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MISREPRESENTATION

Updated: Feb 20, 2022

BY SAURAV KHATTAYAL


INTRODUCTION


Misrepresentation is considered as an action or an offence that consists of false or misleading statements made by one person to another within a negotiation in a contract. If the misrepresentation is discovered, it is considered as voidable and the party which has adversely impacted may look for the damages. In such affairs the person who has suffered from the damages becomes the “plaintiff” and the party that made the misrepresentation is considered as a “defendant Positive attestation, in a way which isn't justified by the data of the individual creation it of that which isn't correct trusts it to be a genuine proclamation or any penetrate of obligation which is without an expectation to trick, increases a bit of leeway to the individual submitting it, or an individual asserting under him, by misdirecting another to his bias of any person claiming under him is also considered as a misrepresentation.


For example, if a person is selling his motorcycle to another person and advertises it to be in a perfect condition in spite of having problems with it can be considered as a misrepresentation.


The sources of misrepresentation are common law, statute and equity. The term misrepresentation has been mentioned under section 18 of the Indian Contracts Act 1872.


BODY OF ARTICLE/MAIN CONTENT

Types of misrepresentation

1. Negligent Misrepresentation

Negligent misrepresentation is a kind of distortion that is made thoughtlessly or without absurd grounds which is accepted to be valid, yet can't be respected except if the representor owed an obligation to the representee to be careful.1There can be a risk in carelessness in regard of a blameless extreme imprudent error which causes monetary misfortune, yet where there is explicit disclaimer of duty there is no risk. The duty exists in any event when there is no trustee connection between the gatherings.

Hedley Byrne & Co Ltd v Heller & Partners Ltd1

FACTS- Hedley Byrne was a firm known for advertising agents.[1]A customer, Easipower Ltd., put a large order. The firm (Hedley Byrne) wanted to check their financial position and credits, therefore they asked Easipower’s bank, Heller and partners Ltd. to get the creditworthiness, who replied that without any responsibility on the part of the bank Easipower is considered good for its business engagements. Later on, Easipower went into liquidation and the company Hedley Byrne face a loss of 17,000Euros. The Firm later sued Heller and Partners for negligence which claimed that information was negligent and misleading in nature. In return Heller and Partners argued with Lack of direct nexus and Liability was excluded.

JUDGEMENT- The court found that the connection between the gatherings was adequately proximate and was to make an obligation of care. It was additionally sensible for them to realize that the data that they had given would depend upon for going into an agreement or some likeness thereof. That offered ascend to an extraordinary relationship where adequate consideration would have been taken by the respondent in offering guidance to stay away from carelessness risk The disclaimer was adequate to release any obligation made by Heller's activities. There was no structure for harms on the grounds that a man can't be said willfully to embrace an obligation if the exact second when he is supposed to be tolerating it he proclaims though truth be told, he isn't.


2. INNOCENTMISREPRESENTATION


Innocent misrepresentation is commonly used for misrepresentations that consists of no element of fraud or negligence.

According to English law, a person, induced to enter into a contract as a result of misrepresentation which is innocent in nature can be rescinded except for entitled to damages.

An innocent misrepresentation. It has been held that a misrepresentation, even though innocent and not willful, cannot avoid a contract unless made without reasonable grounds. Therefore, the pre-contractual statement was considered to be false, but that maker was not negligent in making the statement.

For example, if a person A sells his vehicle and says it has 50000 miles when in fact, it has 50500 it would not be a part of the transaction. However, if the same car had 100000 miles, the situation could be different and it could be impactful.


Government of Zanzibar v British Aerospace (Lancaster House) Ltd2


FACTS- A chief fly must be purchased by the public authority of Zanzibar from British Aerospace and went into the agreement with the account organization. The organization repurchased the plane and rented it to the public authority It was discovered that the plane was in a defective condition and was gotten back to British Aerospace and was fixed yet the shortcomings proceeded. The portions that should have been paid on the rent understanding were halted by the public authority. The money organization took ownership of the plane and sold it. An activity was raised against British Aerospace to repeal the agreement. It said that the portrayals that were made were that the plane was in wonderful condition and with no plan or any sort of development absconds. The case that was made by British Aerospace was that with counter compensation had gotten inconceivable since the fly was sold by the money organization.


JUDGEMENT- It was held under judge Raymond Jack QC that there was no right to rescission or damages for the government. As the plane had been sold, the contract could not have been rescinded, so it was impossible to do counter restitution.[2]


2. FRAUDULENT MISREPRESENTATION


A fraudulent misrepresentation is considered as a bogus proclamation that is purposely made with the goal to prompt a subject to go into an agreement. It isn't considered as a term of the agreement and furthermore can't be actioned as a penetrate. It can be considered as a lie or a false statement that can be used to trick a person to enter into an agreement or a contract. It can happen in any mode through written, spoken by remaining silent etc.

