Distinguishing between terms and mere representations
-Structure
-Is it a term?
-Is it written?
-Look at parties objectively judges intentions
-use other factors
-Is it a representation?
-Is it sales puff?
Introduction - importance of the distinction
-Considering statements made by one of the contracting parties, often assurances about the
quality or attributes of the subject matter. We are considering present tense not future, not
concerned with promising to do things in the future.
-Parties will say a lot when forming a contract, and statements need to be sorted between terms
and representations. For example ‘i hereby promise the car is in good condition’ is a term, but
‘this car goes like a rocket’ would probably not be a term.
-It needs to be determined whether a statement is a term, representation or mere sales puff
-Important as there can be legal consequences for misrepresentations even if it is not a term.
However if it is a term then there is a greater level of protection as the claimant can claim for
breach of contract (regardless of fault) and can be put in the position they would’ve been in if
the claim was true.
-However for misrepresentations damages can only be recovered if the defendant was at fault,
and are not entitled to the same measures of damages.
The test to distinguish depends on the parties intentions - judged
objectively
- Lord Moulton in Heilbut, Symons & Co v Buckleton(1913): a statement will be a term ‘provided
it appears on the evidence to be so intended’. And the objective intention was held in Oscar
Chess Ltd v Williams(1957)
-Esso is a good example of the objective intention. Esso did not intend to make the estimate a
warranty (subjectively). But the judge decided that was what is taken to have been intended
Common factors taken into account
-According to Heilbut all the circumstances can be taken into account.
-Timing of the statement: Lightman J in Inntrepreneur Pub Co v East Crown Ltd(2000): The
lapse of time between the statement and formation of the contract is significant, the longer the
lapse the greater the presumption that it was not intended to be a term. And if the final
negotiations/contract do not contain a term containing the statement, then it is harder to say it
was intended to be a term
-Importance of the statement Bannerman v white (1861), The more important the statement is to
the parties the more likely it is to be considered a term. (particularly the importance to the party
to whom it is addressed) - The party should make it known that it is important to them
, -Relative positions of the parties: Oscar Chess Ltd v Williams(1957). If one of the parties is an
expert and the other an amatuer. The statement made by the expert is more likely to be a term,
and a statement made by the amateur is more likely to be a mere representation. In the case
mentioned a regular car owner sold his car to a dealership describing it as a 1948 model (as the
logbook described it). It turned out to be a 1939 model but the court decided it was a
representation.They said it was highly unlikely that an amateur would intend to make a promise
like that to a dealer.
-Dick bentley v harold smith motors - expert making a statement to an amateur more likely to be
a term.
-Esso Petroleum v Mardon(1976), esso told mardon the throughput of the petrol station was
estimated at 200,000 gallons. However this was not the case due to council actions causing
less trade. Mardon took up the tenancy but lost money and gave up. Esso tried to claim to
repossess and mardon counter claimed for damages for misrepresentation. At first it appears
esso’s claim was opinion and so not a representation, but the court of appeal held that esso’s
relative expertise meant that the forecast would have been considered to have been made with
reasonable care and skill (not a random guess)
-Esso is a good example of the objective intention. Esso did not intend to make the estimate a
warranty (subjectively). But the judge decided that was what is taken to have been intended
External verification Schawel v Reade(1913) if the defendant encouraged the claimant to rely on
his assurance without seeking external verification of its accuracy the court will be more likely to
consider it a term. The opposite is true if the defendant encourages external verification Ecay v
Godfrey(1947)
If it is a written term
Misrepresentation -What counts as actionable
misrepresentation
Structure
-The statement must be untrue - and an actionable misrepresentation
-Must be a statement of fact, not opinion or future intention
-Statement must induce the other party into entering the contract, they must have acted in
reliance on that misrepresentation
Introduction to misrepresentation
-Not a breach of contract - actionable in tort
-“An untrue statement of fact made by one party to a contract, by words or conduct, to the other
contracting party, and which induced(the test is reliance not inducement) the other to enter into
the contract”
-Misrepresentation is where a statement that is not incorporated as a term, but has influenced
the party in entering into the contract turns out to be false.
-This is not a breach of contract, but rescission is commonly available as a remedy
Silence - Non disclosure is not misrepresentation
-Fundamenal distinction between misrepresentation and non-disclosure (which generally does
not give rise to liability). For example if you buy my house i am under no obligation to tell you
-Structure
-Is it a term?
