Misrepresentation In A Contract Case Study

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Ansewer

Misrepresentation refers to a circumstance where a person is induced to enter into a contract partly or entirely by untrue information made by the other party. Misrepresentation can lead to a contract to be voidable. Voidable contract means there is a valid contract whether is written or verbal. In any voidable contracts, a party has a choice whether to rescind or to continue with the contract. However, there are certain circumstances and elements of misrepresentation that can cause a contract to be voidable. Misrepresentation can occur in a number of ways. Under Section 18 of the Contract Act 1950, misrepresentation includes:-
a) Any positive assertion, in a manner not warranted by the information of the person making it, of that …show more content…

Representation is a statement which induces entry into a contract but which is not part i.e. a tem, of the contract. Misrepresentation is an untrue statement of fact made by one party to other which was intended and did induce the latter to enter into the contract. If there is a misrepresentation, a contract entered into as a result of misrepresentation is voidable. In the case of misrepresentation the remedies are:-
A- Rescission
B- Damages

A- Rescission
- Equitable remedy available for all types of misrepresentation.
- Innocent party must exercise choice: to resend or to affirm contract.
- Effect of rescission: parties are put back to their pre-contractual position.
- Notice: Generally, innocent party must notify representor of decision to rescind. If impossible to find representor, contract can be rescinded by conduct of representee- Car and Universal Finance Co. Ltd. V Caldwell(1965)
- Bars to rescission:
• When innocent party affirms contract (after discovering true state of affairs)- Long v. Lloyd(1958)
• When parties cannot be restored to substantially same pre-contractual position (principle of restitution in …show more content…

Heller & Pnrs. (1964). This tort provides remedy where misstatement made by non-party to contract.

Elements of misrepresentation

A. Untrue statement of fact
• Test of falsity= whether statement is “substantially correct”- see Avon Insurance Plc. V. Swire Fraser Ltd. (2000) per Rix J.
• The notion of “statement” can extend to mere conduct without words. See e.g. Spice Girls v. Aprilia World Services B.V. (2002)
• The following are not untrue statements of fact:
- A mere “puff” or “sales patter”- see e.g. Dimmock v. Hallet (1866)
- Statements of intention, unless at the time of stating the intention the party did not actually have such an intention- see e.g. Edgington v. Fitzmaurice (1885).
- Statement of opinion, unless the maker of the statement did not actually hold the opinion or had no reasonable grounds on which to base the opinion- see e.g. Bisset v. Wilkinson (1927); Smith v. Land & House Property Corp. (1884), Humming Bird motors Ltd. v. Hobbs

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