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Published: Fri, 02 Feb 2018

Misrepresentation can be known as statements made on a contract

Innocent misrepresentation occurs when someone makes a statement believing it to be true, when rather in fact, it is a false statement. It really happens in an innocent nature, no deliberate intentions inflicted. Some of the elements which must be fulfilled in an effort to prove and claim in this type of misrepresentation are as follows:

The person who makes the false statement, the statement must be, and remains untrue.

In the material to the transaction, that is, where the buyer must significantly rely on the lie stated if for e.g., if a consumer purchase a television set regardless of the problems associated being outlined, this would therefore not be applicable.

The lie must be the root of which the other party endures losses.

Fraudulent misrepresentation as considered in the case of Derry v Peek 1889. This is where persons of the other party are intentionally misled. Of all the types, fraudulent misrepresentation is known to be most serious in that it results in the most adverse penalties. Some of the elements under this form to be complied with are as follows:

A false representation must indeed be made.

The misrepresentation must be ‘material to the transaction’, in other words the information provided by misrepresentee must be related to the transaction in question.

Information that is falsely put out or irresponsibly ignored pertaining to whether or not information is true.

The intention imposed by the misrepresentation made is to take action or to abstain from acting out.

The other party has to rely on the lie made; therefore there must be some substantial evidence at hand.

The lie must result in a loss to the other party. There must be some level of harm in the final transaction.

Negligent misrepresentation is one of which statements are made without knowing if it is true or not. 1A Restatement (Second) of Torts § 552 states that negligent misrepresentation can be referred as, one, who in the course of his business, profession or employment, or in any transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

The principle of lawsuits according to this form of misrepresentation is to prevent careless conduct and promote responsible behavior. The distressed party must establish that the following elements do exist before an action of lawsuit is performed:

A duty of care between parties, this is owed to persons’ of the other party who may be reasonably affected if it is not followed through.

A subsequent breach of that duty – negligence is determined in context of a scenario; therefore a court will determine whether the duty of care has been breached according to the standard of care to which it chooses to hold the supposedly negligent party.

Damages, the claimant must prove a suffered loss by extent to causes of a negligent act. To decide this, a court will apply the ‘but for’ test which entails that if the loss would not have occurred ‘but for’ a negligent act, then the negligent act will be cause of injury. If losses were incurred through other means however, no liability would arise.

Based on the information identified, it can be stated therefore, with respect to the criteria given, that Gina’s statement to John, on information regarding the computer in question, does in fact fall under negligent misrepresentation. The student believes that even though Gina informed John of the reliability and large memory status of the computer, she really was not sure of the reality of data given to John. Being in a hesitant state, John seek out guidance from his friend Hector, who is qualified in computing, who although was in a hurry advised John what he thought of it resulting in John purchasing the computer. At a very early stage of using the computer, John experienced ineffectiveness and inefficiencies. In encountering this, he then called Gina to complain, who advised him to bring in the computer so that it can be checked and dealt with accordingly. So yes, John may have had a case of negligent misrepresentation against Gina and the computer shop by extent, however, this would have only been applicable if it were addressed in the same instant. John, a writer, was too anxious to complete his novel and therefore continued to use the computer, even though advised otherwise by Gina. Six months later, he experienced major trauma and frustration when he could not save his entire novel as a result to the memory capacity being absorbed. With no backups or print outs, this further distressed John into throwing the computer out of the window.

When discussing negligent misrepresentation, the case of 2Hedley Byrne and Company Limited V Heller and Partners Limited, [1964] may arise. This case entailed where Heller and Partners Ltd, a bank, warranteed to Hedley Byrne and Company Ltd, an advertising company that its potential client, Easipower Ltd, was credit worthy. When Easipower Ltd could not pay for the advertising services, Hedley Byrne sued the bank as a result of misrepresentation. However, Hedley Byrne’s claims were dismissed due to Heller and Partners warranty disclaimer for any responsibility for their inaccurate statements. In this given criteria though, because of John’s undue delay of getting the computer checked when asked to, the student thinks that even if John wants to claim a case of negligence misrepresentation, Gina can indeed counter claim on a few other provisions discussed below.

Gina can counter claim on terms of comparative negligence, this is where instead of the total burden of liability for a loss on an individual, and it is placed between the two responsible parties. With this in mind, instead of Gina and the computer shop being burdened with the entire liability of losses incurred by John, John will also be responsible in this form of negligence. If John is held to be 51% responsible, he will incur losses. If, however, he is held 40% responsible, then Gina and the computer shop will need to pay only 60% rather than the entire 100% in damages suffered.

Another avenue in which Gina and the computer shop may counter sue can be on terms on contributory negligence, that is, if they wish to be a bit more extreme. Contributory negligence principles are applied in the event of the claimant contributing in any way encountering on his own losses, resulting in him being disqualified from recovering any losses. With respect to the criteria given, Gina and the computer shop can be extreme in this instant once John has in any way contributed to his own losses, which he did when he ignored Gina when she advised him in bringing in the computer for inspection. This information can in fact debar John from recovering any damages he acquired.

Alternatively, Gina and the computer shop can also counter sue on terms of John’s professional advice from his friend Hector who guided him in purchasing the computer.

Overall, it is quite obvious and strongly advised that John should not claim under any misrepresentation acts against Gina and by extension the computer shop. Based on the data provided above, it is very evident that John will suffer further losses as a result, in view of the fact that Gina holds more substantial advantages in counter claims against John. The student reiterates, that John drop any claims of possible lawsuits of any misrepresentation acts against Gina and the computer shop company.

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