-Is it written?
-Look at parties objectively judges intentions
-use other factors
-Is it a representation?
-Is it sales puff?
Introduction - importance of the distinction
-Considering statements made by one of the contracting parties, often assurances about the
quality or attributes of the subject matter. We are considering present tense not future, not
concerned with promising to do things in the future.
-Parties will say a lot when forming a contract, and statements need to be sorted between terms
and representations. For example ‘i hereby promise the car is in good condition’ is a term, but
‘this car goes like a rocket’ would probably not be a term.
-It needs to be determined whether a statement is a term, representation or mere sales puff
-Important as there can be legal consequences for misrepresentations even if it is not a term.
However if it is a term then there is a greater level of protection as the claimant can claim for
breach of contract (regardless of fault) and can be put in the position they would’ve been in if
the claim was true.
-However for misrepresentations damages can only be recovered if the defendant was at fault,
and are not entitled to the same measures of damages.
The test to distinguish depends on the parties intentions - judged
objectively
- Lord Moulton in Heilbut, Symons & Co v Buckleton(1913): a statement will be a term ‘provided
it appears on the evidence to be so intended’. And the objective intention was held in Oscar
Chess Ltd v Williams(1957)
-Esso is a good example of the objective intention. Esso did not intend to make the estimate a
warranty (subjectively). But the judge decided that was what is taken to have been intended
Common factors taken into account
-According to Heilbut all the circumstances can be taken into account.
-Timing of the statement: Lightman J in Inntrepreneur Pub Co v East Crown Ltd(2000): The
lapse of time between the statement and formation of the contract is significant, the longer the
lapse the greater the presumption that it was not intended to be a term. And if the final
negotiations/contract do not contain a term containing the statement, then it is harder to say it
was intended to be a term
-Importance of the statement Bannerman v white (1861), The more important the statement is to
the parties the more likely it is to be considered a term. (particularly the importance to the party
to whom it is addressed) - The party should make it known that it is important to them
, -Relative positions of the parties: Oscar Chess Ltd v Williams(1957). If one of the parties is an
expert and the other an amatuer. The statement made by the expert is more likely to be a term,
and a statement made by the amateur is more likely to be a mere representation. In the case
mentioned a regular car owner sold his car to a dealership describing it as a 1948 model (as the
logbook described it). It turned out to be a 1939 model but the court decided it was a
representation.They said it was highly unlikely that an amateur would intend to make a promise
like that to a dealer.
-Dick bentley v harold smith motors - expert making a statement to an amateur more likely to be
a term.
-Esso Petroleum v Mardon(1976), esso told mardon the throughput of the petrol station was
estimated at 200,000 gallons. However this was not the case due to council actions causing
less trade. Mardon took up the tenancy but lost money and gave up. Esso tried to claim to
repossess and mardon counter claimed for damages for misrepresentation. At first it appears
esso’s claim was opinion and so not a representation, but the court of appeal held that esso’s
relative expertise meant that the forecast would have been considered to have been made with
reasonable care and skill (not a random guess)
-Esso is a good example of the objective intention. Esso did not intend to make the estimate a
warranty (subjectively). But the judge decided that was what is taken to have been intended
External verification Schawel v Reade(1913) if the defendant encouraged the claimant to rely on
his assurance without seeking external verification of its accuracy the court will be more likely to
consider it a term. The opposite is true if the defendant encourages external verification Ecay v
Godfrey(1947)
If it is a written term
Misrepresentation -What counts as actionable
misrepresentation
Structure
-The statement must be untrue - and an actionable misrepresentation
-Must be a statement of fact, not opinion or future intention
-Statement must induce the other party into entering the contract, they must have acted in
reliance on that misrepresentation
Introduction to misrepresentation
-Not a breach of contract - actionable in tort
-“An untrue statement of fact made by one party to a contract, by words or conduct, to the other
contracting party, and which induced(the test is reliance not inducement) the other to enter into
the contract”
-Misrepresentation is where a statement that is not incorporated as a term, but has influenced
the party in entering into the contract turns out to be false.
-This is not a breach of contract, but rescission is commonly available as a remedy
Silence - Non disclosure is not misrepresentation
-Fundamenal distinction between misrepresentation and non-disclosure (which generally does
not give rise to liability). For example if you buy my house i am under no obligation to tell you
