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Law of Contract 2018MISREPRESENTATION
- A misrepresenta*on is a false statement of fact or law which induces the
representee to enter a contract.
- There are two types of statement that can be made before a contract forms, these
will either:
1. Form part of the contract
2. Not form part of the contract, therefore becoming a representa7on.
Breach of Contract = If the statement is a term and it is breached, the claimant has remedies
for breach of contract, principally to sue for damages and/or terminate the contract:
Misrepresenta9on = In addiBon, even if the statement is not a term, the maker (A) may be
legally liable to B if it is a misrepresentaBon.
General elements:
- The general elements for misrepresentaBon claims are the following:
(1) A false statement of fact or law
(2) By words or conduct
(3) Usually made from one party to another
(4) Which induces B to enter the contract.
1) False statement of fact or law:
- The statement must be a false representaBon about exisBng fact or law.
- This can include statements by word or conduct.
- The test for this is an objec*ve test and focuses on what the reasonable person
would have understood from the words or conduct in the circumstances.
- Bisset v Wilkinson [1927].
- There are a few factors in reference to the false statement:
(1) Statements about future inten7on cannot amount to misrep unless the
representor had no inten*on of carrying out the stated intent – (Edgington v
Fitzmaurice)
, Law of Contract 2018
(2) Incorrect statement of opinion may amount to misrep where the representor was
in the posi*on to know the facts – (Smith v Land and House Property)
- Where the maker of the statement has special experBse or knowledge, statements of
opinion are much more likely to be acBonable representaBons as well as terms:
- Esso v Mardon
(3) False statement of law will now amount to misrep unless it is made clear that it
is just an opinion – (Pankhania v LB Hackney)
(4) If a statement made becomes false because of a change of circumstance there is
an obliga*on to disclose the change or misrepresenta*on is possible – (With v
O’Flanagan)
2) By Words or Conduct
- Most cases involve words, but a posiBve representaBon can also be made by
conduct.
- Spice Girls Ltd v Aprilia
3) Usually made from one party to another
- First, it is normally necessary that the statement is made:
(i) By the other party to the contract
(ii) A’s agent acBng within scope of authority
(iii) At very leadt that A knows the representaBon has been made
- Second, the claimant B must be able to show that he is the representee.
- Generally this is met by showing the representaBon was made to him.
4) Which induces the representee to enter the contract
- Once it has been established that a false stamen has been made thorugh words or
conduct from one party to another, inducement must be proven.
- The statement by A must induce B to enter the contract.
- B must have relied on the misrepresenta*on.
1) There can be no inducement or reliance if the representee was unaware of the false
statement - Horsfall v Thoma
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