Representation and a contract
If you feel you’ve been misled by someone into signing a contract or signing up for a particular service, you may have been affected by misrepresentation, rather than just persuaded by an effective sales pitch.
This can happen during negotiations leading to a contract, as one side may say things to induce the other to enter into the contract. Some will be mere sales puffs, which will have no legal effect, whilst others may be representations.
Representations are statements of opinion which may or may not become contract terms. The distinction between a representation and a contract term is important because each may give rise to different remedies. There are different types of misrepresentation, for example:
A contract for a newspaper subscription provides that, if Mr B subscribes to the newspaper for a year, he will receive a free tablet worth £300. After signing the contract, he realises that the tablet is not actually free, but that Mr A, who offered the subscription, had instead incorporated the tablet’s price into the contract for the newspaper subscription. If Mr B had known that, he might never have subscribed.
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Because Mr A knew that the tablet wasn’t free, but said that it was to entice Mr A, this is an example of a potential fraudulent misrepresentation.
But if Mr A genuinely did not know that the tablet price was incorporated into the contract for the newspaper subscription, it could be an example of innocent misrepresentation. He would have to demonstrate that he made that misrepresentation entirely without fault or knowledge.
If Mr A did not care enough to verify the terms of the contract before selling it to Mr B, then it could be an example of negligent misrepresentation. Mr A was being careless and in breach of the duty he owed to Mr B, so Mr A could be held accountable for negligent misrepresentation.
In all these situations, a fact is being misrepresented, not an opinion.
These misrepresentations could give Mr B a right to rescind the contract and/or sue Mr A for damages. Innocent misrepresentation is more difficult to prove than the other two misrepresentations. However, the starting point is the well-known English contract law case of Redgrave v Hurd (1881) 20 Ch D 1. It holds that a contract can be rescinded for innocent misrepresentation, even where the representee also had the chance to verify the false statement.
How can we help?
If you believe you have suffered from a misrepresentation, you may have options available to rescind your contract and pursue dispute recovery proceedings; our team of dispute resolution lawyers can help you to take the right action for your situation.