Chen-Wishart: Contract Law 2e 
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Diagrams from the textbookChen-Wishart: Contract Law 2e
Chapter 5
1. How can you tell whether a pre-contractual statement is: (a) a term, (b) an actionable misrepresentation, or (c) a puff? Why does it matter?
See 5.1.1.
This question invites you to discuss the remedial consequences of classifying statements made in the context of contract negotiations. The sub-questions you should address are:
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What are the conceptual differences between (a)-(c)?
What differences does it make at the remedial end (what can a claimant receive for breach of term, misrepresentation or an untrue puff?)?
What difference might it make whether the claimant made a 'good' or 'bad' bargain?
How is the distinction between (a)-(c) made?
To what extent is the distinction based on the parties' intention and to what extent on other considerations (what?)?
2. Are statements of opinion, intention, or law actionable as misrepresentations? Give examples.
See 5.1.2.
In so far as these are not statements of fact as such, they may nevertheless be actionable if they contain an untrue statement of implied fact. What implied statements of fact might be contained in apparent:
statements of opinion (give examples)?
statements of intention (give examples)?
statements of law (give examples)? What is the law now on misrepresentations of law?
3. 'A contracting party should not tell an untruth, but he need not disclose what he knows even if the information would be material to the other party's decision to enter the contract.' To what extent is this statement true? To what extent should it be true?
See 5.1.3.
This question invites you to address the issue of actionable non-disclosure. The sub-questions you should address are:
The general rule of no liability and its justification.
The extensions of the scope of actionable misrepresentations to half-truths and duty to correct situations.
The exceptions based on special relationships.
The indirect techniques for relieving non-disclosure.
You could finish with a general assessment of when there should be a general duty of disclosure (would good faith help)?
4. 'A party who has been induced to enter a contract with the misrepresentor does not need to encounter the problems in establishing common law deceit and negligent misrepresentation'. To what extent, if at all, is this statement true?
See 5.2.1.
This question invites you to compare the common law actions in deceit and negligent misrepresentation with the claim for damages under the Misrepresentation Act 1967. The sub-questions you should address are:
What must be proved for each cause of action? Which sets the lowest threshold?
What is the measure of damages for each cause of action? Which is the most generous?
In what circumstances would a claimant be forced to resort to the common law actions?
5. 'The "fiction of fraud" in the Misrepresentation Act 1967 must go.' Discuss.
See 5.2.1.2.
This question invites you to assess the measure of damages under section 2 (1) of the Misrepresentation Act 1967. The sub-questions you should address are:
What is the 'fiction of fraud', where is it contained?
What heads of loss are claimable according to this fiction (give examples, e.g. from Smith New Court)?
What difference does the fiction of fraud make (give examples)?
What academic and judicial criticisms have been made of the fiction of fraud? Assess these criticisms.
Are there any counter-arguments (in support of the fiction)?
What is your conclusion?
6. Explain (giving examples) the different between:
damages for breach of contract;
damages for misrepresentation; and
money claims related to rescission.
See 5.1.1 and 5.2.
This question tests your understanding of the different types of money claims which may attach to a statement made in the context of contract negotiation. The relative sums involved may determine how claims are prioritized.
7. When is, and when should, rescission be available for misrepresentation?
See 5.3.
Which types of misrepresentation entitles the claimant to rescind the contract? What are the bars to rescission? Is each of the bars justified? If not, why not and how can it be reformed? What bars were dismantled and what introduced by the Misrepresentation Act 1967?
8. To what extent can a party exclude or restrict liability for misrepresentation?
See 5.4.
Can liability for fraud be exempted? What statutory controls exist? What are the statutory tests of validity of clauses exempting liability for misrepresentation? What amounts to a clause exempting liability for misrepresentation (e.g. do 'no agent authority clauses' or 'entire agreement clauses' qualify for statutory control? give examples)?
9. Did the Misrepresentation Act 1967 improve the law on misrepresentation? How might any problems contained in the Act be resolved?
This question invites you to assess the benefits and drawbacks of the Act.
What mischief was sought to be addressed by the Act? To what extent did it succeed in doing so?
The potential difficulties you could address are:
The measure of damages under section 2 (1).
The fiction of fraud.
When damages will be ordered in lieu of rescission under section 2 (2).
The availability of section 2 (2) damages where the right to rescind has been lost.
The measure of damages under section 2 (2).
The interaction between section 2 (1) and section 2 (2) damages.
The measure of damages where a misrepresentation has been incorporated as the term.
The scope of section 3.
10. In view on the BSE scare on beef, Katie looks to rearing ostriches for the sophisticated dining table. She discusses with Leo the possibility of buying Leo's flock. Leo says:
You take them as they are. Get them checked if you like, but I'm and old hand and I say they're in the peak of health. I saw an article yesterday that said you'll get a 500% return. If you go ahead, my restaurant chain will be your best customer.
Katie and Leo sign a contract for the sale of the ostriches which omits any reference to Leo's statements. Advise Katie on the following facts:
a quarter of the birds were sick at the time of purchase and die shortly after;
the article Leo mentions is two years old; more recent and available market research shows a declining consumer demand for ostrich meat; Leo can only sell the remainder of the flock at a loss;
no orders were ever placed by Leo's restaurants.
What does Katie want (rescission (can she?), damages (expectation or reliance?))?
Re (i): the statement about the health of the birds is unlikely to be a term (why?)? Is it a mere statement of opinion? Or, does it contain an implied and false statement of fact? Does it matter that Katie did not check?
Can Katie rescind? Is she barred?
Can Katie claim damages? What is the nature of her action? What is her measure of damages?
Re (ii): the statement about the article is unlikely to be a term (why?)? The statement is literally true but does it imply a false statement of fact? If so, can she claim rescission (bar?)? What damages can she claim?
Re (iii): the statement as to possible future purchases is a statement as to the future. Does it contain an implied and false statement of fact? If so, is rescission or damages for misrepresentation available?
Is it possible to argue that the statement is a contractual promise to purchase such that expectation damages are available for breach? What are the obstacles to such a claim? What further facts do you need to know?
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