Product: Misrepresentation

WHAT IS MISREPRESENTATION?

EXAMPLES in OUR DAILY LIFE

1. When a product salesperson overstates what the product can do, the safety of the product, or what the product can be used for.

2. When product information fails to warn of risks of the product.

3. When product information fails to list some ingredients of a product.

FOOD AND DRINK

30% of shrimp products are misrepresented - Oceana

30% of shrimp products are misrepresented — either mislabeled as the wrong species, called or implied to be "wild" when in fact it was farmed or mixed in a bag with various species. In one instance, the researchers found an aquarium species not meant for human consumption that was mixed in with frozen wild shrimp.

BABY PRODUCT

Babyganics Baby Products (shampoo, sunscreen, diapers, detergent, etc.) has a name that implies “organic”. But further inspection shows this is not the case, and two mothers are taking them to court alleging only small quantities of organic ingredients.

VEHICLES

Product Misrepresentation: How California Law Protects Consumers

Honda claimed that their Civic got so many miles per gallon and when their customers were not getting the mileage they were promised per gallon they were upset. One customer decided to bring them to court for product misrepresentation and encouraged others to follow along. She claimed that Honda knew their product wasn't living up to the standards that they were claiming.

TYPES OF MISREPRESENTATION

FRAUDULENT MISREPRESENTATION

Fraudulent misrepresentation was defined by Lord Herschell in Derry v Peek (1889) as a false statement that is "made knowingly, or without belief in its truth, or recklessly, careless as to whether it be true or false."

Therefore, if someone makes a statement which they honestly believe is true, then it cannot be fraudulent.

INNOCENT MISREPRESENTATION

This is a false statement which the person makes honestly believing it to be true.

NEGLIGENT MISREPRESENTATION

NEGLIGENT MISREPRESENTATION UNDER s2(1) MISREPRESENTATION ACT 1967

Part of Section 2(1) of the Misrepresentation Act 1967

This provision does not require the representee to establish a duty of care and reverses the burden of proof. Once a party has proved that there has been a misrepresentation which induced him to enter into the contract, the person making the misrepresentation will be liable in damages unless he proves he had reasonable grounds to believe and did believe that the facts represented were true. This burden may be difficult to discharge as shown in:

• Howard Marine & Dredging Co v Ogden & Sons [1978] QB 574.

NEGLIGENT MISREPRESENTATION at COMMON LAW

The House of Lords have held that in certain circumstances damages may be recoverable in tort for negligent misstatement causing financial loss:

• Hedley Byrne v Heller [1964] AC 465.

Success depends upon proof of a special relationship existing between the parties. Such a duty can arise in a purely commercial relationship where the representor has (or purports to have) some special skill or knowledge and knows (or it is reasonable for him to assume) that the representee will rely on the representation.

PRODUCT LIABILITY

Product Liability is the liability of manufacturers, sellers, lessors, and others for injuries caused by defective products.

PRODUCT LIABILITY OF MISREPRESENTATION OF PRODUCT

Product liability occurs when the manufacturer or seller of a defective product allows that defective product to get into the hands of a consumer. When a manufacturer or seller misrepresents a product, that misrepresentation can be the basis for a product liability action. In the product liability context, misrepresentation occurs when product advertising, packaging, labels, or other product information available to consumers misrepresent material facts concerning the quality or use of the product.

CONSUMER PROTECTION IN U.S.

A variety of laws at both the federal and state levels regulate consumer affairs. Among them are Federal Food, Drug and Cosmetic Art, The Fair Credit Reporting Act, Truth in Lending Act, Fair Credit Billing Act and The Gramm–Leach–Bliley Act.

Federal consumer protection laws are mainly enforced by the:

• Federal Trade Commission

• The Consumer Financial Protection Bureau

• The Food and Drug Administration

• The U.S. Department of Justice

At the state level, many states have adopted the Uniform Deceptive Trade Practices Act including, but not limited to, Delaware, Illinois, Maine, and Nebraska. The deceptive trade practices prohibited by the Uniform Act can be roughly subdivided into conduct involving either:

• unfair or fraudulent business practice

• untrue or misleading advertising.

The Uniform Act contains a private remedy with attorneys fees for prevailing parties where the losing party "willfully engaged in the trade practice knowing it to be deceptive".

Uniform Act §3(b). Missouri has a similar statute called the Merchandising Practices Act. This statute allows local prosecutors or the Attorney General to press charges against people who knowingly use deceptive business practices in a consumer transaction and authorizes consumers to hire a private attorney to bring an action seeking their actual damages, punitive damages, and attorney's fees.

