This website uses cookies to ensure you get the best experience on our website. Learn more

Law Notes Contract Law Notes

Misrepresentation Notes

Updated Misrepresentation Notes

Contract Law Notes

Contract Law

Approximately 1511 pages

Contract law notes fully updated for recent exams at Oxford and Cambridge. These notes cover all the LLB contract law cases and so are perfect for anyone doing an LLB in the UK or a great supplement for those doing LLBs abroad, whether that be in Ireland, Hong Kong or Malaysia (University of London).

These were the best Contract Law notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LLB samples from outstanding law students with the highest...

The following is a more accessible plain text extract of the PDF sample above, taken from our Contract Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

INTRODUCTION

WHAT IS A ‘MISREPRESENTATION’?

Not all statements made by one party in the negotiations for a contract, which is relied on by the other party in entering into the contract and which turns out to be false are actionable. Only a misrepresentation of fact will give rise to liability

  • Discount ‘mere puffs’: exaggerated sales hype or vague boasts about the subject matter of a contract are not intended to be relied upon. Such statements do not give rise to liability. But if, judging the matter objectively, the court thinks that the statement was intended to be taken seriously, it will not be dismissed as a mere puff even if it is extravagant. For example, in Carlill v Carbolic Smoke Ball, the advertisement that a 100 reward will be paid by the manufacturers to anyone who contracts influenza after using the ball three times daily for two weeks according to the printed directions was held not to be a ‘mere puff’, because the deposit of 1000 in the bank evidenced seriousness.

  • Eg Esso v Marden [1976] where inaccurate estimate of the station’s throughput, opinion, but held to not to be a puff due to RELATIVE EXPERTISE of the person making the statement

  • Cf Dimmock v Hallett (1866) where “fertile and improvable land” held to be a mere puff

  • Misrepresentation sits alongside other ‘vitiating factors’ – which make the contract voidable (i.e. subject to the remedy of rescission). In addition, there may be the possibility of recovering damages

CATEGORISING A STATEMENT MADE IN NEGOTIATIONS – IS IT A TERM OR A MERE REPRESENTATION?

We are considering statements made by one of the contracting parties about the contractual subject matter, such as assurances that it possesses a certain quality or attribute. These are not statements in which one of the contracting parties promises what they will or will not do.

Some of these statements are terms (I promise it is a Constable). Others are representations (it is a Constable).

(B) WHY DOES IT MATTER?

(i) The remedy will be different if the statement turns out to be false

  • To obtain damages on the expectation measure, the representee might contend that a pre-contractual misrepresentation has become a term within the main contract or a collateral warranty.

  • Only a collateral warrenty if Lightman J. in Inntrepreneur Pub v East Crown [2000] endorsed at [23] in Business Environment Bow Lane v Deanwater Estates [2007] (No collateral warrenty arose, :

  1. Parties must have intended it to be a collateral warranty. Intention is a question of fact to be decided by looking at the totality of the evidence

  2. the test is the ordinary objective test for the formation of a contract: what is relevant is not the subjective thought of one party but what a reasonable outside observer would infer from all the circumstances;

  3. in deciding the question of intention, one important consideration will be whether the statement is followed by further negotiations and a written contract not containing any term corresponding to the statement. In such a case, it will be harder to infer that the statement was intended to have a contractual effect because the prima facie assumption will be that the written contract includes all the terms the parties wanted to be binding between them;

  4. a further important factor will be the lapse of time between the statement and the making of the formal contract. The longer the interval, the greater the presumption must be that the parties did not intend the statement to have contractual effect in relation to a subsequent deal;

  5. a representation of fact is much more likely intended to have contractual effect than a statement of future fact or future forecast.”

  • If it’s a mere misrepresentation, damages are available under the 1967 Act, but calculated on the less favourable tort measure: to put C into the position he’d have been in if the representation had not been made and not if the representation was true. The claimant can only recover damages where the defendant was at fault.

(ii) Strict liability applies to contractual terms, but if it is a mere misrepresentation D does not have to pay damages if he had reasonable grounds to believe that the statement was true.

(C) HOW TO TELL THE DIFFERENCE: DEPENDS ON THE PARTIES’ INTENTION, JUDGED OBJECTIVELY

Statement can only be a term provided it appears on the evidence to be so intended. Intention is judged objectively and ‘can only be deduced from the totality of the evidence” (Lord Moulton in Heilbut v Buckleton [1913] –ultimate test is INTENTION, OBJECTIVELY ASCERTAINED, also illustrated by Leggatt J in Yam Seng Pte Ltd v International Trade Corp (2013))

(D) FACTORS COMMONLY TAKEN INTO ACCOUNT

Timing of the statement

The lapse of time between the statement and the making of the formal contract will be significant. “The longer the interval, the greater the presumption must be that the parties did not intend the statement to have contractual effect in relation to a subsequent deal” (Lightman J stated in Inntrepreneur v East Crown [2000])

A further important consideration will be whether the statement is followed by further negotiations and a written contract not containing any term corresponding to the statement. In such a case, it will be harder to infer that the statement was intended to have contractual effect, because the prima facie assumption will be that the written contract includes all the terms the parties wanted to be binding between them.

Importance of statement

The more important the statement is to contracting parties, the more likely it is to be considered a term (Bannerman v White [1861] where buyer asked if hops was treated with sulphur and said would not buy them if hops treated with sulphur as cannot make beer. Seller assured buyer hops not treated with sulphur. Held statement that hops not treated with sulphur was a TERM and not a MISREPRESENTATION as C had communicated the importance of the term and relied on the seller’s statement)

A really trivial representation might not...

Buy the full version of these notes or essay plans and more in our Contract Law Notes.

More Contract Law Samples