With v O’Flanagan [1936]

Court: Court of Appeal

Facts: Dr O’Flanagan truthfully stated in January 1934 that his medical practice had annual takings of £2000. By May of the same year, however, the takings had decreased significantly to only £5 a week due to Dr O’Flanagan's illness. Despite this change, Dr O’Flanagan did not disclose the new information when entering into a contract to sell the medical practice to Mr With. Mr With sought rescission of the contract.

Issue: Whether there is a duty to disclose material changes in circumstances that were previously represented as true during negotiations, and whether failure to do so constitutes an actionable misrepresentation.

Held: The Court of Appeal granted rescission of the contract, finding that there was an actionable misrepresentation. The court held that there was a duty to disclose material changes in circumstances and that a representation made to induce a contract is treated as a continuing representation.

Key Judicial Statements - Lord Wright MR: If a statement has been made that is true at the time but during the course of negotiations becomes untrue, then the person who knows that it is untrue is under an obligation to disclose the change of circumstances. He also noted that a representation made as a matter of inducement to enter into a contract is to be treated as a continuing representation.

💡 Leveluplaw: confirms that a duty to disclose material changes in circumstances exists if the initial representation was made to induce the contract. This duty applies regardless of intent and requires that significant changes be communicated to the other party.