welcome to law of contract so we are continuing with discussion of uh vacating factors uh so far uh we have covered mistake as a appreciating factor and for that uh matter we propose to uh continue with another visiting factor misrepresentation but uh just before we do that you notice that when we are discussing our mistake as a visiting factor we did make the point that we are not talking about mistake of law we're talking about mistake of fact and again we're also talking about an operative mistake that is to say that a mistake which actually existed at the time that a person was supposed to have given his or her consent to a particular uh transaction and for that matter had it not been that mistake that he or she had given that consent and for that and to use the words of lord atkin and bell and liver brothers mistake in that respect could be said to be either negative in consent or nullifying consent and again we also noted that our mistake will produce or may produce different consequences as whether you are dealing with a common law or you are dealing with the equity as it were and of course at common law uh all the time where mistake is established uh the contract will be uh considered null uh avoid a been issued that is to say that is analogy or it never existed as it were we have seen that but then uh in limited uh instances where equity applies then the mistake as we noted will not necessarily uh render the contract void but avoidable in which case a party can take steps to have the contract set aside or the contract avoided so that he or she is liberated from the effect or the consequences of such uh a contract which is initiated by a mistake so let us keep that in mind and i think that uh the other significant thing we touch on is the fact that we have three types of uh mistake we have like the common uh mistake in which both parties have made uh the same uh mistake especially uh mr let's say the arrest uh center where they thought that the subject matter of the contract actually uh existed at the time that they were making the contract when as a matter of fact it did not uh exist so typically i remember the case of kotura in hairstyle and that has given rise to a statistical provision in the contract i'm sorry in the sale of goods act at 137 that where you are making a contract as to specific goods there is an implied obligation implied condition on your part that that item will be in existence and that provision is as a result of the case law we call the kutura and hasten and again we also uh talk about mutual mistake mutual mistake where both parties are mistaken but they've made asset where if you like a different type of mistake in other words both parties understood the contracts or what what the subject matter of the contract or returns to a contract in different senses the offeror made the offer understanding it in a certain sense and then of array on the reporter to accept the offer in a different sense and because they have a fundamental misunderstanding about what was being offered and what was being accepted they know that the case law would say that the parties were not consensus are they them or they were at cross purposes and a very typical reflection as you saw the case of a raffle and which of us so therefore where there's an alleged mutual mistake as we noted the call to endeavor to apply the objective test of agreement now when the objective test for agreement is applied that is to say that the court will try and find out assuming uh there was present when the parties were making the contract as you called a disinterested reasonable person officials by standard how will that officials bystander or that disinterested there is not a person who have understood the parties who have really meant if the objective test is applied and the code is able to arrive at some kind of agreement then despite the fact that in the subjective minds or the subjective intentions of the parties they thought that there was no uh if you like consensus that did them the court will still say that there's an agreement because the test of agreement is objective it's not it's not as subjective as it were and finally we're going to talk about unilateral contracts and in later contract as the term itself suggests only one party is mistaken regarding the contract and usually it is relation to the identity of the other uh contracting party so where that is the case uh quite often uh the other party who is not mistaken is just uh being fraudulent trying to uh you know play fraud on the other party in the sense that he knows that the party he is actually contracting with is not the one that he really want to contract it but he just want to take advantage of the ignorance of that party and then fix him with liability take his money or value and would subsequently disappear into finn air so if you read the case law such a person is usually known as the rook of the froster one case to read avoid a lot of them a lot of old cases there keynes norton and then louise and ivory flips and brooks candy and lindsay ingram a little but a more recent authority i'd like everybody to read in addition to what the case you're giving in the case of the uh shogun uh finance right again hussein uh sugan finance against uh houston is and then the great piece okay so these are uh some of the points which we saw to uh cover when we discuss mistake as appreciating factor so having said that we like to welcome you to another segment of discussion of the sheating factors and as i said we are looking at the misrepresentation uh and hopefully we wind it up with the direction on the influence so that we're able to say goodbye to visiting factors and announced class will be able to discuss illegality in public policy and then we'll be left with one last topic that is the discharge of contracts and we are ready for examination okay good so we will try and first uh do a brief introduction understand misrepresentation and then look at the various types of misrepresentation and the remedies which the law provides from its representation first of all as we have already made the point means representation is one of the uh elements of factors which may undermine that is a visit or invalidate the agreement between the parties of course is not the only thing we know uh others as we have been uh talking about them uh we're looking at if we just talk about mistake we'll be looking at the duration on the influence of course illegality is put there but uh illegality arguably is not a efficient uh factor for some uh scholars but we look at that when uh we we get there now where a contract has made as a result of misrepresentation then uh such a contract is voidable at the request of the party who is a victim of misrepresentation so mind you we are not saying the contract is void we say this voy double void dabu means that in the eyes of the law the contract is valid for the time being but at the instance of one of the parties who is affected uh the contract uh could be uh set aside so that it will no longer be treated as a valid word contract so voidable contract if you like ask what you call like a temper validity for the time being is valid but its validity does not last since it can be taken away at the instance of a party who is affected by so let's keep that in mind [Music] and that is why we also add that where we virtually establish misrepresentation it doesn't render the contact void again it does not render the control void the reason being that uh it just denies that party the right to continue the contract if uh that is in that party's interest so if you think that because you've discovered a misrepresentation you're uncomfortable with the contract and all that you like to be released from the contract then the law allows you to get a release because of the misrepresentation that you have discovered and that is why we're seeing that it renders a contract void double but not void so let us keep that in mind good having uh noted the question is what is misrepresentation uh misrepresentation or case when a false statement or representation of facts is made by one party to the other party before or at the time of contract which has the effect of inducing the other party to enter into a contract so looking at that definition uh ketones which stand out are the fact that there's a false statement right a false statement a fourth statement or representation fact is the same thing if you say you've made a representation that is a statement right and but we're not talking about yes that we're talking about the falsity of it so that statement