At common law, where fraud could also be proved was the only action available for misrepresentation traditionally. Even this is also fairly recent, developed in the late 19thcentury. This obviously exhibits that how fundamental it was for some defendants in the past to show that the assertion on which they professed to have depended had been fused as a term into the agreement. They will be left with no cure in the event that they couldn't do this.


Derry vs Peek


FACTS- An outline had been given by The Plymouth, the Devonport and District Tramways organization which expressed that the organization had the authorization to utilize the steam cable cars which was the substitution of the pony fueled cable cars.


Truth be told the organization didn't have such authorization to utilize the steam cable cars as the option to utilize the steam power was with the Board of Trade's assent. The organization prior applied for accepting that they would get the consent yet dismissed when the outline was given.


JUDGEMENT- It was held that negligent misrepresentation was one made thoughtlessly or without sensible justification for trusting it to be valid. The House of Lords held that the investors activity fizzled in light of the fact that it was not demonstrated that the chief needed fair confidence in what they had said.


REMEDIES IN MISREPRESENTATION

The remedies for misrepresentation are the recession for the damages. It,s principal is that the legal certainty asks for a clear delineation of the losses to be remedied by recession and those by the damages.

Remedies for misrepresentation varies from its categories as discussed earlier. i.e:-


1. Remedies for negligent misrepresentation

2.Remedies for innocent misrepresentation

3. Remedies for fraudulent misrepresentation


1.REMEDIES FOR NEGLIGENT MISREPRESENTATION


Under the 1967 Act and at custom-based law, harms are accessible as a cure.


Appling the Hedley Byrne rule, harms are determined by the standard misdeed measure. This implies that harms may be granted for a misfortune that is a predictable outcome of the careless distortion that was made.


As indicated by the 1967 demonstration, harms are again determined by the misdeed measure since the demonstration is suitable where misrepresentation is preposterous to expect to be demonstrated. The court of allure on account of Sharneyford v Edge [1987] affirmed that fitting measure was the misdeed measure.


One outcome of grants of harms under the 1967 Act being determined by a misdeed measure, obviously, is that they can likewise be diminished in the event that it is conceivable to show opposite carelessness as well.


Generally, any distortion that was not the consequence of extortion was classed as blameless deception. On this premise, the main cure accessible if the distortion was carelessly made for rescission in value and this is as yet conceivable.


2.REMEDIES FOR INNOCENT MISREPRESENTATION


In customary law, harms are not some time ago accessible under precedent-based law, they won't be given under s2 (1) of the demonstration of 1967.


Under sculpture law there is no typical right to harms, the court has prudence under segment 2(2) of the 1967 Act to grant the harms as another to downturn where downturn is accessible on the off chance that it is persuaded that to do the demonstration is the fitting cure.


Preceding the 1967 Act no activity was conceivable under custom-based law and the accessible cure was value for downturn.


3. REMEDIES FOR FRAUDULENT MISREPRESENTATION


Under the misdeed of misdirection, a gathering can sue for the harms he has endured in the event of false distortion. Definitely, at that point, the technique for surveying any harms granted will be as indicated by the misdeed measure, i.e., to place the inquirer in the position he would have been in if the misdeed had not happened, as opposed to the agreement measure which is to place the petitioner in the position that he would have been in if the agreement had been appropriately performed. On account of Clef Aquitaine SARL v Laporte Materials (Barrow) Ltd [2000] 3 All ER493 the petitioner went into long haul arrangements because of false cases by the litigant. The contentions found not as productive as they would have been if reality had been told at the hour of contracting. The petitioner had the option to make up for the harms.


CONCLUSION


Generally, by finishing up the said factors we realize that, oversee an agreement void or voidable dependent on the particular conditions of the case. An agreement can't be authorized by any of the gatherings if the agreement is void and if the agreement is considered as a voidable agreement even after it is a legitimate agreement. Accordingly a void agreement can't be performed while a voidable agreement can be performed on the choice of the both of the gatherings. On the off chance that there has been a deception or a slip-up the agreement might be proclaimed void and along these lines be abrogated. On the off chance that excessive impact has happened, at that point the agreement might be delivered voidable and hence is fit for being dropped.[i][ii][iii]


[i]Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 [ii]Government of Zanzibar v British Aerospace (Lancaster House) Ltd [2000] EWHC 221 (Comm) [iii]Derry v Peek, (1889) 14 App Cas337 : [ 1886-90] All ER Rep 1.

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