The Basis Misrepresentation - Essay Example

INTRODUCTION TO BUSINESS LAW: ESSAY – MISREPRESENTATION to insert his/her Catriona Hyde PBR1026M Lincoln Business School submission Table of Contents Table of Contents 2 Introduction 3 The basis misrepresentation 3 Fraudulent misrepresentation 4 The negligence of common law 5 Neglect misrepresentation under the statute 6 Innocent misrepresentation 7 The Mistakes in the law 8 Conclusion 9 Reference 10 Introduction Consumers should be protected from unscrupulous traders who may want to take advantage of unknowing consumers and get them into contractual agreements that results in losses. The current provisions of the law offer two avenues that cover the aggressive trade and the misleading practices, which are common entities, experienced when dealing with two parties entering into a contractual agreement (Cartwright, 2007; Beale, 1995). These avenues are the private redress and the public enforcement. Although the private redress and public enforcement systems are different, they address similar conducts using a variety of terms and concepts that leads to different result. Law of misrepresentation have provisions that offer redress of the consumer detriment (Cartwright, 2007). However, the rights appear in fragmented forms that are complex hence making it unclear. The complexities presented by the law require amendments to ensure effective application of the law. The current laws provide confusions to the advisers of the consumers and traders as well as their clients, a fact that pose hindrances to private ordering. Therefore, the essay presents the law by highlighting the gaps that need amendments by considering possible avenues that are applicable in a case where the consumer is mislead by the trader. The basis misrepresentation Misrepresentation refers to misleading actions when considered from a private law perspective. However, this law does not occur in a single body but rather represents several causes of actions for a number of issues arising from misrepresentation (Law Commissions, 2010; Atiyah and Treitel, 1967). Therefore, it gives rise to several families of rule. When a consumer intends to bring forth claims of misrepresentation, they are required to go through sea of actions that may be intimidating and lead to uncertain actions (Law Commissions, 2010). These represent some of the discouragement that hinders the consumers from commencing any claim from the fraudulent traders. When a consumer is presented with misleading facts, or is told something that is untrue, such a consumer is said to have been mislead. When the trader breaches the contract or act in a fraudulent manner, the law of England governs this in the 1967 act of the misrepresentation (Warren, 1983). A misrepresentation depends on whether the information falls within the three categories of factual, falseness and not an omission (Cartwright, 2007). When a representation is untrue, it represents an actionable prospect. However, when it is untimely, unintelligible, or not clear, it has high chances of deceiving consumers that fall in the average category but does not signify misrepresentation (Beale, 1995). The intrigue is the unclear circumstances presented by the scope of these facts making it difficult for their application to take place. These uncertainties create gaps in the provisions that ought to protect the consumer from the traders that may seek to apply ambiguous in misleading the consumers. The cases have underlying basis of proving that a trader acted in a negligent and fraudulent manner (Atiyah and Treitel, 1967). In such cases, the consumer case appears difficult. Effective assessment should begin with the description of the common concept by examining the counts that represents misrepresentation and whether the concept constitutes material. Fraudulent misrepresentation The fraudulent misrepresentation signifies the action of deceit that leads to fraudulent acts (Cartwright, 2007). Therefore, the consumer affected by the act must have relied on the false representation. It signifies that the defendant knowingly represented the deceit to the plaintiff. Besides, in such cases, it could be that the defendant also recklessly represented the deceit to the plaintiff (Atiyah and Treitel, 1967). Therefore, the claimant must have relied upon the representation. The law views it as an action of deceit that leads to damages on the side of plaintiffs while the defendant should be charged with fraud and deceit, which do not happen in most cases owing to numerous ambiguities in the law. The law offers difficulties to proving the fraudulent actions (Adams, 2005). The standard concept asserts that fraud must be proved distinctly and alleged distinctly. These require strong evidence to place a successful case for the plaintiff. Besides, it requires that the consumer be in a position of proving the state of mind of the trader (Ervine, 2008). An honest trader may not be liable to the misrepresentation despite the unreasonable believe. However, for large corporate companies and entities that