or that representation of fact is false it's not true good so if you like the person who make that representation you can be called the presenter or the the false representation becomes like that miss represent as it were now not only that again it is supposed to have been made before or the time the contract is made and that is to say that if you are complaining of misrepresentation and you are unable to link the misrepresentation to the formation of the contracts so that you are not able to show that you became a victim of the misrepresentation before or at the time the contract was made then your misrepresentation will not be entertained because if a misrepresentation is after the contract there is no misrepresentation because if you look at the other element he said that it has a faith of inducing the other party the other part that is the party to whom the statement the false statement of fact was myth that is the the representative if we like now the representative is supposed to have been induced induced means that is a force you have been influenced to enter into the contract and what that means is that had it not been for that misrepresentation he or she would not have entered into the contract yeah so where these things are there then we could say that misrepresentation exists good of course misrepresentation the statement uh giving rise misrepresentation can be in any form it can be in writing for example as in the company's prospective so is a company's prospectus that is if the company wants to invite other people to come and subscribe for h shares or other securities the company will package information about itself just as we saw when mtn wanted to make it initial ipo in ghana it wanted to open up to a lot of people to acquire shares and get issues listed on the stock exchange you know that where they package a lot of information about itself and various people could actually read it in order to make up their mind whether they want to uh invest in mtn or not so that is prospectus again misrepresentation can also be verbal that's just by word of mouth or sometimes it will be implied from conduct the person may not expressly say something but a person may not expressly say something but he or she may put up a conduct and the conduct may be uh direct or indirect if you like positive or even like omission of course when it comes to missing is limited but you talk about that especially as whether silence can give rise to me so presentation so we're talking uh about that good yeah so we've discussed the essential elements of uh misrepresentation and you said that uh if you are trying to understand this representation we must be thinking of it in terms of a statement of material facts that is the data party make an important statement if it's important statement that is a statement relating to important aspect of what you are about to enter into contract what you are contracting about and then of course that is made by one party to the contract to the other and what this means is that you cannot make a misrepresentation to yourself okay you cannot be a victim of your own misrepresentation that is uh inconceivable so let us keep that in mind and again we want to say that the statement which will give rise to the misrepresentation should be a statement which was made during the negotiation leading up to the formation of the contract and not that alone is not enough the statement should have been made with the intention to uh induce right with the intention to induce the misrepresentation that is the other party and for that matter if that upon closer examination the statement could not be said to have been intended to operate and actually did operate as an inducement to the other party to enter into the contract that statement cannot give rise to misrepresentation it cannot give rasmus representation so that is very important but it is not every statement which induce a person to enter the contract that would be considered misrepresentation the statement must have been a false statement if it's not false then it doesn't give rise to misrepresentation because truth is truth okay so uh we have said that to constitute misrepresentation the statement alleged to misrepresentation must be a statement of material facts that is it must be a statement of fact and not a statement of opinion so the general rule is that a statement of opinion does not give rise to misrepresentation that is the general rule and for that matter if we look at the case of bicep and wilkinson a farm had never been used for raising a ship when the owner of the farm was selling it he made the statement that it could support the raising of 2000 ship now the purchaser later on discovered that that was not true about that farm and for that matter he sought to seal for recession of the contract and the court held that having regard to the evidence which came before the court the statement that the farm could support 2000 ship was merely a statement of opinion at which the seller of the farm honestly made despite the fact that such a statement was mistaken mistaken in the sense that it was not true and why is it not true well the the farm had ever been used previously to do ship farming and all that so question is uh how could you be certain that such a farm had the capacity to raise a 2000 uh ship so that was the position that uh the court uh took yeah so that was just an opinion [Music] yeah so uh bicep and we're concerned an authority for the proposition that a statement of opinion as a general rule does not give rise to misrepresentation even if it turns out to be false but as i said that is just an exception we so that is just a general rule and you know to a lot of general principles in law we have exception so we have an exception to the rule that a citizen of opinion does not give rise to representation that is to say that in some instances it could give rise to misrepresentation and typically where the statement of opinion was not was made not just by an ordinary person by someone who professes or who holds himself out as having some expertise then such a statement can give rise to a misrepresentation as a pain in the case of eso petroleum against madden a national petroleum company against madden madden took attendance of a failing station owned by eso and having been given a forecast that is estimated by an experienced exorcist representative of the quantity of the petrol station or petrol the station could be expected to stand on what they call the toronto port the quantity was never rich during the four years martin remained as a tenant and the business run at a loss so martin sue for misrepresentation and the court held that the company had made a misrepresentation since the sales representative knowledge of such matters made the forecast accidental fact rather than opinion and the sales representative was acting in the capacity of an agent of the company and for that matter the claim for damages from his representation in the court view was successful so here uh unlike bicep wilkinson where the course said that the seller of the farm was in the same position as a purchaser of the farm because the farm had never been used for a sheep farming and for that matter uh the vendor could only be conjuring up if you like stories since he had no basis but in nasa petroleum the courts is telling us that the sales representative who made statement regarding the capacity that is the sales potential right of that particular feeling station which was being stood by reason of the fact that the company that is the eso petroleum had been running its business at that station for quite some time they knew uh how much the station could actually generate in terms of revenue over any period of time and for that matter if they are making a statement regarding potential sales which could be made at that station the they must make a true statement otherwise uh if they say anything they only be deceiving the the recipient of the information that they represented and that was why the court was prepared to take the position that despite the fact that the statement of the capacity of the station ordinarily would have been a statement of opinion but this statement of opinion was not just an ordinary opinion by a lay person by someone with some reasonable expertise and for that matter that should suffice us giving rise to misrepresentation should same turn out to be untrue or false so let us keep that in mind yeah so as we have indicated the clear point is that it is not possible to avoid liability for a statement which is expressed or subsequently