Contract Misrepresentation Solicitors
Misrepresentation of the facts can have far reaching financial consequences in contract law. If you relied on a statement when making the decision to enter into a contract of any kind, and that statement turned out to be untrue, then you may have grounds to claim compensation.
At Lupton Fawcett, we have expert commercial litigation solicitors who can offer advice on misrepresentation in contract law. If you find yourself in the position of needing to bring or defend a claim for misrepresentation, taking expert legal advice at the earliest opportunity will be crucial.
Whether you are dealing with issues relating to mis-sold goods or services, or misrepresentation in contracts in any area of the law, speak to us. We have extensive experience of helping our clients with contract law and dispute resolution and we pride ourselves on our ability to find effective solutions quickly and efficiently.
What is misrepresentation in contract law?
Misrepresentation is a legal term which applies when one party to a contract makes an incorrect statement of fact. This may have been made by the party innocently. However, a false statement of fact can also be made by one party deliberately or fraudulently which the innocent party believes to be true and relies upon it to a material extent when deciding to enter into a contract.
The Misrepresentation Act 1967 offers protection to anyone entering into a contract or a sale from fraudulent or false claims and makes it possible to claim for damages if misrepresentation occurs. A claim can be brought if it is possible to prove that a party has been induced to enter into a contract as a result of a statement made which was untrue; the defendant needs to prove that they believed at the time they made the statement that it was true. Misrepresentation can very commonly arise when forming contracts for buying or selling goods or services and property sales, but they can really occur in any type of commercial contract.
How are representations made?
Sales literature, advertisements and the terms of contracts themselves can all contain representations of fact. A misrepresentation can occur in in writing, in spoken forms of communication, or gestures, and can even be made in a combination of any or all of these. or in a combination of both. Reliance by the innocent party on the misrepresentation prior to a contract being entered into is key.
In written contracts, statements relied on by the parties made before the contract should be recorded in writing in the terms of the contract, forming the warranties and conditions. If any such statement is not correct, it may mean that there has been a misrepresentation and there may be grounds to take action.
Types of misrepresentation
Before two parties enter into a contract, statements are usually made by one party designed to persuade the other into signing the contract. These statements can be made during meetings, conversations, sales pitches, or expressly written into the contracts themselves. Where these statements are found to be misleading or untrue, there may be grounds to make a claim for damages.
There are three main types of misrepresentation, and the settlements available will depend on which type has occurred.
This occurs where a false representation is made by a party knowingly, or without belief in its truth, or recklessly as to its truth, and intends the innocent party to act in reliance on it. If someone makes a statement which they know is untrue, or they recklessly make a statement without knowing whether the statement is true or not, then that is a fraudulent misrepresentation of the facts. If you enter into a contract on the basis of a fraudulent misrepresentation and a consequence of this is that you suffer loss, you have the option to claim damages, or to unwind the contract.
Negligent misrepresentation occurs when one party carelessly makes a statement, or does not have reasonable grounds to believe that the statement is true. There is no requirement to establish fraud. When negligent misrepresentation results in a claim, the law states that the person responsible for making the statement has to prove that they had reasonable grounds for making the statement, or that they believed it to be true at the time.
Innocent misrepresentation occurs when a misleading statement is made which induces a party to enter into a contract, but the person making the statement had reasonable grounds for believing that it was true. The misrepresentation is made without fault so it differs from the other two types of misrepresentation in that it is not made fraudulently or negligently. When this occurs, there are two remedies; either the contract can be cancelled (i.e. rescinded), or damages can be awarded (in lieu of rescission). It is not possible for both remedies to be awarded, and the courts judge each case on its merits.
If a person makes a statement but later realises that what they have represented is false, they are legally obligated to make sure that the other party is aware of the mistake. It is possible to amend or withdraw a previous representation at any time before it is relied upon.
How is misrepresentation remedied?
If you successfully make a claim for misrepresentation, there are two main remedies available, and they will depend on the specific circumstances of the claim.
Recission is the most common remedy for misrepresentation; this is where the contract is reversed, and all the parties are restored back to the position they were in prior to the contract being made.
It may also be possible to claim for damages, and sometimes to recover certain financial losses. The amount of damages recoverable will depend on the situation; higher amounts are available for where the misrepresentation has been fraudulent, for example, because of the deception involved. There are legal tests in place which can help to calculate compensation levels, but if you are considering making or are defending a claim of misrepresentation, taking expert legal advice promptly is advised.
Limitations of misrepresentation
There are certain limitations that apply to the right to unwind a contract, known as a bar to recission. If you became aware that a misrepresentation has occurred, but continue with the contract, it is not possible to make a claim for misrepresentation or end the contract. The continuation of the contract is taken as an affirmation of the contract.
For this reason, if you find that you have entered into a contract as a result of information or a statement that you discover is false, it is important to act quickly. If you do not seek advice promptly there may be legal implications, as a delay or failure to take action can be considered as acceptance of the contract, despite the misrepresentation. We recommend seeking legal advice at the earliest opportunity if you discover that you have been a victim of a misrepresentation to give yourself the best possible chance to remedy the situation.
How can Lupton Fawcett help?
With over 100 years’ experience of assisting clients, we are well placed to handle all aspects of commercial litigation. We can handle your misrepresentation claim adeptly and efficiently, getting to know you and your business and offering cost effective, ethical solutions. We provide a full range of legal services, and we have extensive experience of finding effective resolutions to legal disputes as swiftly and effectively as possible.
Based in Yorkshire, we offer first class legal advice to clients all over England and Wales, and we pride ourselves on our reputation for client satisfaction. We build lifelong relationships with our clients, getting to know their business and what drives them, so they know that when they need expert advice they can rely on us to give them the right solutions, tailor made for them.
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