Lucretia places a sign in the window of her red Ford Transit van, which reads for sale - 10000 low mileage great shape 1999 model full service history available

However, Smith v Chadwick ruled that the misrepresentation would not have induced James to enter into the contract if he regarded it as unimportant. Given that different van models would vary the van’s performance to deliver flowers, it is unlikely that James regarded the car’s age as unimportant. Lastly, that James could have verified the accuracy of the representation when checking the service history is ordinarily no bar to his claim.  There will only be a bar when there is such delay. Since James discovered the misrepresentation three months after purchase, his claim is not subjected to this.

Referring to Oscar Chess Ltd v Williams , it must also be noted than only a misrepresentation but not term is found here. Since Lucretia is a private seller, James was in at least as good a position as Lucretia to discover car’s true age. Moreover, section 2(2) of Misrepresentation Act 1967 is not a problem here. The section gives courts the discretion to deny rescission to protect non-fraudulent representor from being deprived of entire bargain for a relatively trivial misrepresentation. This is more likely to be applicable to large scale transactions such as that in William SIndall Plc v Cambridgeshire CC. Hence, James should be able to rescind contract recovering £10000, while the van would be returned to Lucretia.

Damages

James should claim for damages under section 2(1) of Misrepresentation Act. James need only prove that Lucretia made a statement of fact which induced him into entering into the contract. It is then for Lucretia to prove that she honestly believed on reasonable grounds that the statement was true when made. It is likely that Lucretia could prove her reasonableness as a private seller with no expertise. However, more information is needed to determine on the issue of honesty. For instance, whether Lucretia knew about the correct age of van. If this is answered affirmatively, then Lucretia is likely to fail on proof of honesty.

Should this be the case, James will be awarded compensation under section 2(1) ‘fiction of fraud’ measure.

In Royscot Trust Ltd v Rogerson, it was ruled that section 2(1) gives a tortious measure, as if representor made a fraudulent misrepresentation even if it was not made fraudulently. James can therefore claim all losses flowing from the misrepresentation even if it is unforeseeable. This loss would include the profit James could have made had he entered into another contract not tainted by misrepresentation. Nevertheless, there is a chance that this may be barred for being ‘too remote’. Generally, claims for fraudulent misrepresentation is immune from the remoteness limit. However, it was ruled in Royscot case that losses under section 2(1) could only be recovered, ‘provided they were not otherwise too remote’. Referring to 4eng Ltd v Harper, a loss would be too remote if it is not directly caused by the representor’s deceit. Hence, if this is the law, James would not be able to recover the loss of profit.  Furthermore, expenses made can only be claimed if it is required by the contract. The £1000 spent on the shelving system is not required by the contract.

Ergo, James’ claim of misrepresentation of van’s age would only recover £10,000. The claim of consequential loss is unlikely to succeed, while the expense on shelving system will not be recovered.

Non-Disclosure

Regarding the second issue, Lucertia here did not disclose to James the fact that the van was used by a serial killer to hide his victims. When this information was publicised by a third party newspaper, James’ business become unprofitable. The loss came not from the misrepresentation per se, but rather that the damaging information is publicised.

Under the principle of caveat emptor, there is no general duty of disclosure. Although English contract law has moved considerably away from the philosophy of 'freedom of contract', there is no positive sign towards the recognition of such a duty. Despite this, there are exceptions and indirect techniques for relieving non-disclosure. For instance, if it is contract uberrimae fidei or made under undue influence, such a duty would be imposed. Unfortunately, the current contract does not fall in either category. An alternative to this can be sought in Smith v Hughes, which ruled that while there is no duty to disclose, the seller is required to disclose any defect that would mean the good is not fit for buyer’s particular purpose. A claim under this is unlikely to succeed, as the fact that van was used by a serial murderer cannot be interpreted as a ‘defect’ as such.

James could otherwise pursue a claim of Lucretia making a statement of ‘half-truth’ when she said the van would be ‘perfect for the job’. This makes the representor liable when the statement is literally true, but omit important qualifications which distorts representee’s assessment of proper weight to be attached to statement. A similar case can only be found in Robertson v Dicicco, where the seller used the term ‘beautiful car’, when in fact it is not fit for buyer’s purpose. Yet, this claim is based on a statutory duty imposed on a business party under the Trade Descriptions Act 1968 and Consumer Protection Act 1987. Anyhow, should the court recognise a duty to disclose, it is not advisable for James to pursue claim.

Firstly, section 2(1) Misrepresentation Act does not apply in cases of non-disclosure. There are two implications for this. Not only would the difficulty of proof be significantly high, the damages recoverable would also be less generous. Since the law does not allow double-recovery, James should instead pursue a claim for misrepresentation as to car’s age. In addition to the advantage of a lower qualifying threshold, he would be awarded a more generous compensation.

Secondly, it must be noted that the van’s background was disclosed by a third party newspaper, which directly caused James’ loss of potential profit. As demonstrated in Allied Maples Group v Simmons & SImmons, where causation of loss rests on hypothetical actions of a third party, it must be shown that there is substantial chance that such loss would occur. In this case, it is not in Lucretia’s expectation nor control, that a local newspaper would make such a publication.

Hence, it is not advised for James to pursue this.

Conclusion

James should pursue one claim only under the Misrepresentation Act 1967 with regard to van’s model. He can definitely rescind contract and recover £10,000. There is also a potential for the recovery of loss of opportunity, though the expense on the shelving system definitely cannot be recovered. He should not pursue a claim of non-disclosure which is less likely to succeed, and what could be recovered is less favourable as well.

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