claim to be an opinion when the knowledge and experience of the representative in the matter is far greater than that of the representation so this is like the point of dissension between essay petroleum against mardi gras and then the earlier case of biceps and wilkinson on the other hand another point uh to note is that in talking about misrepresentation the alleged statement that is a statement alleged misrepresentation uh which must be a significant material fact also means that it should not be a statement of intention in other words as a general rule acceptance of intention will not amount to misrepresentation and the reason is that a representation is a statement about existing facts or past events not about a future tense so a statement which you give rise from his representation should not be a statement which lawyers will say in future that is something which is futuristic no it should be something which is here and now or which was so let's keep that in mind that is the general rule but it is possible in a limited instance for a statement of intention that is a statement pertaining to the future to be treated as misrepresentation so if you make a statement regarding what you intend to do in the future right and if it can be demonstrated subsequently that now you made the statement regarding what you intend to do in the future you never intended really to do that then despite the fact that ordinarily speaking the statement that you made was a statement about what you intended to do in the future because there is evidence that you never uh intended to do that that statement could give rise to misrepresentation and that is exactly what happened in the case of edgington against fez morris the directors of the company invited members of the public to lend money to the company that is to subscribe for its securities and the director stated that in the prospect you i've told you about the prospects already that the money will be used to improve the company's buildings and extend the business of the company however subsequently it was uncovered that the rare intention of the directors in trying to get money from the investing public was rather to pay off the company's existing debts and because of that the court held that the director statement was from misrepresentation now let's look at it the statements in the prospectus or the statement seeking to entice members of the public that one there to invest right that wanted to invest in the company uh among other things said that yes please whatever money we are going to generate we are going to use it to expand our businesses and all that now this certainly pertained to the future however in the course of time the evidence became clear that the directors never had such intention and rather the company was owed so much debt so they were just trying to raise money to pay off the same debt of the company so not necessarily for expansion and that was why the court was prepared to conclude that then the statement that they were going to use their money for expansion as a segment of intention and could still give rise to misrepresentation because there was no basis for having such intention and that is why if you read the cases you come across one of the judges who make the point that the state of a person's digestion in the stomach is very much a fact in other words if you are talking about what you are going to do and there is evidence to show that you actually do not intend to do that and so on then that could give rise to miss representation so let us keep that in mind again uh that the statement alleged representation of the statement of material facts also means that silence as a general rule will not amount to misrepresentation silence i said you know we will not amount to misrepresentation and what do you mean by a silence that is to say that where you are making a contract with the person and you refuse to make disclosure you don't disclose certain information or certain facts and because of the non-disclosure maybe the other party assumed that the opposite or the contrary is true and on basis of that proceeds to enter into the contract can that give rise from residentiation well the general position of common law is that that cannot give rise to misrepresentation because you've not made any statement so to speak and again the common law does not impose obligation on anyone to be a volunteer being a volunteer means that to be on the floor of your own and be gaining information when none has been solicited from you you have no such obligation nevertheless there are instances or circumstances in which silence would constitute misrepresentation one when a statement made in the course of negotiation subsequently becomes false and is not corrected that can give rise to misrepresentation two when silence distorts literally through statements that can also give rise to uh mis uh representation so uh let's take for example uh the case of rna castle and a company when inviting the public to subscribe for instance stated that it had paid regular dividends throughout the years of the depression so this clearly implied that the company had made a profit green dose yes now this was not the case since dividends have been paid out of the accumulated profits of the pre-depression yes and the court was of the view that the company silence as the source of the dividend that is where it got profits to declare dividends was a misrepresentation because it disordered a true statement that dividends had been paid dividends had been paid but the dividends were paid from some accumulated money uh before the the depression uh error and that is why we made the point that uh that's why we've made the point that when silence distorts literally through segments that can give rise to misrepresentation and again to a three another instance where silence can give rise misrepresentation is where the come the contract is of utmost good faith that is we are dealing with what you call the uber mafi day contract uberema fidei that is the contract requires utmost good faith honesty and uh what are those uh types of uh contract like for example if we are talking about a contract a contract between let's say you're going to take insurance policy you are going to take insurance policy that is an example of a condo which requires like the utmost good fit and then you are required to make a disclosure so that if there is some information about you what you have made the insurance company for example decide not to sell the insurance policy to you or to calibrate your premium up to a certain amount or setting level and you remain silent so that they give you a wrong quotation that could be treated as misrepresentation because such type of contract requires a good faith honesty you have to be open and sincere again there'll be no misrepresentation where the statement is made by a third party unless that third party is agent of the party against whom their misrepresentation is alleged and of course this one is obvious from our discussion of even offering acceptance it is a party to the contract whose statement uh when turns out to be forced can be treated as consistent misrepresentation and for that matter where is made by a third party who does not have authority of the party to the that uh potential contradicting that cannot give rise to spin so look at the case of a payment against a lan journey again in the statement what was the alleged misrepresentation must have been made before or at the time of the contract we've talked about that already but we need to assume a little bit on it or get a bit of like a closer uh consideration that the statement of fact it turns out to be false later on for you to count as much representation must have been made before or at the time of the contract so that is very important the reason is that that way we can show that it operated on the mind of the representee that it exercised his mind it had an effect on his judgment before he or she entered into the contract so let us keep that in mind now if the statement was made after the agreement was rich then that's why the fact that it is a false statement it cannot be actionable as representation because it had no effect on the formation of the contract so what we should keep in mind is that by misrepresentation we are talking about the context of formation of the contract we are not talking about after the contract is made we are talking about the either pre-contractual or the the con the contractual information on the contract and that is why the statement of fact which turns out to be fought should