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Misrepresentation and Breach of Contract

By: Louise Smith, barrister - Updated: 3 Oct 2017 | comments*Discuss
 
Misrepresentation Contract

A legally binding contract or agreement is usually formed of written and / or verbal terms setting out, more or less precisely, what the parties to the contract intend to do. During the process of reaching an agreement the parties may also make representations of fact. For example, a retailer selling a sit-on lawnmower may tell an interested customer that he will be “the fastest gardener in the West and the envy of all his neighbours” if he purchases the GrassNemesis 5000.

Representations and Terms

The contractual status of such a statement may depend on the intention of the person who makes it. If the person making the statement intends it to be contractually binding it will be a term of the contract. If he does not intend it to be binding it may be a representation. It can sometimes be difficult to determine whether a statement is a term of the contract or a representation – a trial examining the words and actions of the parties may be required.

A statement of opinion is unlikely to constitute a representation. Further, a statement which forms part of the advertising patter of a salesman may be classed as “mere puff” and not a representation. (The gardener, who bought the GrassNemesis 5000 because of the salesman’s statement above, may have trouble convincing a court that he is entitled to damages simply because several of his neighbours think he looks like an idiot on his new lawnmower.)

Representations and Misrepresentations

If a representation is untrue it is described as a misrepresentation and it may entitle the other party to end the contract. For a misrepresentation to result in this entitlement it must generally be shown that the misrepresentation induced the person to enter into the contract.

Different Types of Misrepresentations

Misrepresentations may be:
  • Innocent – where the party who made it did not realise it was untrue;
  • Fraudulent – where the party who made it knew that it was untrue or was careless as to whether or not it was true;
  • Negligent – where the party who made it has a duty towards the other party arising out of a special relationship and, therefore, is expected to take additional care where it is foreseeable that the other party will rely on the statement.

Misrepresentation and Inducement to Enter a Contract

A misrepresentation may be made with the intention that it will induce the other party to enter into a contract. If it does induce the other party to enter into the contract it may then be an “actionable misrepresentation”. The party who was induced by the misrepresentation may then be entitled to a legal remedy.

Remedies for Misrepresentation

A misrepresentation may entitle the person who was thereby induced to enter the contract to set aside – or rescind - the contract. Alternatively a misrepresentation by one party may mean that the other party is entitled to damages.

The Case of Hedley Byrne v Heller and the Misrepresentation Act 1967

Historically, a person was only entitled to legal remedies due to fraudulent misrepresentations. Subsequently, in the 1963 case of Hedley Byrne Co. Ltd v Heller, it was decided that there could be circumstances in which damages could follow negligent misrepresentations. This would generally be where a ‘special relationship’ exists between the parties - probably due to some particular skill or duty on the part of the person making the representation.

The Misrepresentation Act 1967 may give an entitlement to damages for a negligent misrepresentation unless the person who made it can prove that he believed that the representation was true and that he had reasonable grounds for this belief.

Misrepresentation and Rescission of a Contract

The purpose of the remedy of rescission is to put the person back into their pre-contract position. Generally, a person is not entitled to both rescind the contract and to claim damages. However, they may be entitled to monetary recompense if they incurred other obligations whilst bound by the contract.

A person may lose the right to rescind the contract if they discovered the misrepresentation and then expressly continued with – or affirmed - the contract. Rescission may also not be available if it has subsequently become impossible to return the parties to the position they were in before the contract.

Damages for Misrepresentation

The type of damages available to a person who has entered into a contract because of a misrepresentation may depend on both the type of misrepresentation and the effect of that misrepresentation. The purpose of the damages will generally be to compensate the innocent party for loss suffered in relying on the misrepresentation. However, the test applied by the courts may vary depending on whether a misrepresentation was fraudulent, negligent or innocent – and whether the claim is brought pursuant to the Misrepresentation Act.

