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When answering a misrep question

Issue 1: is there an actionable misrepresentation?

Law and Application:

Section 6 of the CRA 1979 allows [plaintiff] to sue [defendant] for misrepresentation. If a misrepresentation
is present, then the misrepresentation will become a term of the contract and [plaintiff] will be able to get
damages if the misrepresentation were a term of the contract.

There are 4 elements to prove a misrepresentation.

1a. False Statement of Fact


Was the statement a past or present fact?
if statement is about future, no misrep
if statement is subjective, no misrep, (e.g. car is beautiful)
Is statement an opinion?
If so, there is an implied statement that the opinion is honest/genuine (if not genuine, misrep)
Easterbrook v Hopkins [1918], The little gold mine case misrep
If both parties have minimal knowledge or experience on the matter, opinion is not implied as fact
Bisset v Wilkinson (1927), 2000 Sheep case no misrep
Is the party making statement of opinion lying?
If so, misrep
Is the intention in the statement actually held?
If seller never had intention to carry out what he/she stated he/she would do, misrep
Edginton v Fitzmaurice (1885), not buy horses but pay off debts case misrep
West v Quayside Trustee Ltd [2012], subcontractor promised work case
Does defendant know more about the express matters around their statement?
If so, defendant makes an implied statement that the opinion they are making is based on accurate
facts and figures and on reasonable grounds
If so and opinion is based on incorrect figures, misrep
Smith v Land and House Property Corporation (1884), a most desirable tenant case, misrep
NZ Motor Bodies v Emslie [1985], Emslie case, misrep

1b. False Statement of Fact


Was the vendor silent?
Vendor has NO duty to disclose ANY relevant information
Traditional rule, silence does not constitute statement, misrep
Was the matter presented in such a way that a reasonable person would expect the presented
matter to be statement of fact?
King v Wilkinson (1994), Fence over neighbours boundary case
Agent:
knew of the problem
deliberately chose not to disclose information
the vendor showed the property and it was presented in such a way that a reasonable person
would expect the fences to be on the correct land
misrep ,as the vendor had gone beyond mere silence
Was there a half truth?
If so, explain half truth, that is, where a party makes a statement, the statement is true if understood in
isolation, but the statement only discloses half of the truth/not the whole picture and thereby creates a
false impression
Wakelin v RH & EA Jackson (1984), the lunch bar case, misrep
Did the circumstances change after the true statement?
If so, the vendor must disclose the change, if they dont, misrep
With v OFlanagan [1936], ill doctor case, misrep
2. Made by or on behalf of one party
e.g. the statements about the [misrep] were made by [vendor]
e.g. the statements about the [misrep] were made by [agent of vendor] on behalf of [vendor]

3. To the other contracting party


e.g. all statements were made to [purchaser/plaintiff]

4. Inducement
Purchaser knew about representation, AND, believed it to be true, AND, because of that, entered
into the contract
e.g. On the facts of the case, [purchaser/plaintiff] purchased the [matter] because [usually will have a
line in the case to quote, for example, [purchaser] liked what they saw and heard]. The statements
need not be the sole inducement (Emslie).
Was Purchaser aware of the statement?
If they didnt know about it, it couldnt have affected their decision to enter into contract
Upham v Bardebs (1927), farm bought in auction case, misrep
Did Purchaser know of the misrep before entering into contract?
If so, no misrep
Was there an investigation (or lack thereof), and thus has Purchaser still been induced?
No investigation
Purchaser has no duty to investigate, misrep
Redgrave v Hurd (1881), young solicitor case, misrep
Investigation (by purchaser or by experts)
Then false statement is ignored, misrep
Attwood v Small (1883), mines investigated by experts case, misrep

If no acknowledgement, skip to conclusion

Conclusion:

e.g. [Purchaser] can sue for misrepresentation


e.g. [Purchaser] cannot sue for misrepresentation
Issue 2: Is the acknowledgement clause conclusive between [Vendor] and [Purchaser]?

The clause is part of the contract as the signing rule applies. The acknowledgement clause excludes the
liability of the vendor by saying that [summary of clause].

Law and Application:

The clause is not automatically conclusive as section 4 of the CRA allows the courts to consider whether it
is fair and reasonable that the clause should apply. The court in Herbison said that in determining whether
the clause is conclusive, all the factors should be should be looked at globally and weighed against each
other.

3 important factors the court must look at:


Subject matter and value of the transaction:
More complex/valuable, more likely clause will apply
e.g. The contract was for [matter] at the [small or substantial] price of [price of matter]
[If high price/value] A reasonable buyer would be expected to carry out some due diligence
when entering into such a contract, so this factor is in favour of conclusiveness
[If low price/value] It is not reasonable to expect a buyer to carry out some due diligence
when entering into such a contract, so this factor is in favour of conclusiveness
Respective bargaining strengths of the parties
The more unequal the bargaining positions are, the more likely the clause will not apply
e.g. Both [Vendor] and [Purchaser] have business experience and are thus dealing at arms
length. There is equality of bargaining power, so this factor is in favour of conclusiveness.
e.g. [Vendor] is in a stronger position of power because (they are bigger, the purchaser does
not have business experience, etc.). There is not equality of bargaining power, so this is in
favour against conclusiveness
If either party was represented or advised by a solicitor at the time of negotiations
If Purchaser advised by a lawyer, more likely for clause to apply
e.g. There is no legal advice provided to the buyer, so that is a factor against conclusiveness
e.g. There is legal advice given to the buyer, so that is a factor for conclusiveness

Has the Vendor acted dishonestly or fraudjulently?


If yes
e.g. [Vendor] has acted dishonestly in misrepresenting the [misrep]. This is a weighty, if not decisive
factor, against conclusiveness.
If no
e.g. [Vendor] has not acted dishonestly in misrepresenting the [misrep]. This is a factor for
conclusiveness

Conclusion
e.g. [Purchaser] can sue for misepresentation
e.g. [Purchaser] cannot sue for misrepresentation
Second Part of Question: Can Purchaser sue Agent (typically real estate) under FTA?

Issue: Can [Agent of Vendor] be liable for misleading and deceptive conduct under s9 of the FTA?

Law and Application:

Is agent a legal person?


Includes a local authority, and any association of persons whether incorporated or not
e.g. [agent] is a legal person that can be sued under s9 of the FTA
Is agent in trade?
trade means any trade, business, industry, profession, occupation, activity of commerce, or
undertaking relating to the supply or acquisition of goods or services or to the disposition or
acquisition of any interest in land
e.g. [agent] is in trade as it is in the business of selling commercial real estate (s2, FTA).
Was agent engaged in misleading and deceptive conduct?
e.g. [agent] engaged in a misrepresentation which is misleading and deceptive conduct.
If asking about a claim against the business make sure to mention agent was acting on behalf of
business
e.g. [agent] was acting on behalf of the business

Conclusion:
e.g. [purchaser] can sue [agency] for misleading and deceptive conduct
e.g. [purchaser] cannot sue [agency] for misleading and deceptive conduct