have been made at the time that the contract uh was made so let us keep that in mind [Music] and a good illustration of the point that the students have made at the time the contract was made or before the contract was made is the case of roscola and thomas the case of rascola and thomas now if you look at rescular and thomas there was a contract for sale and pages of boss after the purchaser had made the payment the seller rather out of unnecessary enthusiasm or excitement made their statement that you've made a good purchase the horse this horse is sound and free from vice in other words the seller of the horse having concluded they still was giving people like a more positive statement about the horse or the appellation no to the horse so to speak and later on it was demonstrated that the horse was really unruly and those who had a vicious character that is to say that the rare behavior of the horse was contrary to what the seller had said about it so the purchaser [Music] felt that he had been deceived and wanted to get the transaction rescinded and when the matter came to court the court uh held that the claim of the producer will not succeed because the statement or the promise regarding the quality of the horse was made after the agreement and not at the time making the agreement or before the agreement was made for that matter the crucial element that the statement which will give rise with representation must have made before or the time of the contract had not been satisfied so let us keep that uh in mind another point which you have made already and you want to develop further is that the statement allowed to be a misrepresentation must be an inducement to enter into the contract so we were talking about the i mean the inducement element and that is to say that uh for you to succeed in bringing action as actionable misrepresentation you must be able to show that the statement of facts which has turned out to be false okay had material significance on your judgments in other words it influence you in a significant way in entering the contract that is to say that if it had not probably before the impact or the influence of that statement which are sent out to be forced you have probably not have entered into the contract so you relied on it so inducement actually come to the fact that yes they do rely on it of course relying on it does not also mean that you will lie only on that only that you said that there's no exclusivity you could have influenced by some other thing by interference there's evidence that you rely on this statement of facts which are turned out to be false you have satisfied the requirement of what inducement so let us keep that in mind there are a lot of cases in the literature for example jail fasteners limited against a mass bloom the claimant engaged in a takeover of another company and this was done for the purpose of obtaining the services of two of the directors of the other company rather than for any commercial advantage in the takeover those of you who followed the news you know the that they take over or the same relating to the company called like the twitter if you follow the international news on business now in investigating the company prior to the takeover the claimant rely on the company's accounts which in fact have been negligently prepared there could be no claim of misrepresentation since the purpose of taking over the company was to secure the services of the directors and for that matter the court was of the view that the accounts would not have acted as inducement they are not material to the real purpose of the contract [Music] yeah so we are talking about uh the mis the the four statements uh producing material if you like impact or being important in your decision to to to to enter into that contract so here you notice that the main thing which they were seeking to achieve was to get the services of some directors not necessarily because they wanted to maybe make more money and so far as uh trying to get the the service of two directors as the reason for making the takeover then the court uh i came conclusion that if there had even been some errors in the company's account right by those who put accounts together that cannot be considered as a national misrepresentation because it does not satisfy the requirement of uh being materially significant being material significant in other words uh in terms of what really uh exercised the mind of the misrepresented to enter into the contract so let's keep that in mind [Music] now the caveat is that it will not matter that the representation will not generally be considered as an inducement provided that it did in fact induce the claimant to enter into the contract so as we have said uh it may well be that there were other you know there were other things which for example also uh influence the let's represent t uh so longest it was one of those things the four statements of one of those and which exercise that the representative's mind the requirement of inducement will have been achieved so look at the case of moose prime properties limited against art hills properties limited trail properties were sold by ocean in advance of the ocean there was a misrepresentation concerning the existence of an outstanding rent review which could result in increased rents and therefore increased revenue making it more attractive proposition their defendants and successfully challenge the clayman's claim for recession arguing that the statement could realistically induce nobody to enter the contract but when the case eventually uh made its way to the english foreign it rejected uh that defense and radar held that it was not important whether or not a reasonable builder who have been induced by the representation the question was merely whether or not the claimant in the case had been induced by the representation to enter the contract so therefore uh what mr prime prophet limited is saying is that even if the statements of fact which has turned out to be forced may be considered by you to be something we should not for example induce any person any reasonable person or whatever that will not really make the difference so you'll notice that the court is trying to say that when we are trying to establish the element of inducement it's not so much about the objective tests it's not a question of whether a reasonable person will have been induced by this statement but what is important is that whether in the circumstances the particular case we have on hand is there evidence that the person was in fact induced if there's evidence that the representative was in fact induced then it does not matter that maybe some other reasonable people wouldn't have been used by such a representation so that is the point the court is making [Music] now it is also uh worth noting that [Music] the misrepresentation must induce the person to enter into the contract and we have of course made this point uh over and over again and the rider is that where the you are let's say that unaware of the representation okay a representation is is made but you're not aware of it if you are not aware of something you cannot complain that it influences your judgment or where a statement of uh fact a representation is made but you choose to do your own independent investigation so that you don't rely on the statement of fact we subsequently become force and know that you cannot complain about misrepresentation so the the caveat being standing here is that if a segment of fact is made and you choose to do your own maybe to use your own skill to ascertain the veracity of it before you you proceed then if later on that segment turns out to be false you cannot complain no misrepresentation that's what you're talking about or if you don't believe in that statement of facts then what it means is that you have not been influenced by it and for that matter even if there's evidence later on that it is false you cannot complain of misrepresentation has happened in the case of atwood against small where in the course of negotiation for the sale of a mine the vendor or the seller made exaggerated statements regarding capacity of the mind and the buyers did not stop at that they did not just rely on the exaggerated statement by the by the vendor so the buyers appointed their own experts to investigate the mind and the agents or the aspects they appointed reported back to the buyers that are the statements made by the by the vendor regarding capacity of their mind were true so the independent appointed aspects of the bias if you like confirm the statement by their