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Hi, I entered into a contract to sell shares in a company. for £25,000. one year later I asked for the money i was contractually owed. I was advised by the purchaser it was never their intention to pay me for the shares. so due to this misrepresentation and failure of consideration, the sale and purchase was rescinded by mutual agreement. I have now discovered during the time this person held my shares they too £20,000 in dividend. Due to the rescindment of the SPA am i entitled to the return of the dividends the purchaser took?
Unhappy - 3-Oct-17 @ 4:16 PM
Hi , I received a circular from a beauty hair salon advertising massage and manicure for N$30 realising that this was an exceptionally good deal and made a booking.When arrived at the salon I was told there was a mistake on the circular and it have said N$300, the manager explain to me that it was stil a good price because normally massage and manicure cost N$450. It take me 30 minutes driver to this salon and if I knew it was 300 I couldn't make a booking.... would I have to pay the full amount if I was told before massage and manicure done ? Advise
General - 22-Aug-17 @ 9:49 AM
KM - Your Question:
Advice please, my father and brother signed a 3 year fixed term joint-tenancy agreement with no break clause in the hope of having a secure long-term home. From the first day they moved in the neighbour owner occupier has been a constant nuisance, complaining about noise (walking and talking in their home) and when they put the lights on in the evening. Her complaints and behaviour are irrational and she bangs on the door shouting at them and threatening to have them thrown out of their home. They have always been respectful and polite to her in response but her behaviour is increasingly abusive, intimidating and threatening. We since have found out that the agency managing the properly knew about her behaviour before trapping them in the 3-year tenancy. Does this constitute breach of contract by negligence of the landlord in failing to inform us of the nuisance neighbour? Would it be covered under the misrepresentation act in failure to disclose important information for the purposes of their financial gain? Surely they cannot be expected to live with this for three years as it's affecting my elderly fathers health? Many thanks

Our Response:
When buying a property the vendors have to declare neighbour disputes, however, this is not the same as when renting. It is the property that is being leased, therefore the landlord cannot be held responsible for the actions of a neighbour. One option may be for your father and brother to ask to be allowed to leave the tenancy early if they can find another tenant. Offering to pay for the expenses involved in changing the tenancy over to another person might bring the landlord to the negotiating table, especially if the situation is affecting your father's health. You can see more via the CAB link here . Alternatively, taking some specialist legal advice may help here.
ContractsAndAgreements - 8-Aug-17 @ 11:49 AM
Advice please, my father and brother signed a 3 year fixed term joint-tenancy agreement with no break clause in the hope of having a secure long-term home. From the first day they moved in the neighbour owner occupier has been a constant nuisance, complaining about noise (walking and talking in their home) and when they put the lights on in the evening. Her complaints and behaviour are irrational and she bangs on the door shouting at them and threatening to have them thrown out of their home. They have always been respectful and polite to her in response but her behaviour is increasingly abusive, intimidating and threatening. We since have found out that the agency managing the properly knew about her behaviour before trapping them in the 3-year tenancy. Does this constitute breach of contract by negligence of the landlord in failing to inform us of the nuisance neighbour? Would it be covered under the misrepresentation act in failure to disclose important information for the purposes of their financial gain? Surely they cannot be expected to live with this for three years as it's affecting my elderly fathers health? Many thanks
KM - 6-Aug-17 @ 6:39 PM
Hi, We booked our Mexican wedding at the travel agents as the coordinator gave us a price with a wedding which was £769 but she said would be free if we booked 5 rooms, we knew this would happen as had friends and family coming and as she stated we had already booked 5 rooms. We later found out that we had to pay for extras which we didn't realise were not Included, such as the chuppa and aisle runner for the beach. We emailed asking the cost to upgrade to a higher package, the assistant manager emailed back saying she checked this and the price would be £800 on top of what we were already paying. I asked to confirm whether this meant after taking off the £769 for the original package or on top of and she confirmed this. Later we received our final invoice with no discount for the £769 for having 5 rooms. I questioned this and they are denying it saying that there is a free package but this is £769. I have the email from the assistant manager and notes which I wrote down in full view of the agent where she gave me prices and I wrote them down before and after booking 5 rooms. Would the email be sufficient evidence to prove misrepresentation?
Carla - 30-Sep-16 @ 11:00 PM
Hi, We booked our Mexican wedding at the travel agents as the coordinator gave us a price with a wedding which was £769 but she said would be free if we booked 5 rooms, we knew this would happen as had friends and family coming and as she stated we had already booked 5 rooms. We later found out that we had to pay for extras which we didn't realise were not Included, such as the chuppa and aisle runner for the beach. We emailed asking the cost to upgrade to a higher package, the assistant manager emailed back saying she checked this and the price would be £800 on top of what we were already paying. I asked to confirm whether this meant after taking off the £769 for the original package or on top of and she confirmed this. Later we received our final invoice with no discount for the £769 for having 5 rooms. I questioned this and they are denying it saying that there is a free package but this is £769. I have the email from the assistant manager and notes which I wrote down in full view of the agent where she gave me prices and I wrote them down before and after booking 5 rooms. Would the email be sufficient evidence to prove misrepresentation?
Carla - 30-Sep-16 @ 10:33 PM
Wardy - Your Question:
Advice needed. My job advitised for a CENTRE SUPERINTENDENT. The advert also included that the role would be supervising contract cleaners. I tock the job in 2002 and was doing what they advitised for. My job description did not have in it supervision of cleaners, my staff appraisals all had in them needs a supervision course. this was not acted on till 2010. In 2008 the firm done a job evaluation. I e mailed the person involved and was told they was no job description updates till after the job evaluation was over. After they had done the evaluation they said I did not supervise cleaners. a role I had been doing since 2002. I was told by my unision in 2010 after I had complained and was angry became depressed as nobody would listen. I put in for a regrade and the result was Supervision is not in your job description so you carnt have an upgarde. I have all the adverts,staff apraisal recomendations to be done in that year,letters from HR.I became more depressed and angy wilth a lot of angry out bursts. in 2012 I was I feel forced to take a compremise agreement by my union rep or I would be sacked. Can I do anything? is it a false advitisement? Can I sue for false advertising.

