The Doctrine of Misrepresentation - Coursework Example

The Doctrine of Misrepresentation is not fit for purpose, it should be reformed Name Institution Course Title Course Number Date The doctrine of misrepresentation is not fit for purpose. It should be reformed. Introduction Misrepresentation is defined as an untrue fact statement or law that another party in a contract relies on (Olby, 2016). Claims that can be viewed as talk of sales like slogans of advertisement cannot be referred to as misrepresentation. If a term of a contract includes misrepresentation, it may establish an action basis for contractual remedies contract breach. Otherwise, the contact party that is affected by the other party’s misrepresentation may be in a position to obtain damages or withdraw from the business contract. The three forms through which misrepresentation can be made include fraud, negligence or innocence. Williston (2011:415) point out that it is ordinary in law that many parts of the law which have revolutionize with minimal regard with one another have close and logical linkage and that the laid down doctrines in a set of cases are barely reconcilable with the doctrines created in others. Circumstance such as this cannot be allowed to permanently exist. There must be a way of reconciling different policies. The easier forms of pleading that have superseded the initial forms which relied on sharp differences between the many different actions recognized by the common law, establish an even more importance of establishing harmony than before. According to Williston (2011:415) misrepresentation law furnishes an outstanding example of the truth of what was said. Misrepresentation may come to the mind of a lawyer, mainly, the action on the deceit case, and what is required for a sound action declaration (Sadiqi & Ennaji, 2006:92). As noted by Sadiqi and Ennaji, (2006:89-93), misrepresentation is significant in the legal arena and in other aspects, and some of these factors may advantageously be compared in dispute in the deceit action or with the established rules. This means that the lawyers need thorough reference which is a strenuous work. Thus, it is important that the policy of misrepresentation be narrowed down to less-strenuous activity for both the lawyers and the consumers. According to Stewart (2006:1), the cause of action of a plaintiff in many jurisdictions may rely on four perspectives namely misrepresentation, breach of warranty, strict tort liability and negligence. In his case, misrepresentation in product sales promotion and product advertisement refers to the method of giving clients untrue security concerning a specific product, basically from diverting attention from the risks of that product. An action is based on the deliberate concealment of imminent risks or negligent misrepresentation. Robert posits that misrepresentation can be further debated under the doctrine of express warranty breach or strict tort liability theory. Arditi (2010:8) argues that many people that are familiar with the ordinary contract law, restitution and tort argue that the rules that govern this law have advanced over some centuries and provide remedies that are intricate and uncertain. It can be firmly argued that only most skilled lawyers can give a reasonable advice to consumers concerning their rights in the platform of statute and common law. In other words, the policies that relate to misrepresentation, undue influence and duress are intricate. Thus, they need reformation to make them simpler. Furthermore, many lawyers perceive the misrepresentation doctrine as intricate. Consumers and their consultants have a tendency to avoid it. According to Arditi (2010:8), consumer consultants find it hard to give advice to consumers on the law of misrepresentation, lest the representation leads to a term of the contract. When it comes to a breach of contract, the consumer advisers find it easier and clearer to expound to consumers and also simpler to establish in the court. In the law of the English and the Scots, if the doctrine of misrepresentation is not a contract breach, there are three misrepresentations levels and several remedies depending on the trader’s fault: negligent, fraudulent and innocent. A consumer can claim against a third party that is not part of the contract but with whom the consumer has a special relationship with. From Arditi’s findings, consumers consider the four kinds of misrepresentation and the scale of possible remedies such as the calculation of possible damages puzzling. Moreover, it is hard for consumers to create and prove the characteristics of negligence or fraud, particularly the trader’s state of mind. Also, consumers consider the definitions in the misrepresentation law very ambiguous and complex. Besides, the Acts of 1985 and 1967 as contended by Arditi are not transparent. In the policy dealing with the third parties liability for misrepresentation, the ‘special relationship’ definition is not clear. Therefore more clarification needs to be done to make the law more comprehensible. In addition, many actors in the law