vendors and consequently the buyers proceeded to purchase the mine unfortunately they discovered later that the segments were or inaccurate or untrue so they sought to have the contract set aside and the mata made it with all to the the the house of loss uh and the cost held that a nation by the buyer to receive the contract must fail because the buyer had rely on his agent's report rather than the seller statement there was therefore no misrepresentation so this reinforces the point with me that where a statement is made and you choose to verify the statement and having made their own verification you go ahead make the contract and the statement turns out to be untrue later on you cannot complain of misrepresentation so let us take note of that it's very important yeah i think from our discussion of the terms of contract we came across the case of a catchment uh and hill uh so we will not uh believe at that point so you can look at it yeah so uh just we've just reiterate uh the points that we have made just being repetitive again that the in order to succeed in bringing an action for misrepresentation the most important thing is that the statement made must have been false and it does not matter that it was innocent or deliberate or whatever it was important is that the statement uh was first so this brings us to types of misrepresentation so we have what we call innocent misrepresentation foreign misrepresentation and negligence misrepresentation i must say that not until uh against the the 1960s we had only two main types of misrepresentation that is innocent misrepresentation and uh fraudulent misrepresentation so let us keep that in mind and of course uh when the case of the brand against the heller and partners were decided and and and and from there uh we've come to have another category of misrepresentation we call the negligence representation good so uh whether innocent misrepresentation following to a negligence representation it will not render the contract void as we have noted already but just avoidable this representation doesn't render the conjunction void but avoidable as it were what is innocence representation a misrepresentation is innocent where a false statement is made by one person who had reasonable grants believe that it was true not only when it was made but also when the contract was entered into so that represent all made a statement believing it to be true and and and and and felt that it was true when he made it but it just happens that at all material times when the statement was made the statement was untrue right the statement was true the statement was forced so that's like let's say that there's someone who has not learned his geography well for example let's say in austin certainly the statements that the sun rises from the west and set at the east and he makes this statement with all the conviction in all the honesty that is to say that he does not know that the sun rather rises from the east and set at the west so what he's saying is anything new simply but the fact of the matter is that it is not true it's never been true that the sun rising from the west and if you like set and it's i mean this lesson a very simple example so where you are victim of innocent misrepresentation you can have the contract rescinded inequity has happened in the case of red grief against uh uh ahead it's about that like that the sale of a solicitor's practice so you go and and and read that regarding the endings of the [Music] of the practice and know that when he made a certain statement because the solicitor had been unwell for quite some time it wasn't very sure of how much was coming into the practice so the statement that he made regarding and what the practice will generate was untrue so that was innocence representation then we also have further line representation and further misrepresentation every student of law of contract in the commonwealth world right knows this point i'm going to make and it should not be different for our students who are also doing this cut that is the definition of uh fraud and for that matter for the misrepresentation in the the the locus classical the celebrator case of dairy and peak 189 it's the case that everyone should know yeah so in dairy uh and pick further land this representation was defined by lord heschel as a a false statement made known knowingly or that belief in his truth or recklessly careless whether it be true or false so therefore uh if you want to find out whether someone has been fraudulent right whether someone has made a problem misrepresentation we have to be guided by the tests which was propounded by lord hessel in darien peak which you've just quoted so we have to find out that the false statement that is the first representation which the person made can we say that he made it knowingly in other words when he was making it he was very much aware that the statement that was making was false do we have evidence to that effect if the person was very much aware that the statement he was making was first then we have satisfied the requirement of fraud or two the person made the false statement without belief in this truth if we can have evidence to show that at the time that this person made this false statement there was no scintilla of belief regarding its truthfulness or variousity the person made the statement never believing to be true if we have evidence to support that when he made that false statement he never believed what he was saying to be true then that is also fraud or three he made that false statement recklessly or carelessly as whether it is true of us recklessly what killer says what does it show of worst means that he made the false statement without bothering to find out he never bothered to find out especially so when he or she had the means to have been able to ascertain whether the statement he was making was true or false now these three tests are not conjunctive they are disjunctive if i say they are not conjunctive what i mean is that in order to sustain a claim for fraudulent misrepresentation you don't need to satisfy all the three if you can make out one fraud is established if you can prove that the person made the statement knowing it to be false uh you have made out fraud of course document would be that how the traitors are they are naturally related in the sense that if you make out one you can logically infer the other to you from it where if the person made the city no need to be true sorry knowing need to be false then certainly what it means is that he didn't believe this is meant to be true isn't it of course they are not necessarily the same because you notice that there are levels where the a person make a statement which it needs to be false it is uh now i'm very straightforward then we have the next level where he makes the false statements and there's evidence that he never believed in the truth of what he said so that is also there and then the third one that one is taking us gradually into what will later made i mean discussing as a negligent misrepresentation where he made the statement in a reckless or careless manner that to say that he has the opportunity to ensure whether what he's saying is true or false but he doesn't make use of the opportunity and makes the false statement [Music] so that if he had actually availed himself of the opportunity which existed he could have become aware of the falsity of that representation so that's what we are talking about so dairy and peak is a very important authority you should keep in mind so what exactly happened in dairy and peak well uh there was a company which was authorized to uh make uh tramways right if you go to uk or the uh some other countries you see what you call are the trams the trams is not exactly like a train but it's a particular type of trend yeah so under the law it provided that carriages might be moved by animal power maybe hustles and so on but if the board of trade gave the approval then addition to animal power you could also move your carriages by by sim or any other mechanical uh power for period approved by a government department called the board of trade now this particular company prime of devon port and district tramway's company they wanted to invite the public to put money in the company so they issued prospectus right we've explained what prospectus already it is the company issued the prospectus and in the prospectus they stated that quote one great future of this undertaking to which considerable importance should be attached is that by especially out of element obtained the company has a