Misrepresentation in Uk Law
A false statement made to induce a party to enter into a contract. Misprepresentation — if proved — renders a contract voidable (see: VoidableContract). Three (perhaps four) factors must be established to succeed in a claim of mispresentation.
(i) there must be an unambiguous false statement of existing fact (or perhaps law); (ii) it must be addressed to the party misled; (iii) it must induce the contract; (iv) (perhaps) it must be material, that is, one which would induce a `reasonable man’ to contract in those circumstances. Grounds for misrepresentation (i) There must be an unambiguous statement of existing fact.Since Kleinwort Benson v Lincoln CC (1991) it might be the case that a statement of law may also found a misrepresentation — although that case concerned resitutionary remedies for money paid under a mistake of law, rather than contract. Three classes of statement are generally not held to be representations: (a) `puffs’, (b) opinions, and (c) intentions. (a) It can be difficult to distinguish a misrepresentation from a `puff’, that is, an advertising or promotional statement which is not intended to be binding (Dimmock v Hallett (1866), in which it was representated that land was `fertile and improveable). b) A statement of opinion is not a representation (Bisset v Wilkinson (1927)) unless the opinion of the person making the representation has some special weight, e. g.
, he or she is a professional employed to give such opinion (Esso v Mardon (1976)). (c) A statement of intention – if honestly held – cannot be a misrepresentation; however, my intention is a fact and it can be dishonestly represented — Edgington v Fitzmaurice (1885). (ii) The statement must be addressed to the person misled. (iii) The statement must induce the contract.It need not be the sole inducement (Edgington v Fitzmaurice (1885)). This test will fail when (a) the representee is actually unaware of the representation (Horsfall v Thomas (1862)), (b) the representee knows the statement is untrue, and (c) where the representee is patently unaffected by the statement. (c) is likely where the representee takes other steps to establish the validity of the statement (Atwood v Small (1838)).
In general, the fact that the false statement could have been discovered with due diligence will not prevent it being concluded hat it induced the contract (RedgraveVHurd1881) but more recently it has been suggested that a misrepresentation does not induce where it would be highly reasonable to expect the representee to check the validity of the statements (SmithVEricSBush1990). (iv) (Perhaps) the statement must be `material’, that is, one that would induce the contract in a reasonable man. Currently this criterion is doubted. Modern practice seems to be to incorporate this requirement into consideration of whether the misrepresentation did induce the contract.Types of misrepresentation Fraudulent misrepresentation This overlaps with the TortOfDeceit. The misrepresentation must be intentional and dishonest (DerryVPeek1888). Damages are not limited by remoteness (see CausationInNegligence).
Rescission may be awarded. Negligent misrepresentation The misrepresentation was not intended to deceive, but nevertheless the defendant is in breach of a DutyOfCare to the claimant. Rescission may be awarded. Innocent misrepresentation The mispresentation was neither fraudulent nor negligent.In general, damages are not available, but rescission may be awarded. See also MisrepresentationAct1967. Misrepresentation Act (1967) s.
2(1) of this Act is extremely important for claimant seeking compensation for Misrepresentation. It has the effect of shifting the burden of proof from the claimant to the defendant; that is, if the claimant alleges that the defendant made a negligent misrepresentation, the onus is on the defendant to show that he had good grounds for believing the representation to be true.The Act also makes it possible for the court to award damages in misrepresentation cases, where Rescission would not be available. Another effect of the Act, or at least of the way the Act has been interpreted by judges, is to allow the claimant to recover not just forseeable losses, but all direct losses. This seems to follow from the wording — the Act says that a misrepresentation should be treated as deceitful, despite there being no dishonesty, unless the defendant can show that he was not negligent.It seem unlikely (to me at least) that the creators of the statute had in mind that damages for negligent misrepresentation should be as extensive as fraudulent misrepresentation, but there are a number of cases that suggest that judges don’t see things the same way. rescission To rescind a Contract is to treat it as terminated, perhaps because one party is in breach (see: RepudiationOfContract), or because the contract is voidable (e.
g. , for Misrepresentation). voidable contractUnlike a void contract (see: VoidContract), whose legal status is as if it never existed, a voidable contract is one that remains in force until it is declared void by one of the contracting parties. For example, one of the parties may fraudulently misrepresent a service to be offered. The offended party may then declare the contract void and refuse to be bound by it (see: Contract). However, if goods are exchanged under the contract before it is voided, then title is passed. With a void contract no title passes, because effectively the contract never existed.