Representation of Client in Contract Law Case

THE INTRODUCTION

Abstract from the question given, on the purpose to advice on Arnold, it is vital and crucial to find out whether or not a contract has been formed between the parties involved so the locus standi[1] of Arnold can be tracked. Hence, with the establishment of locus standi, Arnold may then can take action on issues he has encountered to the parties. It is simply indicating that, there must be a mutual agreement which is legally enforceable between parties involved. In another word, there must be an existence of consensus ad idem.[2] Whereby Lord Wilberforce a say on this issue in The Eurymedon as below:- [3] “… English law, having committed itself to a rather technical and schematic doctrine of contract, in application takes a practical approach, often at the cost of forcing the facts to fit uneasily into the marked slots of offer, acceptance, and consideration…” In summary, In order to claim remedies, a valid contract shall consist of offer, acceptance, and consideration whereby this ensures and that gives locus standi to the claimant to carry out contractual action towards the defendant. The issue in this question would be seeking for an evaluation on whether the statement made is a term or representation. If it is a term, it may lead to breach of contract ; whereas, if it is representation, it is imperative to seek for remedies available for the claimant.

Establish the Contractual Relationship with the claimant

Therefore, it can be denoted that the claimant, Arnold must have prove his contractual relationship with the first defendant, William to uphold his claim on his misfortune incident since he considers the deal given by William a bad one. It is then submitted that, William can be categorised as an offeree whereby his enquiries is just merely an invitation to treat since he is just plainly making a request due to his needs. An invitation to treat, as per Treitel : – “…When parties negotiate with a view to making a contract, many preliminary communication may pass between them before a definite offer is made…”[4] Based on the fact given, Arnold is indeed on the look out for a house in the newly built Kenwood Park and sought for William’s consultation who is a house broker. As a result, it is submitted that Arnold is making an Invitation to treat in lieu of an offer like what has been illustrated in the case of Gibson [5]. Whereas, on another hand, in the light of Storer v Manchester,[6] in accordance to offer as defined by Professor Treitel, William has expressly show his willingness by giving Arnold particulars of that house. [7] On the surface, contractual relationship thereby established.

Determining the statement made is a term or representation

Thus, It would be imperative to then applying Fletche LJ’s guideline as laid down in Heilbut Symons v Buckleton to find out possible contractual action.[8] It was held that a vague statement would amount to representation instead of a term. Whereby in Dimmock v Hallet that described the land as ‘fertile and improvable’ is constitute to a representation. [9] Likewise, in this scenario, statement made by William that ‘a hypermarket will be opened in about 3 months’ is said to be a representation. In a nutshell, the core issue in this scenario would be whether William as an representor has misrepresented the facts to Arnold, the representee which by any chance may give rise to liabilities and Arnold shall be advised on the ground of the probabilities for being granted for possible remedies.

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The onus to prove the offeror has misrepresented the facts

It is advised that, in order to determine whether one has been misrepresented to the claimant, there are elements to prove an actionable misrepresentation. The representation made by the representor must be unambiguous false statement of fact which is addressed to the party misled and which includes that party to enter into a contract.[10] This also signifying that, there must be a false statement of existing fact or law, and it is addressed to the party misled which has materially induces the party to embark into a legally binding agreement. As such, if the statement made is held to be a mere puff, a party will not be blamed under contractual liabilities. Notwithstanding with that, If all the elements have been satisfied, misrepresentation then has successfully raised at the first glance and remedies is likely to be granted.