right to use the steam or mechanical uh motive power instead of a horses so in the prospectus the company in trying to entice the public to put investment in the company made the public aware that the company had already obtained permission of the government department so that it can use steam or mechanical power to drive its carriages and not just horsepower and that statement is significant so what it means is that the company will be able to make more revenue because if you are using similar mechanical power that you can move more personnels and cargo around than if you are just using enema power so that was the implication now the plaintiff in darien peak bought chess on the fate of this statement that the company had been given the power to use uh mechanical or steam to run its carriages however the company was later on refuse the consent by the government department to use the steem power and the company came under so much distress that it folded up it winded up and the plaintiff uh got uh angry and then sealed but during the trial the evidence were quite clear that at the time the company was actually issuing the prospect to spawn making the statement the prospectus that it had been given the power to run its carriages by symbol mechanical power it honestly believed that consent will be given by the government department as a matter of course and for that matter the court held that the plaintiff action in the seat action in the seat is the same as where you see someone for fraud they are trained in the sea to address chain for fraud must feel as the statement contained in the prospectus was not a fraudulent misrepresentation as the company entertained an honest belief that it was true so what we notice is that in dairy and peak the house of lost true lord hessel propounded a very useful tests for making a determination whether fraud had been committed or not nevertheless the test of fraud was not satisfied according to the facts of that case and for that matter the court held that no fraud have been committed so let us keep that in mind that's why the fact that daryan pique is a locus fascist for fraud in the dairy and peak itself fraud was not made out because the court had evidence that when the company made the statement that it will be given the consent by the government department to use steam or mechanical power to run its carriages it deep soul in all honesty so let's keep that in mind yeah so where you have made out probably misrepresentation that you as an injured party or the victim you can resend the contract right you can resend the contract that is to say that you have the contract set aside you have the contrast set aside and you are no longer bound by the effects of the contact uh as happened in the case of smith's new course secretaries limited uh against uh screamed your records as because of time we will not be discussing every single case otherwise you'll not be able to finish what you want to finish but you go and read that now let's talk about negligent misrepresentation as i told you that negligent misrepresentation is a bit later in time in the sense that for a long time that was not actually recognized [Music] as a category of misrepresentation but later on that was uh recognized so a negative misrepresentation is a false statement made honestly but without reasonable grounds for belief in this truth uh if you like so that's why so where you've made a false statement i don't have reasonable grants for his belief in this truth uh that is but that is too simple right now the very useful understanding of negligence representation is the uh case of a brand against hella and partners and i would like to take you into that case a little bit uh before we move on that's a minute take a do you see the the new can you confirm what you see on your screen now okay okay anybody can you confirm what you see on your screen you can raise up your hand so that i will release it okay how do you say as look i see the slide on negligence misrepresentation oh really yes i want to see if you're seeing that one let me see one minute what do you see now what do you see kojo um uh sir please uh i would suggest that when you finish you give us all the i said what did you say the question that's what i asked what do you see [Music] oh it's come again i want the confirmation uh for me it's on and off it's undulating the network all right okay sorry i've swapped what i will show if i want to make sure that what um what i'm trying to show now is the same thing that you are seeing so it's not quite stable assume that you see if you don't see you have the recording okay so i made a point that the case of bran and company limited against selling partners limited is a leading authority for recognition of negligent representation and uh just uh take note of the correction in the the slide the citation is 1928 is the 1964 now in that case uh this is uh what happened and i will just take uh aspects of the fast from the scene of lord reid and this is uh i'm just quoting a reading portion of the judgment lord really speaking on behalf of the house of laws this case my loss this case raises an important question whether in what circumstances a person can recover damages for loss suffered by raising office having rely on an innocent but negligent misrepresentation [Music] on heaven on on having relied on innocent by negligent misrepresentation yeah i'm teaching okay i cannot do better than adore the following statement of case from the development of machina j code this case raised certain interesting questions of law as to the liability of bankers giving references as the credit widthiness of their customers the plaintiffs are film of advertising agents the defendants are merchant bankers in outline the plaintiff's case against the defendant is that having placed on behalf of the client is the power limited on credit terms substantial audits for advertising time on television programs and for advertising space in certain newspapers on terms under which day the plenties became personal liable to the television and new super companies they cause inquiries we made through their own bank of the defendants as to the credit readiness of ac power limited who were customers of the defendants and were given by the defendants satisfactory references these references turned out not to be justified and the plaintiffs claimed that in reliance on the references which they had no reason to question they refrain from canceling the orders so as we leave themselves of their current liabilities the appellants becoming doubtful about the financial position of ac power limited got their bank to communicate with the respondents who were ac powers bankers this was done by telephone in the followings a contemporaneous note at the compensation which both parties agree it's accurate code so there's a terrific conversation between the bankers of east power limited and those who place the advertising code hello and partners limited minute of telephone conversation call from national provincial bank limited person called el heller concerning this vote limited they wanted to know in confidence and with that responsibility on our part the respectability and standing of israel limited in order to be good for an advertising contract for 8 000 to 9 000 pounds i replied a company recently opened an account with us believed to be respectably constituted and considered good for its normal business engagement the company is a subsidiary of penal industries limited which is in liquidation and we understand that the managing director mr williams is endeavoring to buy the shares of israel limited from the liquidator we believe that the company will not undertake any commitments they are unable to fulfill so this was a telephone conversation right between the the advertising company and then the bankers of ac power limiter which was going to be given advertising on credit basis now some months later the upper land sought a federal reference and on 7th november 1958 the city office of the national provincial bank limited wrote to the respondents in the following terms quote the asset we shall be obliged by your opinion and confidence as to the respectability and standing of israel limited and by setting whether you consider them trustworthy in the way of business to the extent of hundred thousand pounds per unadvertising con contract uh u.s filthy so simply put they wanted to get uh a judgment like financial opinion on credit worthiness of isabel limited that if it was safe uh for is4 limited to be given uh advertising on credit basis to the tune