5 – MISREPRESENTATION
Contract law does not have specific principle requiring disclosure, but there are certain cases where it is
needed. Where there is misrepresentation, non-disclosure or mistake, the possible responses are:
1. The contract is void ab initio
2. The contract is voidable via rescission
3. The contract can be rectified to correct the mistake (see previous supervisions)
4. Damages can be awarded to remedy the wrong
Where the issue is a statement made in course of negotiations, the remedy will depend on classification
of the statement:
1. Contractual term (a ‘warranty’) – damages for breach of contract, possibly termination for
breach (depending on nature of term)
2. Misrepresentation – rescission (subject to bars), and potential tort or Misrepresentation Act
1967 damages
At one point, misrepresentation could be ground for rescission and damages were available only
under the tort of deceit if there was fraud; no damages for innocent misrep. In Hedley Byrne v
Heller (1964), HOL made clear breach of the DOC to avoid negligent misstatement could give rise
to damages. 1967 Misrepresentation Act extended damages under s 2(1) to the case of
misrepresentation inducing a contract where the representor cannot prove absence of
negligence or bad faith. This made inference of collateral contract less necessary, although still
necessary because representations as to future are harder to fit in scope of Act.
Categorising statements made in negotiations
Mere puffs
These have no legal effect, they mean nothing
- Dimmock v Hallett (1866) (auctioneer claim that land ‘fertile and improvable = puff)
- Cf. Carlill v Carbolic Smoke Ball Co (1893) (CBS tried to claim promise puffery; Bowen said
extravagant promise was with aim to profit, should be bound)
Contractual Terms (warranties)
The test is whether parties objectively intended it to be a term (see identification of terms – S3)
- Heilbut, Symons & Co v Buckleton (1913) (Moulton: question is whether there is “evidence of an
intention by one or both parties that there should be contractual liability in respect of the
accuracy of the statement”)
A misrepresentation can be a contractual term, but does not need to be to ground a misrep claim. See
statute about implied terms under CRA and SGA (see S3), esp CRA 2015.
Misrepresentations
A material false representation of fact or law, addressed to the claimant, which induced C’s entry into
the contract.
- Pankhania v Hackney LBC (2002) (Confirms false statements of law can be misrep)
A statement of fact is required for misrepresentation; this must be objectively decided (would
reasonable person think the representor asserting a fact?)
Contract law does not have specific principle requiring disclosure, but there are certain cases where it is
needed. Where there is misrepresentation, non-disclosure or mistake, the possible responses are:
1. The contract is void ab initio
2. The contract is voidable via rescission
3. The contract can be rectified to correct the mistake (see previous supervisions)
4. Damages can be awarded to remedy the wrong
Where the issue is a statement made in course of negotiations, the remedy will depend on classification
of the statement:
1. Contractual term (a ‘warranty’) – damages for breach of contract, possibly termination for
breach (depending on nature of term)
2. Misrepresentation – rescission (subject to bars), and potential tort or Misrepresentation Act
1967 damages
At one point, misrepresentation could be ground for rescission and damages were available only
under the tort of deceit if there was fraud; no damages for innocent misrep. In Hedley Byrne v
Heller (1964), HOL made clear breach of the DOC to avoid negligent misstatement could give rise
to damages. 1967 Misrepresentation Act extended damages under s 2(1) to the case of
misrepresentation inducing a contract where the representor cannot prove absence of
negligence or bad faith. This made inference of collateral contract less necessary, although still
necessary because representations as to future are harder to fit in scope of Act.
Categorising statements made in negotiations
Mere puffs
These have no legal effect, they mean nothing
- Dimmock v Hallett (1866) (auctioneer claim that land ‘fertile and improvable = puff)
- Cf. Carlill v Carbolic Smoke Ball Co (1893) (CBS tried to claim promise puffery; Bowen said
extravagant promise was with aim to profit, should be bound)
Contractual Terms (warranties)
The test is whether parties objectively intended it to be a term (see identification of terms – S3)
- Heilbut, Symons & Co v Buckleton (1913) (Moulton: question is whether there is “evidence of an
intention by one or both parties that there should be contractual liability in respect of the
accuracy of the statement”)
A misrepresentation can be a contractual term, but does not need to be to ground a misrep claim. See
statute about implied terms under CRA and SGA (see S3), esp CRA 2015.
Misrepresentations
A material false representation of fact or law, addressed to the claimant, which induced C’s entry into
the contract.
- Pankhania v Hackney LBC (2002) (Confirms false statements of law can be misrep)
A statement of fact is required for misrepresentation; this must be objectively decided (would
reasonable person think the representor asserting a fact?)