Elements to be proved on each statement made

Essentially, in order for a misrepresentation to be stand in this circumstance, the statement made must not be an opinion or mere puff. The defendant will therefore argue the statement made is merely an opinion; hence, the claim towards him will not be succeeded as laid down in Bisset v Wikinson.[11] Nevertheless, contrary with the mentioned point, In Smith v Land & Home Property Co. Ltd ,[12] It can be rebutted that the statement is however an existing fact as per Bowen LJ :[13] “… The one who knows the fact best involves very often a statement of a material fact…” It is nonetheless may be argued that, Arnold should have check the facts instead of relying on it; hence, it is not at fault of the defendant. On another hand, William as the house broker should have better knowledge than any ordinary person as he possesses a special skill as held in Esso Petroleum Co. Ltd v Mardon.[14] In addition, as Lord Evershead MR has uttered in Brown v Raphael[15] , where such a person were in a better position than the other party to check the facts to back up his opinion, but did not do so, such person will be liable for misrepresentation.[16] From the fact, William has described the Kenwood Park as ‘Gated and Guarded’ and it was the most desirable property within the vicinity that turned out to be untrue. William as a house broker hold a better position than Arnold to ensure his opinion is true. Furthermore, he should have known the fact that Heavenly Homes is more popular since it is a well-known fact as compared to the Kenwood Park. Besides, it is of common knowledge that, guards must be employed by the residence but not the developers. William is therefore made a statement of fact and by possessing a special knowledge failed to check even he is in better position to do so. It can be said prima facie that he has misrepresented a statement of fact. In contrast, William may also raise an argument that, in general, a statement of a future intention will not constitute as a statement of fact therefore it is of no effect for him to be liable under misrepresentation on the grounds of Lord Wilberforce in British Airways Board v Taylors.[17] It would not be just and fair as it is impossible for one to foresee the future and it is unpredictable and that binds the claimant. Indeed, William has mentioned that a hypermarket will be opened in about 3 months within Kenwood Park which amount to a statement as to the future. However, William cannot walk away based on that ground as Arnold may argue that a statement as to the future, can implicitly contain a statement of fact. In the light of Spice Girls Ltd v Aprilia World Service BV , It is illustrated that if the maker of the statement did not genuinely hold the intention or belief at the time of making it, he will misrepresenting the fact.[18] As grasped from the fact, it is opined that William did not hold the intention indisputably by the time making the statement but he was said it with full faith by stating a specific timeframe that a Hypermarket will be opened in 3 months within Kenwood Park,. Hence, it is argued that the statement given are not merely an intention since at the time of contract, he believes himself is making an existing fact which at a higher possibility that the hypermarket will be built and well-established within 3 months. As held in Edgington v Fitzmaurice, the statement made by William howsoever it may be controversial to be an intentional statement; it still amounts to a statement of fact.[19] Even so, William may still argue that, in his understanding, he does not know that the Kenwood Park will not be Gated and Guarded in which is a half true statement, therefore, it can be argued that part he has misstate was silent apart. Action shall not be taken towards him as he says nothing about that since it was held in Fletcher v Krell that silence or non-disclosure of fact does not give rise to liability.[20] Hence, William may not be liable under misrepresentation at this juncture. Notwithstanding with the above issue, Arnold can demolish that argument by claiming there is a set of exceptional rules whereby a half-true statement is deemed to be a misrepresentation as laid down in Nottingham Patent Brick & Tile Co. v Butler.[21] Moreover, it is submitted that, there is a fiduciary relationship between both of them in which it is held that the party has the duty to disclose all the necessary fact to ensure a fair transaction under the light of Tate v Williamson.[22] By juxtaposing the law and the fact, it is a crucial factor for William to ensure all the necessary facts has been told since it might affect the transaction. As a result, silence in this scenario does give rise to liability at the first glance. In accordance to the ratio of With v O’ Flanagan, it can also be argued that, whenever there is any occurrence of changes in the circumstances, the party should have check so the existing fact would not be false and misled the party.[23] On the fact, the plan for the hypermarket has been scrapped by the developers to make way for a man-made lake. Based on that, William was in fact, did not check and inform any changes to Arnold before signing the agreement. Also, another vital issue would be to prove whether or not has the statement of fact made by the representor has materially induced the represetee enter into the contract. As per Jessel MR has expressed in Mathias v Yetts: [24] ‘ if a man has a material misstatement made to him which way, form its nature, induce him to enter into the contract, it is an inference that he is induced to enter into contract by it. You need not prove it affirmatively.’ On the fact, The inducement has shown when Arnold actually became interested and gave 10% of the price of the house to William as a down payment after he listened to William’s statements where he described the property is gated and guarded, there will be a hypermarket opening in within 3 months and illustrated it as the most desirable property in the vicinity that is not wholly true. Attwood v Small.[25] Apart from that, William may, at this stage, argue that the statement made must be done directly by the representor to the representee in which the house owner is John whereas he is just merely an innocent third party. Hence, action could not be taken towards William. However, on the grounds of Conlon v Simms whereby it says, the statement made can also be done through an authorised agent.[26] Based on this sense, William as a house broker has acted on behalf of John to deal with William and the statement made by him has indeed misled Arnold to embark into a bad deal. Nonetheless, According to Smith v Chadwick, it is submitted that if the representee knows it is a representation statement, then, it shall not be taken action on misrepresentation.[27] However, it is argued that Arnold does not aware of the statements since he intends to discontinue with the agreement. Afterhe knows the facts told is not true. Hence, it is prima facie that , in the light of Horsfall v Thomas, the claimant, Arnold can now take action towards William under misrepresentation as all the elements has been satisfied.[28] The next caveat would be to determine which type of misrepresentation can the claimant claim under and the possibility of Arnold to rescind the contract.

Type of Misrepresentation

It may be submitted that Arnold can claim for his rescission subject to the bars to rescission as he wishes to discontinue with the purchase. It is advised that, Arnold may seek for remedies under Fraudulent Misrepresentation or Negligent Misrepresentation which both has got different components to be proved and the burden of proof lies on the representee. First and foremost, in order to claim under Fraudulent Misrepresentation which is governed under the tort of deceit, it must be proven that the statement made knowingly, without belief in its truth, reckless whether it will be true or false as stated under Derry v Peek.[29] However, in this case, Fraudulent may not be successfully stand as William do not make the statement knowingly as the actual fact is, the plan for the hypermarket has been changed unbeknown to all parties by the developer. Therefore, the claim would unlikely to be successful under Fraudulent Misrepresentation as the standard of proof is rather high. The alternative way would be Negligent Misrepresentation under Negligent Misstatement in common law on the grounds of Hedley Bryne v Heller.[30] In order to claim under this type of Misrepresentation, it is needed to prove the existence of special relationship. On the fact, there is special relationship between them are on a dealing of Business. In addition, as laid down in William v Natural Life Health Food, special relationship can be tracked since he possesses special knowledge which in fact he is a house broker.[31] On the fact, it can be argued that, though William maybe believes all the statement made by him to be true, he has the duty to check. On this stage, it may be said that Arnold is at the higher chance to get rescission. William may claim that, there is one possible bar to rescission available which is the lapse of time as described in Leaf v

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On the fact, Arnold has decided to take contractual action only on a week before signing the agreement which the lapse of time argument would not render rescission ineffective. Thus, rescission is still available where he can recover his paid down payment as well if he successfully claims under Negligent Misrepresentation. On another hand, Arnold may also take action against John as he is the owner of the house and do not disclose the defects of the property. On the fact, there have been a few cracks appearing in some parts of the house. However, it is said the representation is made between William and Arnold as a lawful authorised agent. Therefore, misrepresentation could not occur in this scenario. In a nutshell, Arnold as a representee is now at a higher to claim for remedies which are rescission and damages as William has made a false statement of existing fact and that materially induced and misled to Arnold to embark into the contract on the purchase of the property.