Misrepresentation- Law

Vitiating Factors

Misrepresentation

Misrepresentation is a concept in Contract Law as per which a false statement is made one party to the other party with the intention of inducing the party into a contract.

As per Gordon v. Selico a misrepresentation can be made in the form of a statement or through conduct. It is be noted, in light of earlier discussions that misrepresentation derives from statements which are distinguishable from terms. Therefore, not everything said or done will constitute a false statement giving rise to misrepresentation.

In order to understand the concept of misrepresentation it is essential to understand that misrepresentation is infact a Tort. A tort is a wrongful act or omission which breaches a civil right which arises outside of a contract. Therefore, the party which will have been wronged will be owed a duty of care by the party causing the wrong although both parties will not be bound by any contract.

In order to establish misrepresentation the following criteria need to be fulfilled:

• A false statement of fact has been made;

• The statement was directed at the party which has been wronged;

• The statement acted to induce the wronged party to enter into the contract.

When the party making the statement, makes a statement which on the face of it is true; however the entire story is not revealed then this amounts to misrepresentation. Therefore a statement of fact is made but the representor fails to include information which would significantly alter the interpretation of this fact, then a misrepresentation may have occurred. In Krakowski v Eurolynx Properties Ltd, Krakowski agreed to enter into a contract to buy a shop premises from Eurolynx as long as a 'strong tenant' had been organised. The contract proceeded on the grounds that such a tenant had been arranged. Unbeknown to Krakowski, Eurolynx had entered into an additional agreement with the tenant to provide funds for the first three...