Misrepresentation: Negligent And Innocent Statements In Contract Law

• Published date: 26 January 2022
• Law Firm: Andrew Jackson Solicitors
• Author: Mr Mike Wilson

During pre-contractual negotiations, many things may be said in advertising, during discussions or in correspondence. Some may become terms of the contract and others may have no legal effect, but the law of misrepresentation concerns untrue or misleading statements made by one party, which induce the other to enter in to a contract.

A party entering into a contract based on a misrepresentation by the other party may be entitled to rescind (or set aside) the contract and/or claim damages for any loss, but the law on misrepresentation is complex and it is necessary to determine whether the misrepresentation was fraudulent, negligent, or innocent.

It is therefore important for businesses to understand how any pre-contractual statements they may make could leave them exposed to a legal challenge, and how those made by the other party may give them a way out of the contract and/or a right to claim damages.

What is misrepresentation?

A misrepresentation is an untrue statement made by one party (or his agent) to another party, which induces it to enter into a contract and thereby...