Contents

Introduction..........................................................................................................................................2
Statement was made..........................................................................................................................2
Silence does not amount to misrepresentation...............................................................................2
Misrepresenting Actions.....................................................................................................................4
Statement of Fact/Law.......................................................................................................................4
Inducement/Reliance..........................................................................................................................7
Types of Misrepresentation...............................................................................................................9
Remedies:..........................................................................................................................................9
1) Fraud - rescission, damages at common law and s2(1) misrep act 1967.......................................9
2) Negligent - rescission, damages and claims under statute............................................................9
3) Innocent - rescission, indemnity at common law and damages s(2)(2) misrep act.......................9
Rescission (remedy for all types of misrep)..................................................................................11
Damages (remedy for fraud and negligent only).................................................................................14
Introduction
Definition: A misrepresentation is a false statement of fact made that has the result
of inducing the other party to enter a contract. If a misrepresentation is shown to
have occurred, the effect will be that the contract becomes voidable. This means that
the party who was induced into the contract as a result of the misrepresentation may
choose to rescind the contract, but does not necessarily have to.
3 types of misrep:
1) Fraudulent
2) Innocent
3) Negligent
In order to prove misrepresentation, there are 3 elements that needs to be
satisfied:
1) Statement was made by the representor
a. If it’s made by a 3rd party, it isn’t considered a misrep
2) Must be a statement of fact or law and not a statement of opinion
3) Inducement must have been made by the representor and the representee
must have relied on the statement
a. If one relies on the statement, it means that they are induced
b. Can group inducement and reliance together
*mere puffs cant amount to misrep

Statement was made

 General rule: Statement must be made by the contracting parties
 Case: Barclays Bank v O’Brien
 If the 3rd party makes the statement and the party in the contract knows that
the third party has made the statement, then he will also be liable for the
misrep
o If A knows that C made the statement, A will also be liable

Silence does not amount to misrepresentation

 When it comes to misrep, you must have had made the statement
 General rule: silence does not amount to misrep
 Case: Barclays Bank v O’Brien
 Exceptions = situations where silence can amount to misrep
o Situation 1: partial non-disclosure
 giving part of the truth and not the whole truth
 where a person gives u half truth
 A misleading half-truth will amount to a misrepresentation. A
misleading half-truth is a true statement which is misleading due
to all relevant information not being revealed. Take the case of
Nottingham Patent Brick & Tile Co v Butler(1885), where a
solicitor was asked whether any restrictive covenants burdened
 some land. The solicitor answered that he was not aware of any,
which was technically true, as he had not yet checked. Of
course, when he checked, there was some restrictive
covenants. Therefore, the statement was technically true, but
only half-true and misleading, meaning it would be construed as
false.
 case: Dimmock v Hallet
o Situation 2: Representation become false
 where the rep was initially true but thr was a change in
circumstance to make the situation untrue
 representor has the responsibility to inform the other party that
the situation has changed
 If a statement is made which is true at the time of making, but
subsequently becomes untrue, there is a positive duty on the
statement maker to ensure to inform the relevant party of this.
 case: With v O’Flanagan
 it was suggested that misrepresentation as a result of a
change of circumstances might result in either a
fraudulent misrepresentation or a negligent one.
 due to the change of circumstances, the defendant had a
positive duty to notify the plaintiff of this. The fact he
didn’t was held to be a false statement of fact.
o Situation 3: Active concealment
 where a person does smthg to actively hide the truth
 even though u are silent about it, misrep can still happen
 case: Horsfall v Thomas
 The defendant hid a serious defect in a product, and
when the representee discovered this defect, he claimed
this was misrepresented to him. It was held it could not
amount to a representation as the representee never
inspected the product and was therefore never aware of
the misrepresentation.
o Situation 4: Contracts uberrimae fidei
 Certain types of contracts will impose a higher duty of disclosure
than under normal circumstances. This is due to the nature of
the relationships between the parties. The most common
example of such a relationship is that between an insurer and
the insured. It is the insured’s duty to disclose all material facts
at the time of the formation of the contract for insurance and
failure to do so will result in any form of claim under that
insurance contract failing.
 This differs greatly from the usual duties of contracting parties,
whereby there is no positive duty to disclose any facts (Keates v
The Earl of Cadogan (1851)
 only apply for very specific contracts
  specific types of contracts which require a person to give the full
truth w/o being asked
 contracts of utmost good faith. where parties are supposed to
reveal info w/o being asked
 When we talk about silence we see that this does not amount to
misrepresentation of usual contracts however if it is ubberimae
fidei (contracts of good faith) then silence is seen as
misrepresentation and imposes a duty of disclosure of material
facts as one party is seen to be in a stronger position to know
the truth.
 case: Lambert v Co-operative Insurance Society
 The duty of disclosure acts as a web to trap the insured,
the insured are unaware that they have a duty to disclose
information and may not occur to tell information that the
insurer have not asked. it is seen that however in order to
determine what is seen a material fact there is a test
which is applied known as Materiality test which derived
from this case

