Misrepresentation in Uk Law

A false statement made to induce a party to enter into a contract. Misprepresentation – if proved – renders a contract voidable. Three (perhaps four) factors must be established to succeed in a claim of mispresentation.

1. there must be an unambiguous false statement of existing fact (or perhaps law);
2. it must be addressed to the party misled;
3. it must induce the contract;
4. (perhaps) it must be material, that is, one which would induce a `reasonable man’ to contract in those circumstances.

Grounds for misrepresentation

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:

1. `puffs’,
2.  opinions,
3. intentions.

• 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).
• 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)).
• 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).

1. The statement must be addressed to the person misled.
2. The statement must induce the contract. It need not be the sole inducement (Edgington v Fitzmaurice (1885)).

This test will fail when the representee is actually unaware of the representation (Horsfall v Thomas (1862)), the representee knows the statement is untrue, and where the representee is patently unaffected by the statement.

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).

(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. The misrepresentation must be intentional and dishonest (DerryVPeek1888). Damages are not limited by remoteness.