BlueBlades
What is a Misrepresentation, the different types of Misrepresentations and how you can avoid from making one?
An action for misrepresentation arises under the law of tort. A Misrepresentation occurs when the Representor makes a false statement of existing fact with knowledge of its falsity and with the intention that the Representee should act on it with the result that the Representee does act on it to his detriment.
A false statement can be made either orally, in writing or by conduct. Any conduct designed to deceive another by leading one to believe that a certain fact exists is equivalent in law, as in morals, to be a statement in words that the fact does exist.
In other words, when you either tell, give written instructions to or act in such a manner towards your Representeeon something which you know is not true or wrong with or without the intention of causing your Representee some form of harm as a result of him doing so, is tantamount to a misrepresentation.
There are 3 forms of misrepresentation; Fraudulent Misrepresentation, Negligent Misrepresentation and Innocent Misrepresentation.
Firstly, a Fraudulent Misrepresentation is one that is made knowingly by the Representor that it was false or if it was made without belief in its truth or made recklessly without regarding whether it is true or false.
Secondly, a Negligent Misrepresentation occurs when a statement made by the Representor honestly believing in its truth (falling outside the scope of fraudulent misrepresentation) but without having reasonable grounds for so believing. (Making an honest but careless representation.)
The last category of misrepresentation is Innocent Misrepresentation. .Such misrepresentations are those made by a Representor, who honestly believed in its truth (therefore not fraudulent) and he is able to show that he has reasonable grounds to believe in its truth (therefore not negligent).
It must be noted that as a general rule, a representation can be expressed or implied from one's conduct but it normally has to take an active form. The Representor must have actually said or done something before he can be taken to have made a representation.
Silence, however does not amount to a representation. Contracting parties are generally not obliged to disclose any information to the other party or even correct the other's misconception provided he himself had not induced the said misconception. A mere passive non-disclosure of the truth however deceptive in fact, does not amount to deceit in law. Absence of a contractual duty to speak, unless provided for in instances such as contract of insurance, means no such duty can arise in tort.
Hence, silence by one party, even in the face of an obvious misconception on the part of the other, will still not amount to a representation that the misconception is true although, in some cases, it may amount to a unilateral mistake.
As stated above, a misrepresentation must be a false statement of fact and not a mere broken promise. If words of the Representor are mere promises, then such cannot be the basis of an action in tort too. This means promises, which are not considered a term or condition to the contract, when not delivered cannot be the basis of an action in tort for misrepresentation.
There are however, certain exceptional cases where silence or non-disclosure can have legal consequences such as half-truths or where a change in circumstances occurs before or at the time of contracting which renders untrue a statement of fact made previously or under certain types of contract, the law imposes a duty to make full disclosure as in the case of insurance contracts.
As such, what are the remedies that the party so misrepresented, can claim against the Representor who made a misrepresentation?
Firstly, the parties may consider to rescind the sale and purchase agreement altogether. This avenue puts the contracting parties to a position as if the contract did not take place. It is as if the contract was terminated from the beginning and parties are put back into position that they were before the contract. Any goods or monies passed are returned to the respective original owners.
Secondly, the Representee could claim for damages from the Representor. Damages are actually monetary compensation for any losses suffered as a result of the misrepresentation.
Thirdly, the Representee could seek the Representor to indemnify them for losses suffered because of obligations and liabilities created by the contract that was induced by the misrepresentation. It must be noted that this remedy is relatively less costly than that of Damages as indemnity limits the claims for losses arising out of obligations, which are necessarily created under the contract.
.