Misrepresentation Claims: An Essential Update And Practical Advice

• Published date: 08 June 2021
• Subject Matter: Corporate/Commercial Law, Criminal Law, Contracts and Commercial Law, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Walker Morris
• Author: Gwendoline Davies, Nick Lees and Nick McQueen

Misrepresentation: What businesses need to know

When parties consider doing business together, a multitude of enquiries, discussions and negotiations take place before any deal is done. Marketing campaigns and promotional offers and communications have often been undertaken and information has been displayed online prior to the contemplation of any particular enquiries or leads. As part of the entire pre-contract process, myriad representations are made, many of which could give rise to liability.

However, the law of misrepresentation is not straightforward - it comprises elements of common law, equity and statute ¹; it includes characteristics of both contract law and tort; and it is developing all the time.

To avoid inadvertently leaving your business open to legal challenge, therefore, it is important for any business to keep up to date with the law of misrepresentation, and to understand what remedies might flow when a misrepresention occurs.

In this briefing, Gwendoline Davies, Nick Lees and Nick McQueen provide an essential legal update, along with important practical advice, in relation to misrepresentation claims.

What is misrepresentation?

A misrepresentation is:

• an untrue statement of fact or law;
• of which a party is aware (this criteria represents a recent development in the law of misrepresentation. See below for more information);
• upon which a party relies in being induced to enter a contract and
• which thereby causes the relying party to suffer loss.

Misrepresentations can:

• be express written or oral statements
• be implied by words or by conduct
• be made when making plans or projections for the future
• arise via half-truths
• arise where a statement was true when made, but later becomes untrue if circumstances change. Here, the representing party has a duty to update/revise his or her statement
• occur more readily in relationships of utmost good faith (such as partnerships or contractual arrangements requiring full disclosure).

For example...

By way of example, consider the following real-life scenario. A patient required cosmetic surgery after being involved in a serious accident. Having read a manufacturer's brochure given to her by her doctor, the patient decided to go ahead with treatment involving a cosmetic product described in that brochure. The brochure stated that the product, which would be administered by injection, included only the patient's own skin cells. That was not true - the product also included some foetal calf serum ("FCS...