Our Response:
I'm afraid if you have gone as far as seeking union advice we cannot really help further, as we can only give general non-specific advice. I can only suggest you call ACAS if you feel you have been unfairly treated, as ACAS will be able to tell you if you have a case.
ContractsAndAgreements - 19-Aug-16 @ 10:00 AM
Advice needed. My job advitised for a CENTRE SUPERINTENDENT. The advert also included that the role would be supervising contract cleaners. i tock the job in 2002 and was doing what they advitised for. My job description did not have in it supervision of cleaners, my staff appraisals all had in them needs a supervision course. this was not acted on till 2010. In 2008 the firm done a job evaluation . i e mailed the person involved and was told they was no job description updates till after the job evaluation was over. After they had done the evaluation they said i did not supervise cleaners. a role i had been doing since 2002. I was told by my unision in 2010 after i had complained and was angry became depressed as nobody would listen. i put in for a regrade and the result was Supervision is not in your job description so you carnt have an upgarde. i have all the adverts,staff apraisal recomendations to be done in that year,letters from HR.I became more depressed and angy wilth a lot of angry out bursts. in 2012 i was i feel forced to take a compremise agreement by my union rep or i would be sacked.. Can i do anything? is it a false advitisement? Can i sue for false advertising.
Wardy - 18-Aug-16 @ 9:26 AM
Mr. A - Your Question:
I was induced to leave my employment and move to a different city to serve as GM for a UK organisation with the promise that I will be mentored and trained to take over as the next MD. When the Board decided to replace the incumbent MD, they proceeded with the appointment of a new MD withholding all information about the availability of the vacancy and I was told of the appointment a week before the MD took up his position. I didn't expect the MD post to be given to me on a platter but felt deceived when it was done behind my back and no opportunity to make an application was offered to me. I have had excellent performance feedback all through my employment period.Is this fraudulent misrepresentation? ThanksA

