What Is Misrepresentation in Contract Law?

Entering into a contract based on false information can lead to serious financial and legal consequences. Whether you’re a business owner, professional, or individual consumer, understanding the concept of misrepresentation is essential to protecting your interests. In this article, we break down what misrepresentation means in contract law, the key elements that make a misrepresentation actionable, and how it can affect the validity of a contract. We also highlight a real-world legal case to illustrate these principles – and explain how the commercial litigation team at Pinney Talfourd can assist if you believe you’ve been misled into a contract.

What is Misrepresentation?

A misrepresentation is a false statement which induces a person to enter into a contract.

A misrepresentation renders a contract voidable. This means that the contract is valid, until the innocent party takes steps to avoid (cancel) it. The innocent party may also be able to claim recission and damages.

General Requirements for Misrepresentation

For an untrue statement to constitute an actionable misrepresentation, the following general requirements must be met. The statement must be:

• false; and
• a statement (rather than silence); and
• a statement of fact; and
• the party must have relied on the statement and it induced the presentee to enter into the contract.

Sales of Goods Act 1979 – Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd 1965

It is possible for a false statement, made before the contract is entered into, to be a term of that contract. For example, the Sales of Goods Act 1979 implies a condition into any contract for the sale of goods by description that the goods will correspond with the description.

In the case of Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd 1965 it was held that a false statement by a car dealer – that a Bentley motor car had travelled only 20,000 miles since a replacement engine and gearbox had been fitted – was a term of the contract. The claimant was able to sue for damages and it was held that the defendant, as a car dealer, clearly had specialist knowledge and was therefore taken to have warranted the accuracy of his statement.

How can Pinney Talfourd help?

At Pinney Talfourd we regularly act for individuals and companies in contractual claims. Our team are equipped with the knowledge and expertise to navigate through challenges that you may have.

If you have a legal matter you would like to discuss, please reach out to a member of our commercial litigation team by contacting either Nick Hatchett or Emma Hardie on 01277 211 755.