of let's say hundred thousand pounds so the advertising company decided to uh use their bankers to check on the on the the financial standing of israel limited and this is the response that they got on 11th november 1958 the respondent replied as follows for your private use and without responsibility on the part of this bangladesh officials the assay in reply to your enquiry letter of servant instant we beg to advise respect sapo respectably considered company considered good for his ordinary business engagement the figures are larger than we are custom to see your trophy so this was the letter they had to go on and on and on and there was a subsequent exchanges but in one of the communications they will put in a statement that they do not accept a liability or what they call like a disclaimer right they put in what they call like a disclaimer saying that despite all that we have said we do not accept a liability uh for any uh thing that you may suffer as a result of reliance on the statement that we have given so eventually they run advertisements on credit for export limited nsf's are limited uh turned out not to be that good so when uh it collapsed the advertising companies sought to sue the bank or the financial institution for giving opinion regarding credit readiness of support limited before esport limited was made to enjoy the advertising on credit and the call said that if it had not been for the disclaimer which the financial institution or the uh the bankers had uh put in the statement regarding opinion on creditworthiness of each israel limited the the bankers or the financial institution who have been liable for negligent misrepresentation but because of the disclaimer the court said they were not liable but i like you to spend time the judgment is very short it's very it's not the length of judgment and the good thing about it is that if you read it the court discusses uh all the cases uh which will be uh cited regarding uh fraudulent misrepresent dairy and peak and you also come across the case of a donut and savings in later on when you are learning a lot of thought you will come across that so please make a thought and read the case of a early brand against heller and partners let me show that slide again yeah so we've also mentioned a case of uh eso petroleum limited against madden another illustration of [Music] the principle in ed lebron against heller and partners now in the essa petroleum company against madden which we've talked about already if you remember when we are talking about whether a statement of opinion can actually give rise to his representation and he said that one decision is made by an expert or someone professing to have certain expertise then that would give rise to a misrepresentation and we cited as a petroleum company limited against madden as an exception to bicep and wilkinson so just uh still relying on the same facts that we know as far as the separation is concerned uh the court uh made the point that uh when the so uh petroleum representatives focus uh concerning the you know the the potentially in other words how much money uh can be made or the sales what can we mean from that particular feeling station the court also the view that the statement by the agent or the representative of the company regarding the the sales potential of the station at the pre-contractual negotiation stage gave rise to a duty of care that is to say that the maker of that statement had a duty of care was an obligation to ensure a reasonable care that the statement he was making will be accurate and it will not uh contain any error as it were and for that matter the court held that eso was in breach of the duty of care because of the error made by its representative regarding the same potential of the system which was being sued and consequently esso was liable in damages for negligent misrepresentation yeah so that is illustration of the uh early brand against the land partners principle so to speak with also of course we talk about non-disclosure already that you have no obligation to speak when you are making a contract with someone but under a certain situation your silence can give rise to representation you talk about uh burma uh contracts uh that is uh contracts in which uh one party process full knowledge of all material facts and the other is not in a position to obtain uh the same information from any other source so there is what they call an information assignment 3. one party by raising office situation or circumstances has more information which the other party can never have unless the one having decided to share it and that is why the law will say that in a situation like that you are required to show good fit be honest and release the information accurately to the other party and if you don't do that then uh you could be liable for misrepresentation so we mentioned like the insurance contracts announced the contract to take shares from companies and family arraignments in all this we can see what they call fiduciary relationship just as uh in the principal agent relationship when he discussed the privilege of function we came across a principal in agent now between the principal and agent two the agent has an obligation to disclose everything to the principal so there are a number of instances where non-disclosure will give rise to misrepresentation we just mentioned the cases and then you have read them so lokia and wood limited against the western australia insurance company is an illustration and because you'll be learning a company's law there's something of interest if you look at uh the companies act of ghana uh i i'm sorry not at 1992 at 992. uh just ignore the the one it's a mistake if we look at the companies act 2019 at 992 especially sessions 3 and in zero three sub section five three one three and three and four they contain provisions on the obligation to ensure that information that you put in the prospectus of a company are true and that if they contain untrue statement then you incur civil and criminal consequences for example let's look at the companies act just in a minute and i will come back okay [Music] i suppose look at the companies are 219 at 992 if you look at session 305 for example headed the invitation to the public transition 305 uh subsection [Music] 4 for example that the prospectus shall not contain an untrue statement and if the shares are the benches to which the prosperity will lead adulting on the stock exchange whether in the republic or elsewhere and then so it will go on and tell you that if it contains a false statement then that is a serious wrong which will attract a severe sanctions and if you look at session three one three for example it said that civil remedy for misstatement or mission in prospectus so misstatement or mission is the same as a misrepresentation in the prospectus so uh 313 will tell us quote where a prospect was published in connection with the general or sweden british republic respect of shares or the benches of a public company contains an untrue statement it is uh required to state or set a person specified is liable to pay compensation to the persons who require or dispose of their shares on the faith of the prospectus for the loss they may have sustained by reason of the untrue segment or mission code so if you look at session 313 of the companies act 2019 at 992 we are being told that if for example a forced information has been put in the prospectus and on basis of that someone has purchased a share or debenture and he or she has suffered loss he or she is entitled to claim compensation for whatever losses he has suffered for the investment made by relying on such a false information so let us keep that in mind of course the family arrangement is also another type of case where you cannot remain silent and you must disclose information otherwise uh that could give rise to misrepresentation the well-known case of like the goddard and gordon there was an arraignment between two brothers elder of him was believed to be illegitimate for the illegitimate child means that was born outside the word law for the division of the family estates and it turned out that the younger brother who had obtained an advantage because of his belief had known all along that his brother was uh legitimate and eventually when the mata came before the courthouse that even after the last of the three years the agreement could be rescinded because the family arraignment of this sort was uber mafide a requires a nursing and disclosure should have made yeah so what are the remedies for misrepresentation two main