Lecture notes
Complete Notes on Misrepresentation and Mistake for ULaw PgDL
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- Contract
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- University Of Law (ULaw)
Complete Notes on Misrepresentation and Mistake for ULaw PgDL
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Misrepresentation and MistakeMarch 19, 2023
1 False Preliminary Statements
• It is important to note that there are three types of statement for purposes
of this unit: mere sales puff; a term; and a representation.
• For a mere sales puff, as they are so called, there is no remedy (see Weeks
v Tybald (1605) Noy 11 ).
• However, for terms and representations, there can be remedies.
• As seen, for breaches of terms (to be precise, breaches of conditions and
innominate terms), the innocent party is entitled to damages and termi-
nation.
• In most commercial contracts, there will be a clause purporting to exclude
liability for false preliminary statements.
• So, if a false preliminary statement is made, the initial focus is more likely
to be on the validity of the exclusion rather than on the classification of
the false statement.
• S 3 of the Misrepresentation Act 1967 provides that any clause in a busi-
ness contract which purports to exclude or restrict liability for misrepre-
sentation will only be upheld if it satisfies the reasonableness test set out
in s 11 of the UCTA 1977.
• In First Tower Trustees Ltd v CDS (Superstores International) Ltd [2018]
EWCA Civ 1396 ), an exclusion clause which stated that the tenant ac-
knowledged that it had not entered into the lease in reliance on any rep-
resentation made by the landlord was found to be unreasonable under s
11 of the UCTA 1977.
• Thus, where there is a clause purporting to exclude liability for a false
preliminary statement, the main issue is often whether or not the clause
is reasonable and as such valid.
• And, by contrast, where there is no exclusion of this kind, the initial focus
will be on the classification of the false preliminary statement(s) as that
will determine the remedies available to the innocent party.
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,2 Terms & Representations
• The primary test for determining whether a statement is either a term or
representation is the common intention of the parties when they entered
the contract.
• If the intentions of the parties are not clear, to decide whether a statement
is either a term or representation, the court looks at what a reasonable
person would infer (see Southern Foundries (1926) Ltd v Shirlaw [1940]
AC 701 ).
• To determine what a reasonable person would infer, the court will consider
a number of guidelines and factors.
• (a) One factor which may help the court determine whether a reasonable
person would think that a statement is a term of the contract is whether
the statement is made by a party with greater knowledge or skill.
• In Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1
WLR 623, CA, the statement was held to be a term of the contract because
it had been made by a car dealer who was in a position to know or find
out about the history of the car.
• In Oscar Chess Ltd v Williams [1957] 1 WLR 370, CA, the statement
about the age of the car was held to be a representation because the
statement was made by the seller who was just a private individual with
no personal knowledge of when the car was made and was relying on the
log-book.
• Moreover, in Oscar Chess, the buyer was a motor dealer and thus could
have checked the accuracy of the seller’s statement.
• By inference, if a party makes it clear that they have no personal knowl-
edge and that they have got the information from elsewhere and are merely
passing it on, the court will not usually determine that a reasonable person
would think that a statement made by that party was a term.
• See also Esso Petroleum v Mardon [1976] QB 801.
• (b) Another factor which may help the court determine whether a rea-
sonable person would think that a statement is a term of the contract is
whether the statement has been reduced into writing.
• In Routledge v Mckay [1954] 1 WLR 615, although the seller had made an
oral statement about the model of a motorcycle, as this was not reduced
into writing in the contract, it was held not to be a term of the contract.
• That said, in Birch v Paramount Estates (1956) 167 EG 196, although
the seller’s oral statement was not repeated in the written contract, the
court still decided it was a term of the contract as the contract was partly
written and partly oral.
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, • (c) Another factor which may help the court determine whether a rea-
sonable person would think that a statement is a term of the contract is
whether the recipient of the statement makes it clear that the statement
is of vital importance.
• In Bannerman v White (1861) 10 CB NS 844, the seller’s assurance to
the buyer that sulphur had not been used to treat some plants was held
to be a term of the contract as the buyer had said that, had the plants
been treated with sulphur, they would not even ask the price.
• (d) Another factor which may help the court determine whether a rea-
sonable person would think that a statement is a term of the contract is
whether the maker of the statement asks the other party to verify that
statement.
• In Ecay v Godfrey (1947) 80 Ll L Rep 286, the court held that, as the
seller had asked the buyer if they were going to have the boat surveyed,
this indicated that the seller did not intend his previous statement about
the condition of the boat to be a term of the contract.
• Conversely, if the seller tells the buyer not to bother with a survey, this
points to a statement about the quality of goods being a term (see Schawel
v Reade [1913] 2 IR 81, HL).
• (e) Another factor which may help the court determine whether a rea-
sonable person would think that a statement is a term of the contract is
whether there is a lapse of time between the making of the statement and
the contract.
• In Routledge, as there was a period of time between the statement and the
drawing up of the contract, the court held that the statement about the
motorcycle’s model was not a term of the contract.
• If, after having applied the guidelines, a false preliminary statement is
an express term of the contract, it is necessary to consider remedies for
breach.
• Furthermore, if the false preliminary statement is a misdescription of
goods, it may amount to breach of the terms implied by either s 13 of
the SGA 1979, s 3 of the SGSA 1982, or s 11 of the CRA 2015.
• In this case, consider damages, the possibility of rejecting the goods and
the additional remedies available to buyers dealing as consumers if appro-
priate.
• If the false preliminary statement is a representation, then determine
whether it amounts to a misrepresentation.
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