116 Chapter 4Misrepresentation, mistake, duress and illegality
Silence as a misrepresentation
Generally, silence cannot be a misrepresentation. The old rule caveat emptor(let the buyer
beware) applies.There are, however, four exceptions to the general rule. Silence will amount to a misrepre-
sentation in the following circumstances.
(i) If there has been a change of circumstances.
(ii) In contracts of insurance.
(iii) If there is a fiduciary relationship between the parties.
(iv) If the silence makes another statement misleading.
These exceptions need to be examined individually.A change of circumstances
If a person makes a statement which is true, but due to a change of circumstances the
statement becomes untrue before the contract is made, then it may be a misrepresentation
not to reveal that the circumstances have changed.Attwood vSmall (1838) (Court of Appeal)The claimant bought a mine because the defendant greatly exaggerated the capacity of the
mine. Before buying the mine the claimant got his own experts to check the defendant’s
statement. The experts mistakenly agreed that the defendant’s statement was true.
HeldThe statement about the mine’s capacity was not a misrepresentation because
the claimant did not rely on it. By appointing his own experts to check the statement, the
claimant proved that he did not rely on it.Fletcher vKrell (1873)The claimant applied for a job as a governess without revealing that she was divorced. In
those days she would have been well aware that she stood no chance of getting the job if
her secret had been discovered. The employer did not ask the claimant whether she was
divorced, so she did not reveal that she was. The claimant was given a three year fixed term
contract to work in Buenos Aires at a salary of £100 a year. When the employer discovered
that the claimant was divorced he ended the contract.
HeldThe claimant’s silence did not amount to a misrepresentation. She was therefore
entitled to sue for breach of contract. (The employer had argued that the claimant had made
a misrepresentation, and that this gave him a defence to being sued for breach of contract.)With vO’Flanagan (1936) (Court of Appeal)A doctor who was selling his practice said that it had a turnover of £2,000 a year. This was
true, but when the sale went ahead three months later the practice was virtually worthless
because the doctor had been ill.
HeldThe doctor’s failure to reveal the change was a misrepresentation.