prev. representation.




Davies v London - If you make comments you believe are true and later discover them false, you have a duty to correct yourself. If done, there is no inducement (Holmes v Jones).

Agency and Silence

Wakelin v Jackson - A party is liable for misrepresentation by agents as "on behalf of the defender". No direct remedy against agent is offer under s6 CRA. However, does not prevent an action in tort. A statement cannot be made 'in passing' under agency or as a mere conduit (Mainland Products v BIL).




Turner v Anquetil - Misrepresentation must be proved twas towards the party at hand, a group or singular.




Vining Realty Group - A party won't succeed under s6 CRA unless shown that the misrepresentation was to be understood "reasonably so" (FTA). If approx or unconvincing, there is no action. However, Mt Pleasant Estates did hold anything "along the continuum could count."




Chesire v Fifoot - J Cartwright's writings hold it must be done with the intention of causing the representee to enter the contract.




Edgington v Fitzmaurice - Misrep need not be sole cause for inducement. A favourable budget forecast was just one in Emslie as in Pearson v Wynn.

Where Misrepresentation is Legally Harmless

Where they 1) never knew of its existence (Spence v Danesh) 2) did not allow it to affect their decision (Smith v Chadwick) 3) were aware of it (Smith v Chadwick).




Spence v Danesh - "seek expert advice" means there is no misrepresentation.




Attwood v Small - a party relied on independent reports, and so were not affected. The only requirement of misrep - must be material, though need not be important (Hardie Boys J).




Redgrave v Hurd - Knowledge must unequivocal and proved by party claiming they knew, not fragmented or partial. Just because one has an opportunity to investigate it does not prevent a remedy. s4 CRA still applies.

Representation and Terms of a Contract

Mcleod v Davis - It may still be misrep even if it appears as a term in the contract later formulated, sometimes described as in (Young v Hunt). Arguably goes without saying breaching the term is misrep.




Altimarloch Joint Venture v Moorhouse - Look at the PURPOSE of s6 - "aimed at a remedy... and not at the quality of the liability."

Damages for Misrepresentation

An action in tort = cost of cure.


An action in contract = cost of bargain.




Brownlie v Shotover Mining - Damages will usually be calculated as cost of bargain, though there are other cases. Discussed extensively in Altimarloch. Consequential losses may also be recoverable under a test of remoteness.




Snodgrass v Hammington - Damages for stress are sometimes, but rarely awarded. They are "not easily recoverable" (Crump v Wola).




Meates v AG - An action in contract will be in breach/misrep, and an action in tort arises necessarily from that breach.




J and JC Abrams v Ancliffe - A builder had a duty of care to provide accurate cost info before client became fully committed. The party may know prices escalate or change, and keep this secret. It may be misrepresentation to say anything other than the most accurate price for which they would sell - but a tort of negligence would be available.

The Fair Trading Act

section 9 - "No person shall, in trade engage in conduct that is misleading or deceptive or is likely to mislead or deceive." s2(1) any trade or business, activity of commerce. To be examined objectively (Christian Riffel), and business encompasses agents (Body Corp. v Taylor).




It covers 1) misrepresentations of law (redress-able under s4 CRA 1979). 2) Mere puffs may be misreps. 3) Promises of the future which lead to misrep. 4) Silence may be actionable under s9 FTA than s4 CRA. In Smythe v Bayleys Real Estate Thomas J said "silence is part of the defendant's conduct..." Elias CJ held the same in Des Forges v Wright - but s9 FTA does not require things to be disclosed they do not know. Unilever holds it must "affirmatively convey a false meaning". Hieber v Barfoot said silence could be misrep.




section 40 - There are heavy penalties up to $30,000 for those guilty under s9.




section 43(2) - damages are discretionary (unlike CRA). Courts can order 1) contracts to be void, 2) change in how contracts work, 3) a refund for the money, 4) payment for damages, 5) special service performance.




Red Eagle Corp v Ellis - There must be a 'clear nexus' between conduct and loss suffered to qualify for remedies. Even if applicant contributed to loss, it does not prevent a remedy.




Cox & Coxon - The expectation measure (cost of bargain) is NOT under s9 FTA. The FTA does not impose a duty to make good (Hall v Warwick Todd).

Limitation Periods - Distinction between s9 FTA and s6 CRA.

Klinac v Lehmann - An action under the CRA must be within 6 years. FTA actions must be within three years.




Mckenzie Institute - s5 holds parties may contract and replace with remedies of their own.





Fiduciary Duties and Silence

Moody v Cox - Fiduciary duty is "a person whom the confidence is reposed in and who thus possesses influence over another cannot hold this other person to a contract unless they have disclosed all material facts" - whether asked or ot (Lowther). Caveat emptor usually applies but not with fid. duties.




Day v Mead - A party who has a FD may have to pay compensation where a contract is UNERRIMAE FIDEI (one party has all the facts). Eg: contracts of insurance (Mackender v Feldia).




Nunu v McGowan - In cases of DEFECTIVE TITLE - they have to be disclosed. McDonald v Wake holds the vendor is responsible for knowledge of defects. This is the caveat emptor principle.




Scales Trading v Far Eastern - To have a duty of disclosure in contracts of banking guarantee would mean that the cancellation under s9 FTA would replace rescission in equity. Remains open whether damages would be available under s6 CRA. A seller who gives a guarantee is under a duty to disclose.




Gordon v Gordon - FD easily occur in family relationships.