Also, the majority of states have a Department of Consumer Affairs devoted to regulating certain industries and protecting consumers who use goods and services from those industries. For example, in California, the California Department of Consumer Affairs regulates about 2.3 million professionals in over 230 different professions, through its forty regulatory entities. In addition, California encourages its consumers to act as private attorneys general through the liberal provisions of its Consumers Legal Remedies Act,

Consumer protection laws often mandate the posting of notices, such as this one which appears in all automotive repair shops in California

California has the strongest consumer protection laws of any US state, partly because of rigorous advocacy and lobbying by groups such as Utility Consumers' Action Network, Consumer Federation of California, and Privacy Rights Clearinghouse.

Other states have been the leaders in specific aspects of consumer protection. For example, Florida, Delaware, and Minnesota have legislated requirements that contracts are written at reasonable readability levels as a large proportion of contracts cannot be understood by most consumers who sign them.

CONSEQUENCES

The affect of a finding of misrepresentation is the contract is voidable is the contract exists but may be set aside by the representee. The remedy available depends on the type of misrepresentation, but generally consists of rescission and or damages. The right to rescind the contract may be lost in some circumstances. The law relating to misrepresentation is mainly found in common law with the Misrepresentation Act 1967 providing some further details.

REMEDIES FOR MISREPRESENTATION

Once an actionable misrepresentation has been established, it is then necessary to consider the remedies available to the misrepresentee.

RECESSION

i.e. setting aside the contract, is possible in all cases of misrepresentation. The aim of rescission is to put the parties back in their original position, as though the contract had not been made.

The injured party may rescind the contract by giving notice to the representor. However, this is not always necessary as any act indicating repudiation, such as notifying the authorities, may suffice.

INDEMNITY

An order of rescission may be accompanied by the court ordering an indemnity. This is a money payment by the misrepresentor in respect of expenses necessarily created in complying with the terms of the contract and is different from damages.

DAMAGES

FRAUDULENT MISREPRESENTATION

The injured party may claim damages for fraudulent misrepresentation in the tort of deceit. The purpose of damages is to restore the victim to the position he occupied before the representation had been made.

The test of remoteness in deceit is that the injured party may recover for all the direct loss incurred as a result of the fraudulent misrepresentation, regardless of foreseeability:

• Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158

Moreover, damages may include lost opportunity costs, such as loss of profits.

Bibliography

• Babyganics Formula Misrepresetation. (2016, September 22). Retrieved from Pirl: http://www.mypirl.com/todays-lawsuits-blog/2016/9/22/babyganics-formula-misrepresentation

• Begley, S. (2014, October 30). 30% of U.S. Shrimp Is Misrepresented, Study Says. Retrieved from TIME Health: http://time.com/3548308/shrimp-mislabeled-food-health-oceans/

• Kimberly Warner, Ph.D., Rachel Golen, Beth Lowell, Carlos Diasla, Jacquline Savitz and Michael Hirshfeld, Ph.D. (2014). Shrimp: Oceana Reveals Misrepresentation of America's Favourite Food. OCEANA.

• LawTeacher. (n.d.). Misrepresentation. Retrieved from LawTeacher.

• LexisNexis, a. d. (2012). MISREPRESENTATION IN PRODUCT LIABILITY. Retrieved from HEALY SCANLON: http://www.healylawfirm.com/News-Articles/Products-Liability-News/Misrepresentation-in-Product-Liability.shtml

• Licensors, 2. N. (2017). Misrepresentation. Retrieved from Net Industries: http://law.jrank.org/pages/8606/Misrepresentation.html

• Misrepresentation. (2017, March 3). Retrieved from WIKIPEDIA: https://en.wikipedia.org/wiki/Misrepresentation

• Resources, H. L. (n.d.). Product Misrepresentation:How California Law Protects Customers. Retrieved from HG.org Legal Resources: https://www.hg.org/article.asp?id=25353

• RhodesLawTV. (2011, 12 29). What is misrepresentation of product? Retrieved from YOUTUBE: https://www.youtube.com/watch?v=lVCKet6wbDM

• Rose, E. (n.d.). Nutrition Knowledge. Retrieved from Behance: https://www.behance.net/gallery/32642369/Nutrition-Knowledge

• SHSU. (n.d.). CHAPTER 6 STRICT LIABILITY AND PRODUCT LIABILITY. Retrieved from SHSU: https://www.shsu.edu/~klett/CH%206%20NEW%20PRODUCT%20LIABILITY%20NEGLIGENCE.htm

Made with Adobe Slate

Make your words and images move.

Get Slate

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a Copyright Violation, please follow Section 17 in the Terms of Use.