transacts business as entity posses many challenges because it would be difficult to identify the individual who would be required to undertake the assessment of the state of mind. These laws should be simplified because their present nature makes the implementation difficult. The negligence of common law This provision occurs when the representation is either careless or when there is absence of reasonable ground to enable, individuals believe the truth. When traders make negligent misrepresentation, by the virtue of common law, they become liable when the trader owes the consumer a duty of care (Adams, 2005; Collins, 2009). Economic losses were the main concern for the first case that recognised negligent misrepresentation (Hedley Byrne vs. Heller) (1964). The case provided a principle of special relationship for parties involved in the contractual agreement. Applying the concept of negligence outside the spheres of contractual relationship is seen as the main source of economic loss. Although many courts avoid the need of taking liabilities too far, the concept of negligence has the potential of a wide range within which it can accommodate none—contractual relationships (Law Commissions, 2010). However, the demerits of this concept are the assumption of responsibilities. Given that the concepts of proximities and assumed responsibilities are dynamic and evolving continuously, the scope of negligence becomes uncertain. The duty of care applies to both the trader and the consumer so that even if the consumer is owed the duty of care, a trader becomes liable when the consumer breaches that provision (Ervine, 2008). In normal circumstance, it is the trader who understands how things went wrong, and this makes it difficult for the consumers to show acts of negligence. Establishing legislation that allows the consumers to show results without the requirement of establishing the omissions and acts that lead to the neglect would play a significant role in establishing the required legislation to simply the implementation of the act based on res ipsa loquitur (Collins, 2009). Neglect misrepresentation under the statute The jurisdiction of England, Scotland, and Wales requires that the parties must have into a contractual agreement for the statutory liability to apply (McBryde, 2007). Therefore, the contractual relationship forms important attribute for the liability. The defendant would be considered liable unless there is enough prove that justifies what they meant initially. This means that the defendant has the burden of proving the concept. The main advantage of this provision is the fact that the claimant would not be required to provide evidence that the defendant owes them the duty of care (Ervine, 2008). The contractual agreement between the claimant and the defendant provides sufficient evidence. However, the problem with this provision is the section 2(1), which presents a definition of the provision in terms of fraud liability (West and Lewis, 2009). Therefore, it is not a provision that stands alone. Perhaps, it would be meaningful to re-amend the definition so that the provision does not provide the many gaps that exist owing to the definition. If the provision can stand alone, it would be more meaningful hence easy to apply and implement with the contradictions (Collins, 2009). The provision has importation of some elements like test of causation, the counts of misrepresentation, and the fiction of fraud (Ervine, 2008). These provisions causes many troubles for the judgment owing to the uncertainties on the measurement of the damages and the extend that the cases should be carried to. For the pursuer to establish the case of negligence, they must be in a position of establishing the possibilities of the defendant breaching the duty of care (Atiyah and Treitel, 1967). Innocent misrepresentation This concept refers to the opposite perspective of innocent misrepresentations. When a statement from a party made with reasonable care turns out as false, the claimant has the right of rescinding the contract. However, the two parties would be unconfined prospectively and retrospectively from their individual obligation (Holmes, 1897). The strategy aims at restoring the two parties to a position they occupied prior to the contractual agreement and assuming that the contract never occurred in the first place. The court has the discretion of awarding the damages to the consumer upon rescind when the trader uses this provision (Law Commissions, 2010). However, the court also has the leeway of awarding the damages as opposed to rescission. The provision is appropriate owing to the fact that rescission may present consequences with far-reaching impacts. The provision also takes into account the level of misrepresentation so that if the level is minor it considers the unfairness in cancelling the whole deal to award damages (Adams, 2005). Therefore, this provision takes into consideration three aspects of misrepresentations; the possible loses that the consumer incurs when upholding the contract, the possible loses