Misrepresentation And Negligence - Contract

MISREPRESENTATION AND NEGLIGENCE * * * At common law, parties are bound to agreements if the elements of contractual formation are established. 'Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds. They include fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct They all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience.' o Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, 461 per Mason J What is misrepresentation? * Liability is imposed at common law for false statements made in pre-- contractual negotiations. * The contract may be set aside if one party (the representor) induced the other party (the representee) to enter into the contract by making a false statement of fact. * Misrepresentation has become less significant over time, because of related statutory causes of action o (especially, Australian Consumer Law s 18 (formerly, the Trade Practices Act 1974 (Cth), s 52). Types of misrepresentation: 1. Innocent 2. Fraudulent 3. Negligent * The only contractual remedy for misrepresentation is recession * Damages are available in tort for culpable misrepresentation o Negligent or fraudulent Elements of misrepresentation: 1. A false statement of fact 2. Made by the representor to the representee 3. Which was made with the intention of inducing the representee to enter into a contract with the representor and which did induce the representee to enter into the contract