Misrepresentation

A contract may be invalidated by a misrepresentation—an untrue statement made by one party that induces the other to enter the agreement. Misrepresentations can arise from conduct, errors, or omissions, and may be fraudulent, negligent, or innocent. While some representations become contractual terms, others serve only as inducements, and their legal consequences vary based on the type and effect of the misrepresentation.

Misstatements must involve past or present facts, not opinions, unless the opinion implies an assertion of underlying facts. Advertising puffery is usually insufficient unless it contains specific factual inaccuracies. Misrepresentations must come from one party to the other or their agents to be operative, and the innocent party must have relied on them materially in deciding to enter the contract.

Certain misrepresentations can constitute criminal offences, especially under consumer protection laws. Criminal liability arises for false statements made with intent to deceive, while civil remedies depend on whether the misrepresentation is fraudulent, negligent, or innocent.

Exclusion clauses may limit liability for misrepresentation but cannot exclude fraudulent misrepresentation. In consumer contracts, exclusions must meet the “fair and reasonable” test, considering factors like bargaining positions and the buyer’s awareness of the clause. Courts evaluate these clauses rigorously to ensure fairness and adherence to legislative standards.

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