that the trader incurs when undoing the contract, and the level of misrepresentation (Collins, 2009). One of the remedy is to unwind the contract. However, the unwinding presents some requirements as stipulated in the general law (Cartwright, 2007; MacQueen, 2010). In fact, the additional requirements make the application of the provision quite impossible. Perhaps the most appropriate way is to ensure a limitation of these requirements to ensure the law is easily applied. Therefore, the provision of unwinding the contract should be scraped off, to ensure there is sufficient ground for the implementation of the law because its presence provide avenue for complicating the implementation. The Mistakes in the law The legal doctrines in England provide that inclusion of mistakes in the contractual agreement makes it void because it signifies that parties failed to reach an agreement. This provision goes beyond the provision of misrepresentation owing to the fact that the contract never existed. The mistake must have the identity of the party or the contractual contents (Beale, 1995). However, the mistake does not provide the avenue for redress because the misrepresentation depends on the quality of item making up the contract like the items or goods sold (CRMAP, 2011). When the trader provides misleading information to the consumer concerning the signing of the contractual agreement, the consumer has a leeway of defense based on non est factum (Law Commissions, 2010; West and Sarah, 2008). The provision provides that the consumer signed the document thinking that it contained the required legal items, when it in fact contained unintended effects hence providing defense for the consumer. The provision is very narrow, besides it holds that the deception must be serious, and that it must relate to the document type (Atiyah and Treitel, 1967). In addition to, it has no provision that illustrate case when the consumer is negligent. The amendment is required in ensuring that provision cuts across both the consumer and the trader, so that its provisions are not narrow (Adams, 2005; Collins, 2009). Opening the provision will provide avenue for equal representation of the parties and uniform application for them both; besides, it should be able to consider all case of deception irrespective of the magnitude. All deception must be treated equally; therefore, the provision that dictates only on the serious deception and the document type should be amended. Conclusion The law governing the concept of misrepresentation present a patchwork of doctrines that causes confusions. The law lacks a preferred avenue that can assist in the establishment of liabilities. Based on these challenges one would thing that remedies can only be found in the statutory acts for instance, in England the statutory is the 1967 Act. The advantage of the act is the leeway it provides to the consumer not to prove the faultiness on the trader’s side. All the consumer need is to prove that they did not act in a negligent manner. The three remedies that include the damage in case of rescission, damage, and rescission provide uncertainties. Reference Adams, K.A. (2005) A Lesson in Drafting Contracts: What’s Up with “Representations and Warranties,”BUS. L. TODAY, Nov./Dec., at 32, 33–35 Atiyah, P.S. and Treitel, G.H. (1967) Misrepresentation Act 1967, 30 Modern Law Review, 369, 41-47 Beale, H. (1995) Damages in lieu of rescission for misrepresentation, 111 Law Quarterly Review 60, 63-64. Cartwright, J. (2007) Misrepresentation, mistake and non-disclosure, para 12.09 Collins, H (2009) A private right of redress for unfair commercial practices, A report for Consumer Focus, p 22-23. Consumer Redress for Misleading and Aggressive Practices[CRMAP] (2011) Law Commission Consultation Paper No 199; Scottish Law Commission Discussion Paper No 149. Available at http://lawcommission.justice.gov.uk/areas/misrepresentation-and-unfair- commercialpractices.htm. Ervine, W.C.H. (2008) Consumer Law in Scotland (4th ed) para 6-04 to 6-26. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465. This doctrine is discussed in more detail from para 5.27 of the Consultation Paper Holmes, O.W. (1897) The Path of the Law, 10HARV. L. REV. 457, 457 Law Commissions, Unfair Commercial Practices and Private Redress. Feedback from stakeholders (October 2010), available at http://lawcommission.justice.gov.uk/areas/misrepresentation-and-unfair- commercialpractices.htm MacQueen, H. (2010) Abandoned, Orphaned or Property For Ever? Copyright, Prescription and Personal Bar, Edin LR, 14(1), 97-102 McBryde, W.W. (2007) The Law of Contract in Scotland (3rd ed) Part 16 Warren, E. (1983) Formal and Operative Rules Under Common Law and Code, 30UCLA L. REV. 898, 925 West, G.D and Lewis, W.B (2009) Contracting to Avoid Extra-Contractual Liability—Can Your Contractual Deal Ever Really Be the “Entire” Deal? The Business Lawyer; Vol. 64, 999-1038 West, G.D and Sarah G. (2008) Duran, Reassessing the “Consequences” of Consequential Damage Waivers in Acquisition Agreements, BUS. LAW. 63; 777, 791 Read More