have deemed the law of misrepresentation complex and confusing. The Local Government Regulation in Arditi’s findings wrote that the scale of misrepresentation types and the available damages often leave consultants stressed with the way to explaining to the consumer on how things are, and the trader is often left unsure of the obligations they hold. Arditi (2010:9) argues that the present ‘mens rea’ characteristic to misrepresentation is widely to blame for its limited use. If this characteristics were to be removed, greater protection would be realized for consumers. Also, as noted by Professor Collins Hugh, the damages measure for misrepresentation is infamously confusing. In fact the Citizens Advice stipulate that the Act of Misrepresentation of 1967 is not suitable for purpose and that it needs reformation to be straightforward to use. Additionally, stakeholders in Arditi’s research unanimously agreed that the misrepresentation law might require reduction so that it can be simple and certain. Scottish Law Commission (2006:7) considers non-disclosure and misrepresentation together. The commission finds that the non-disclosure law tends to dominate while the misrepresentation policy is hardly paid attention to when it comes to insurance. In history, the importance of misrepresentation in the context of insurance has been largely ignored. This can be partially attributed to the fact the intense duty width to reveal material facts has implied that many a times, non-disclosure has incorporated misrepresentation questions. Many cases have tried distinguishing the two defenses as taken by a guarantor/insurer, and it seems to be an insurer’s standard practice, in any possible way, to implore defenses. To distinguish the two defenses, a representation refers to something that is explicitly said to answer a particular question, whereas non-disclosure implies that someone has failed to disclose something that was far from the question subject but which was recognized to them and which they ought they would have considered to be material for themselves (Gibson, 2011:203). This implies that material fact misrepresentation will lead to grounds of policy avoidance whether the proposer knew that it was untrue or not. Since many insurers ask several questions in the context of consumers, there have been many inaccurate answers to the posed questions. Many a times, non-disclosure law has assumed a residual role. But this law has not been fully considered to apply in the context of consumer insurance. Therefore, the law of misrepresentation has to be considered first before the non-disclosure law. Insurers have to get information from possible policyholders regarding the risk nature. They utilize this as their source of decisions on whether they should accept the risks posed, and if they should accept, at what expense and terms. Some of the information can be accessed only from the potential policy holders (Etherton et al., 2007:2). The Act of 1906 enforces heavy duties on people that apply for insurance. It holds that these people are needed to volunteer info to the insurer concerning anything that might affect the risk assessment of a prudent underwriter. In case the policy holder fails in this role, it is permitted that the insurer can refuse all the claims; and deal with the policy like it were non-existent. In the same way, the insurer can escape the rule if the policy holder creates a material fact representation that is deemed incorrect. As a result, there are three negative implications. First, the disclosure duty may function as a trap. Most insureds especially small businesses and consumers, are not aware that they hold a role to disclose (Etherton et al., 2007: 3). They may not know that they require to volunteer information from which the questions have not been posed. Etherton et al., (2007: 3) finds that even when they are aware of this duty, they may not be fully informed on what may be important to the insurer. Secondly, policyholders may not be allowed claims even if they are honest and reasonable. An insured- small businesses or consumers that does not understand a question on the form of proposal, and soundly thinks that some data is irrelevant to the insurer, may note that the insurer is able to escape the policy. This is also applicable when the insured has provided factual info that is not accurate or partially accurate, even when the insured believed reasonably and honestly that what was said was true (Etherton et al., 2007:3). Thirdly, in case the insured acts in a careless manner, the remedies may be excessively severe. This applies to the case where the insured was frank but was careless when it came to answering questions. In this case, the insurer can avoid the policy in his or her own right (Etherton et al., 2007:3). These problems highlight the complexity of the doctrine of misrepresentation as well as its ambiguity and lengthy characteristic, thus the call for improvement. Moreover, when it comes to misrepresentation in the context of insurance, the statements do not have the law force and the insurance company’s liquidator is