Our Response:
I suggest you give ACAS a call in order to talk to someone directly regarding this.
ContractsAndAgreements - 1-Feb-16 @ 12:12 PM
I was induced to leave my employment and move to a different city to serve as GM for a UK organisation with the promise that I will be mentored and trained to take over as the next MD. When the Board decided to replace the incumbent MD, they proceeded with the appointment of a new MD withholding all information about the availability of the vacancy and I was told of the appointment a week before the MD took up his position. I didn't expect the MD post to be given to me on a platter but felt deceived when it was done behind my back and no opportunity to make an application was offered to me. I have had excellent performance feedback all through my employment period. Is this fraudulent misrepresentation? Thanks A
Mr. A - 31-Jan-16 @ 4:31 PM
@ls9bg - Regulations protecting consumers from unfair, misleading or aggressive selling practices come under the EU Unfair Commercial Practices Directive. Falsely stating a product will only be available (or available through certain/specific terms) for a very limited time to persuade the consumer to make an immediate decision, comes under the banner. Please see link to the Government leaflet on the issue here. However, I suggest you seek professional legal advice regarding whether you have a case to pursue a refund. The CAB may be able to help, please see link here. I hope this helps.
ContractsAndAgreements - 3-Aug-15 @ 1:35 PM
i was mislead into believing by aPhoto shoot company that the only photos suitable for a particular modelling agency who sent me there, were the photos taken by this particular photo studio. I paid extortionate amount of money for 5 photos because my 6 months old baby was assessed to be suitable for modelling after assessment from the test shoot (same photos)which followed the photo viewing session and unexpected photo hard selling session. One of those where you have to make the decision there and then. In the end the sales men put everything on the cd to save his time instead of making a selection of only 5. I reported this to trades standard and asked their advise , they say that it will be difficult to prove a verbal statement that the sales men made to me. I am not sure what evidence I can provide to prove that he indeed lead me to believe that I had no other option but to buy these photos to go ahead with the modelling agency. There is lot of social evidence on consumer blogs. Any piece of advice will be much appreciated. By the way I gave been offered another photo shoot as a resolution but that is not what I want I want my money back.
ls9bg - 31-Jul-15 @ 8:52 PM
@janedoenextdoor - I am afraid I can't answer your question as we are a UK-based website and have no knowledge of US law. However, I am not sure even in the US that you can launch a case on the back of a 'promise' that your ex chose not to keep. I wish you luck sorting your issues out.
ContractsAndAgreements - 21-May-15 @ 10:29 AM
I was proposed marriage from a man in a different state. I left a job and moved in with him. He quickly made living with him unbearable within less than 3 weeks he sent me a text and demanded that I move out THAT day. He called police and my daughter and I put on the streets. She and I have spent money on hotels, and additional expenses that accrue with finding a new home. Most of my proof is my daughter and many numerous text that go between him and I. Is it possible to file civil action to regroup airfare, moving truck, gas and all expenses that have been associated with this nightmare?? If so....does it start from the beginning? As in our move to his home or only after he broke the engagement and threw us out?
janedoenextdoor - 17-May-15 @ 3:54 PM
I was visited by a salesman who arrived unprepared to provide the full terms and conditions of contract or any form of contract whatsoever.Under pressure to accept the offer and benefit from the huge discounts on offer and going on vacation two days later I agreed that upon the production of the terms and conditions I would pay a deposit to secure the product.The full terms and conditions were not provided until 12 days later when reading the small print it became apparent that there was a cancellation period of only 7 days.This information was not given either verbally or on the photocopied front page of the signed document. My question therefore is are my rights to cancellation effective from the date that I was made aware of them or from the date of signing the photocopy of the front page which only related to price and deposit.
col - 12-Nov-13 @ 4:40 PM
Hi I agreed to buy a house and contents, we complete on Thursday, during negotiating it was agreed the contents were included, the owner stated several times all you need is your suitcase everything is here. She stated all she was removing was some personal items, the bedding, and a dresser. The house is in France but both myself and the owners live in England and the offer and acceptance we made in England. The owner allowed us to use the house as there are some works that required attention before the winter, when we arrived some items of furniture have gone and there is a list on the table of items to go. The Owner now want to come down in October whilst we are back in England to collect her (contents) having declined our offer of bring her stuff back to England when we return on Friday? Sorry it is such a long story, the is no Estate agent involved only a Notaire. Regards A J Lawton
Beesknees - 31-Aug-13 @ 6:41 AM
Hi,I am trying to find information and advice on a situation that I unfortunately find myself in whereby I was misled during the recruitment process into believing that my terms and conditions of sales based commission was indeed completely different to that actually operating within the company. Based on this information given to me it proved financial viable for me to move employers but now in place I find that the actual terms do not prove so. Any guidance would be much appreciated.
A L - 21-Jan-13 @ 8:01 AM
boa tarde comecei a trabalhar num salao de cabeleireiro no 15 de novembro de 2011,a minha ex patroa so me fez o contrato a1 de fevereiro 2012 de 6 meses.mas no fim de junho a mesma fechou o salao.gostaria de saber se tenho direito a indemenizacao.e outros direitos o brigada
nanda - 13-Jul-12 @ 2:44 PM
Concise & easy for any business person to follow.
'umble peasant - 27-Sep-11 @ 9:14 AM
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