Misrepresentation

Misrepresentation is a concept in the contract law of England and some other Commonwealth countries, referring to a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. For example, under certain circumstances, false statements or promises made by a seller of goods regarding the quality or nature of the product that the seller has may constitute misrepresentation. A finding of misrepresentation allows for a remedy of rescission and sometimes damages depending on the type of misrepresentation. Misrepresentation is also capable of giving rin action in tort as well as contract law, for the tort of deceit.

According to the judgment in the English case Gordon & Teixeira v Selico Ltd & Select Managements Ltd (1986) 18 HLR 219 it is possible to make a misrepresentation either by words or by conduct, although not everything said or done is capable of constituting a misrepresentation. Generally, statements of opinion or intention are not statements of fact in the context of misrepresentation. If one party claims specialist knowledge on the topic discussed, then it is more likely for the courts to hold a statement of opinion by that party as a statement of fact.

As enacted by the British Parliament in the Misrepresentation Act, the statement in question may constitute a representation even if later incorporated into the contract as a term (i.e. a warranty, condition or innominate term).

An alternative approach, applied in parallel but in exclusivity to, is to find a collateral contract by interpreting the representation as a promise accompanied by some sort of consideration (see the House of Lords' decision in Heilbut, Symons & Co. v Buckleton [1913] A.C. 30 (H.L.)), provided that the statement is not inconsistent with the main contract. The collateral contract will have the effect of adding the representation as a term to the contract.

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