bound to disrespect them. Besides, the statements leave the insurers as the major judge of if the claim rejection was reasonable. To add, the policy statements only cover the policy holders in their capacity of privacy and do not offer protection to businesses (Etherton et al., 2007:7). Sherwin (2003:1017-1018) posits that misrepresentation has two central remedies including rescission followed by benefits restitution conferred, and tort damages. It has been set out that doctrines that govern the damages recovery for misrepresentation are in the Restatement of Restitution and Restatement of Contracts. In both cases, misrepresentation is widely described to entail false statements, half-truth, concealment, misleading conduct as well as other actions intended to inculcate false beliefs. A lot of amendments need to be made for a better doctrine of misrepresentation. However, to get the tort of deceit damages, the plaintiff has to show that the misrepresentation of the defendant was material. This way, if a seller of a mansion informs the buyer of the house that someone thinks of moving in the neighboring place, recognizing that this is not true, the buyer of the house cannot claim damages at a later date. On the contrary, the Restatement of Restitution and the Restatement of Contracts permit rescission for a misrepresentation of material or a fraudulent (Rose 2008:1301). Another reason for the adjustment of the policy is the fact the Restatement of Contracts has set out rescission conditions, that treats justifiable reliance and materiality as two different requirements and confines the requirement of materiality to misrepresentation that is non-fraudulent. In fact under section 162, the Restatement of Contracts defines materiality and differentiates it from justifiable reliance. It states, “The materiality of a misrepresentation is determined from the viewpoint of the maker, while the justification of reliance is determined from the viewpoint of the recipient,” (Sherwin 2003:1020). Either way, Sherwin finds that the reason for the rejection of materiality in the rescission circumstance for the misrepresentation of fraudulent is that materiality is undesirable to pardon an intentionally fraudulent defendant from obligation on the basis that the fraud was slight. As much as this law may try to excuse itself for rejecting the materiality, it is evident that it view materiality and permissible reliance as redundant rather than undesirable. In any case, it has to be rejected. Sherwin finds that when it comes to materiality requirement, there are legal consequences of fraudulent misrepresentation whether acted on factually, believable, believed or deliberate. In this case materiality is a limitation described by Sherwin (2003) as de minus. It therefore marks out a point where proven fraud will be tolerated in law. This law should therefore be applicable to the misrepresentation law. Conclusion In conclusion, the law of misrepresentation has been considered widely ambiguous, strenuous and confusing by scholars as well as consumer consultants and consumers themselves. This has made it harder for involved parties to comprehend it for a proper action to be taken. The policy can also be deemed biased as it assumes the insurer as the major judge in the context of an insurance contract. Having the law being defined single-handedly from the non-disclosure law may also lead to some level misunderstanding. Therefore, a lot of work has to be done in redrafting the policy to reach an agreeable level and to incorporate the understanding of non-disclosure doctrine, small businesses and consumers as part of business contract. Besides, for a law to be effective, it should be comprehensive to the concerned parties, simple, clear straight-forward and less intense. Bibliography Arditi, L. 2010, Law Commission- Reforming the Law: Unfair Commercial Practices and Private Redress Feedback from Stakeholders. London: Tothill Street. Etherton, J., et al. 2007, Insurance Contract Law: Misrepresentation, Non-Disclosure and Breach of Warranty by the Insured. London: Theobalds Road. Gibson, E., 2011, Of the English reformation. Against the doctrine of papal supremacy. Of the Catholick church. The popich rule of faith examined and disproved. The Protestant rule of faith explained and vindicated, volume 1. New York: H. Knaplock. Olby, D. V., 2016, Misrepresentation. Accessed 19th April 2016 from Rose, A.M., 2008, Reforming Securities Litigation Reform: Restructuring the Relationship Between Public and Private Enforcement of Rule 10b-5. Columbia Law Review, 108(6), p.1301. Sadiqi, F. and Ennaji, M., 2006, The feminization of public space: Women’s activism, the family law, and social change in Morocco. Journal of Middle East women's studies, 2(2), pp.86-114. Sherwin, E., 2003, Nonmaterial Misrepresentation: Damages, Rescission, and the Possibility of Efficient Fraud. L.A: Loyola Marymount University. Stewart, W. J., 2006, Product Liability. Accessed 19th April 2016 from . Williston, S., 2011, Liability for Honest Misrepresentation. Harvard Law Review, 24(6), pp.415-440. Read More