If a false statement is part of the contract that you have signed, you may be able to bring a claim for breach of contract. This may be easier to prove than fraudulent or negligent misrepresentation. Damages for breach of contract seek to put a claimant back in the position they would have been in, but for the breach.
It is also possible to include losses that have arisen from the breach. It is important to consider carefully all of the losses that have occurred, for example, a business may have occurred expenses because of the breach.
The usual remedy for misrepresentation is rescission of the contract, also with the aim of putting the claimant in the situation they would have been in if they had not entered into the contract. Damages will be awarded on this basis, with the claimant required to show the causation of loss and that the loss was not too remote from the misrepresentation.
A representation is a statement of fact that is not a term of the contract and where the truth is not guaranteed.
No contractual obligation arises from a representation, but it could give rise to the tort of misrepresentation. The court will decide whether a statement made before a contract is entered into is a representation or a contract term by looking at the following issues:. It is recommended that you seek legal advice in deciding whether your case is one of misrepresentation or breach of contract. Bringing the correct action is vital and understanding which remedy is best for your situation is also important.
For more information, see our article, Misrepresentation and the 11 facts you need to know. As well as in-depth commercial expertise we provide an excellent service to our clients and practical advice and guidance.
The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor. Your Name required. COMMENT While the judgment limits the potential to claim for innocent misrepresentation to those cases where rescission is an available remedy, it still demonstrates that the courts will seek to do practical justice: neither delay nor minor impediments should prevent courts from ordering the rescission of a contract.
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Link Text. For more detail, see Practice Note: Misrepresentation—damages as a remedy. The claimant in a misrepresentation claim is entitled to rescind the contract unless in the case of non-fraudulent misrepresentation the court orders damages in lieu of misrepresentation. Rescission does not prevent a claim for damages where the misrepresentation also caused loss.
There are, however, a number of bars to rescission and the innocent party needs to elect early if it wishes to rescind the contract, as inactivity may signify affirmation of the contract. For more detail, see Practice Note: Misrepresentation—rescission as a remedy. It is not uncommon for parties particularly in complex commercial contracts to agree provisions that seek to restrict or exclude the rights of one party to bring a claim for misrepresentation.
An exemption clause will not be effective to protect a defendant who has made a fraudulent misrepresentation. Where a clause in a contract seeks to limit or exclude liability for misrepresentations then, by virtue of MA , s 3 , the validity of such a clause may be subject to the test of reasonableness under Unfair Contract Terms Act UCTA , s Note, as from 1 October , such provisions apply to business-to-business contracts only and that for consumer contracts, reference should instead be made to the Consumer Rights Act , ss 61 — Misrepresentations—excluding and limiting liability for them.
Contractual estoppel. Contractual estoppel—the authorities. To assist you with analysing the strengths and weaknesses of a potential claim in misrepresentation, or its defence, we have produced the following checklists:. Similar but different to a claim for actionable misrepresentation are claims for negligent misstatement. The most obvious type of case is a careless response to a request for a specific piece of information. The usual claimant is the person who asked for the information or advice and to whom it was addressed.
But in some situations it is possible for third parties to claim. For guidance on the key elements for founding a claim for negligent misstatement, with particular reference to claims for financial loss and claims by third parties, including the decision in Carparo Industries v Dickman and issues of causation, see Practice Note: Negligent misstatement—founding a claim.
For further guidance, see Practice Notes:. Negligent misstatement—defences and remedies. A deceit occurs when a misrepresentation is made with the express intention of defrauding a party, subsequently causing loss to that party. In a claim for deceit, the claimant must show that the defendant knew that they were not telling the truth. There must be proof of fraud and nothing less will do. The tort of deceit. We provide the following bespoke letter of claim precedents with accompanying drafting notes for claims for misrepresentation and negligent misstatement:.
Letter of claim—negligent misrepresentation. Letter of claim—damages for continuing representation becoming false by alteration of circumstances. Letter of claim—rescission and damages for fraudulent misrepresentation.
Preliminary notice of claim—negligent misstatement by accountant. Letter of claim—negligent misstatement by accountant. Letter of claim—negligent misstatement by bank.
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