This essay, through relevant case law, legislation and legal commentary, seeks to evaluate the principle of misrepresentation under English law according to the facts provided. I will describe the characteristics of different types of misrepresentations and their applicable remedies based on their precedence. Finally, I will evaluate their applicability to the case at hand, as well as determine the relevant course of action that should be pursued by the claimant if the case indeed amounts to misrepresentation. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Definition of Misrepresentation Misrepresentation occurs when a false statement of fact or law is made that induces the claimant to enter into a contract. Where a statement made in the course of negotiations is classified as a representation rather than a stipulation, the claimant may apply to the court for a writ of misrepresentation if the statement is found to be incorrect. There are three types of misrepresentation, namely: fraudulent misrepresentation, negligent misrepresentation and innocent misrepresentation. The result of a misrepresentation case is that the contract is voidable, for example, the existing contract can be canceled by the plaintiff. The remedy available depends on the type of misrepresentation, but generally includes termination of a contract and/or compensation for damages. In some cases the possibility to withdraw from the contract may be lost. The law relating to misrepresentation is found primarily in the Misrepresentation Act 1967, as well as the common law with statutory precedence which provides some further detail. Types of Misrepresentation A misrepresentation occurs when the representative makes an incorrect statement of fact (not an opinion) before entering into a contract. If the representative relied on this statement when deciding whether or not to enter into the contract, he or she may be able to claim compensation. There are three different types of misrepresentations, and your remedy options will largely depend on whether the misrepresentation was made negligently, fraudulently, or innocently. The general remedy for misrepresentation is to annul or terminate the contract so that both parties find themselves in the position they were in before the contract was made. Compensation for damages can also be provided for in certain circumstances, both in addition to and as an alternative to termination of the contract. Compensation for damages or termination of the contract: Once you have established that there has indeed been a misrepresentation and determined the type of misrepresentation, you can decide on the remedies available. There are two types of remedy: • Damages in the form of financial compensation, intended to compensate the victim of a false statement for the damage caused, as much as money allows. • The termination of the contract or the possibility of terminating a contract so that the parties are placed in the position they were in before the contract was concluded. The availability of different remedies is generally determined by the types of misrepresentations present and the stage of the contract at which the misrepresentation is discovered. Fraudulent misrepresentation: A fraudulent misrepresentation occurs when someone claims that; • They know that it is a false situation, or, • That they do without believing that it is, in fact, the truth, or, • That they do recklessly (e.g., the party does not care whether the statement is true or not). If a contract comesentered into as a result of a fraudulent misrepresentation, you can choose to claim damages, cancel the contract, or both. You may, however, lose the right to cancel the contract as detailed below. Negligent misrepresentation under section 2(1) Misrepresentation Act 1967: Negligent misrepresentation is a representation made carelessly and in breach of the parties' duty to take necessary and reasonable care to ensure that the representation is accurate. If there is no "special relationship" then there may be a misrepresentation under section 2(1) of the Misrepresentation Act 1967 where a statement is made carelessly or without reasonable grounds to believe that it is true. Negligent mistake under common law: This occurs when the representative carelessly makes a representation while there is no reasonable basis to believe that the representation is true. This misrepresentation is relatively new and was introduced to allow for damages to be recovered in cases where neither a collateral contract nor fraud has been found. It was first seen in the case of Hedley Byrne v Heller [1964] AC, where the court held that a negative statement relied upon may be actionable. Lord Denning in Esso Petroleum Co Ltd v Mardon [1976] QB 801, however, transferred the tort into contract law, laying down the rule as follows: "if a man, who has or professes to have special knowledge or skill, makes a statement thereunder to another... with the intention of inducing him to enter into a contract with him, has a duty to use reasonable diligence to verify that the representation is correct and that the advice, information or opinion are reliable” Innocent misrepresentation: This is a type of misrepresentation occurs when the representative had reasonable grounds to believe that his misrepresentation was true Before the case of Hedley Byrne v Heller [1964] AC All misrepresentations that had not been