remedies uh resistance and damages we'll talk about them uh virusly as we come through the case uh recession simply means they're setting aside uh the contract and this is available for all types of misrepresentation be it innocence misrepresentation problem is representation negligent misrepresentation so what is the effect of recession the effect of recession is simply to wipe out the existence of the contract entirely and return the passes to the positions they were in before the contract was made so like they started school i entered the position that they were before the contract was made and recession has been developed in various decisions by the court of equity and for that matter all the principles which go of inequitable doctrines or remedies such as ratification injunction specific performance are applicable to recession so all the equitable machines applicable to resistance let us keep that in mind and knowing that uh recession being an equitable remedy is really discretionary and if you want the course of equity to exercise discretion in your favor you must not be guilty of inequitable conduct such as dishonesty in that regard remedy of recession will be lost remedy recession will be lost or will not be available to a party in certain circumstances where there has been lots of time meaning that we know that we say that delay defeats what equity so where you become aware that you'll be victim of misrepresentation but you don't timelessly uh take steps to set aside the the contract to resend the contract then after a reasonable delay you will not be able to do that has happened in the case of leaf against international galleries so over there you notice that the misrepresentation was discovered five years after the contract and uh the victim did not actiniously and the court also reviewed that because of the delay recession was not available another bar to availability of recession for misrepresentation is affirmation affirmation will mean that where you are the representative or the nuisance party and you [Music] diedly or indirectly expressly or impliedly affirm the contracts with knew with full knowledge of the truth in other words having become aware that you are being a victim of misrepresentation you continue to carry out your affairs you continue to behave you listen to the contract as if uh you've not become aware of anything which entitles you to avoid the contract you treat the contract as if it's in full force now where that is uh the case then you will not be able to resend the contract because you have affirmed the contract as less will say you cannot appropriate a reprobate you cannot eat your cake and have it if you are aware of misrepresentation and you continue to behave under the contract as if nothing is wrong then you cannot later on turn around and say they want to rescind the contract and that is exactly what happened in the case of long against lloyd the defendant advertised for uh sale motor lorry which had been described as being exceptional condition and told the plaintiff who purchased the the car that it was capable of 40 miles per hour and did 11 miles to the gallon two days later certain effects appeared and the plaintiff accepted the defendants of how to pay half the cost of a reconditioned dynamo on the following day the plaintiff's brother set out to drive the lorry to middlesbrough but it broke down on the way and the expert found that it was not in a root worthy condition a defender's representation on sending the vehicle where and through although honestly me and the plaintiff sought to rescind the contract on the ground of the defendant's innocent misrepresentation and the court held that i have one that representation as to the condition of the lorry were innocent and two the journey to rochester was not affirmation because the plaintiff had to have an opportunity to test the vehicle in a working capacity and three the acceptance of the offer to pay half the cost of the dynamo and subsequent journey to middlesbrough did amount to affirmation and therefore recession could not be granted so let us uh keep that in mind now the third bar to the availability of our precision for misrepresentation is where residual in integral is impossible in other words precision is about restoring the parties to the position they were before the contract was made if it is not possible to restore the parties to the pre-contract uh stage or pre-contract state of affairs then uh recession cannot be granted and this may happen where for example the subject matter of the country has ceased to exist or has radically changed its identity in that case a recession could not be granted so we can look at the the case of a by guest against a pike and thirdly recession will also not be available where there has been intervention of third party rights you know what equities used to do is to protect a person who has a good fit and for value acquired rights in property and this is a very important equitable doctrine uh the bona fide fatigue stuff of value you remember that good so where a third party has acquired rights in a contract which was initiated by misrepresentation despite the fact that the misrepresentation can be made out because of the intervention of third party rights a third party a party who was not aware that the contract was officiated and has gone ahead to give vulnerable conservation acquired value in under that contract with this otherwise representation he is innocent an will protect such a person and for that matter if the person affected by misrepresentation is seeking to have the contract set aside the court will say no recession is not available because of the intervention of the third party rights you can look at the the case of flips and bruce louise and ivy which we met last week when uh stanley discussed uh mistake with you so let us keep these things in mind now if you go to uk there is legislation record there is representation act of 1967. now let me say that this legislation has no application whatsoever in ghana you're only citing it for comparative purpose just to give you a sense of what pertains in uk where we received our command law and contract everything from that in 1967 they passed the legislation and so to clarify a certain aspect so for example if you go to the misrepresentation at 1967 of uk as i said of uk so don't apply it over there for example where the court declared uh that yes the the contract which has been affected by misrepresentation is subsistent the court could for example order that instead of setting the contract aside instead of resetting it the contract should remain in force and rather the affected part will be given damages so that is we have damages in lieu of what recession so instead of letting the automatic approach of equity that once recession is made down you can actually have the contract uh rescinded for a good reason where the court consider is equitable to do so having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld as well as to the loss that recession would cause with the other party the call to weigh all this and say that should we allow the country to be set aside if we have to allow the country to be set aside to rescind it what are some of the negative consequences now the call to compare that with if the contract were to be upheld now if the qualities of the view that it will be more troubling having the contact recently because of its representation then the court will save the contract let it remain in force and rather award damages to the victim of the innocent or negligence representation as uh the case may be so that is if you like a bit of like a slight modification which have been made by english lawmakers to how the common law treatments representation uh as uh it were yeah okay so this will mark the end of discussion of a misrepresentation and then we will set up a another class and we discuss for the rest and on the influence uh what i'm going to do is that i've done a lecture like this with the recording so i will send you the slice and send you the recording and it will be considered as treated so that when we meet uh we meet in the course of the this break this long weekend again we'll move on with the discussion of illegality and public policy and before we do that if there are maybe any questions we can take that good so we will draw the cutting down here unless there are maybe some questions that i will take otherwise i have to go and meet your seniors in another class okay not having seen any hand up i'll draw the cutting down and have a very good day we will set up another class