deemed fraudulent were therefore considered innocent. The main remedy for innocent misrepresentations is rescission, the purpose of which is to return the parties to the position they were in before the conclusion of the contract. Section 2(2) of the Misrepresentation Act 1967 allows, however, damages to be awarded in lieu of rescission if the court thinks it fair to do so. This is judged both on the nature of the innocent misrepresentation and on the losses suffered. Limitations of a misrepresentation There are some limitations when it comes to rescinding a contract. • If the claimant knows that a misrepresentation has occurred, but still chooses to carry out the contract (in writing or by conduct). The appellant will therefore not be able to withdraw from the contract as the appellant will be deemed to have ratified the contract by his actions. • Prompt reporting of false statements; A time limit can often be a defense for the defendant as the right to withdraw from the contract will be lost once the time limit has passed. However, if it is proven that the false statement was made negligently or fraudulently, the "time" runs only from the discovery of the false statement. If, however, the judge deems the false declaration harmless, the term starts from the date of signature of the contract. We see this in the case of Leaf v International Galleries [1950] 2 KB 86 where it is discovered that the parties have entered into a contract based on innocent misrepresentations and after a long lapse of time the court orders that rescission is not possible but the only damage remedy. However, if it were possible to prove a fraudulent misrepresentation ornegligent, the term will have no effect. Remedies for misrepresentation The remedies available for misrepresentation depend on the type of misrepresentation. For all four types the remedy of termination is provided. Which, essentially, puts the parties back in their pre-contractual position; each party returns the benefit received under the contract. It should be borne in mind, however, that it is not always possible to withdraw from the contract and in some circumstances the right to withdraw may lapse. Remedies in case of fraudulent declaration: in case of fraudulent declaration, the innocent party has the right to withdraw from the contract and request compensation for damages. The damages awarded are not based on contractual principles, but rather are the damages available in the event of fraud. There is, therefore, no requirement that damages must be foreseeable: this is clearly seen in the case of Doyle v Olby [1969] 2 QB 158, where the court held that contractual damages do not apply to misrepresentations because a representation does not it is a contractual clause. However, if there has been a fraudulent misrepresentation, compensation for damages can be assessed under the crime of willful misconduct. Remedies for negligent misrepresentation: S.2(1) of the Misrepresentation Act 1967 states that the same remedies are available to a claimant where a negligent representation is made as if it had been made fraudulently. This principle is confirmed in the case of Royscott Trust v Rogerson [1991] 2 QB 297 where it was held that; the principle regarding fraudulent misrepresentations relating to damage from a tortious act also applies to negligent misrepresentations. Thus allowing both termination and compensation for damages. Remedies for innocent misrepresentation: According to S.2 (2) of the Misrepresentation Act 1967 the remedies available for innocent misrepresentation are rescission or damages in lieu of rescission. The appellant, however, cannot claim both. Compensation for damages is determined according to the normal principles of a contract. As mentioned above, there may be obstacles to termination in certain circumstances: the right to withdraw from a contract may lapse when a third party acquires rights against the contractor in question. Or when the representative ratifies the contract, due to the passage of time or when restitution in integrum (restoration of the original state of affairs before the contract) is impossible. Facts of the case in question The plaintiff (Shahida) entered into a commercial contract with the defendant (Benjamin's Mirror), for the purchase of a painting for his business. The appellant consulted the clerk and informed him that she was looking for an original painting by the artist Hilda des Ste Croix. She was then shown a painting which was labeled as a painting by the artist in question, the shop assistant then reiterated that it was indeed by the artist. The appellant was then induced to purchase the work of art for the sum of €20,000. Only five years later, when it was damaged, did he discover that the painting was in fact not an original but rather a painting made by the artist's assistant, which is valued ? 2000 or ? 2500 if intact. Application of the rule of law to the facts: From the facts it can be deduced that it is indeed a commercial contract of sale entered into between both parties with the intention of making it binding. The express terms of this contract are that there has been an exchange of consideration based on the promise that the goods are actually as declared. These conditions were placed both in writing through the advertisement next to the painting, and declared orally by the clerk when directing the buyer to the painting in question..