Misrepresenting Actions
 Misrepresentations through actions and not words
 through a person's actions, misrep can exist
 u do smthg that shows that ure representing a particular pov but in actual fact
ure not
 Case: Spice Girls v Aprilia World Service
o spice girls were gonna sign a contract with aprilia to promote aprilia's
scooters and motorcycles
o b4 the contract was completed, all 5 members filmed commercials
o at the time they filmed it, they knew that one of them was going to
leave and that girl actually left after the contract was signed
o here, the action of filming the commercial was a representation that
spice girls didnt know that the girl was leaving and that is in fact untrue
and this amounted to misrepresentation by way of conduct
o court held that by signing the contract it was a misrepresentation
because it was filmed as 5 members but there where was 4, so thru
their actions, there was a misrep

Statement of Fact/Law
 GR: The statement cannot be based on an opinion
 when a representation is made, the statement made must be a statement of
fact or law and not a statement of opinion
 This section will be concerned with whether or not the statement was of fact.
This is a key component of misrepresentation, as a claim for
 misrepresentation will not be actionable if the statement made was merely an
opinion or a suggestion.
 if a person gives their opinion it generally cannot amount to misrepresentation
 A statement of law which is incorrect will amount to a false statement of fact
for the purpose of misrepresentation.
o Pankhania v Hackney London Borough [2002] concerned the purchase
of a property to be used as a car park. There was a statement that the
occupier of the car park could be evicted within three months under
law. This was incorrect, and therefore classified as a false statement of
fact.
 case: Bisset v Wilkinson
o P wanted to purchase a land to breed sheep. farmer assured P that the
land could fit 2000 sheep. in actual fact, the farmer had never actually
carried out sheep farming on the land. P purchased the land and found
out that it couldnt fit 2k sheep. P wanted to rescind the contract on the
basis of misrepresentation. court held that even though the info was
inaccurate it was not considered as misrep as the farmer's statement
was of his mere opinion and not statement of fact
o As mentioned above, the general rule is that a statement of opinion is
not a fact. This is exemplified in the case of Bisset v Wilkinson [1927].
In this case, a farmer stated that “it was his opinion” that the land could
hold 2,000 sheep. The plaintiff claimed for misrepresentation, but it was
held not to be a statement of fact. This was due to two factors
 He expressly stated it was only his opinion
 He held himself out as having no expertise as to whether the
land held that many sheep, he had never claimed to keep sheep
on the land, it was merely a guess. The plaintiff was also aware
of this fact.
 Case: Hummingbird Motors Ltd v Hobbs [1986]
o It is irrelevant whether the statement of opinion made is unreasonable,
or whether the statement maker could subsequently check the validity
of the opinion and update the other party as to whether the statement
was true or not
o Here, an insurance company contracted the insured’s son to enquire
about the value of their contents. He incorrectly stated the value of the
contents. This was held to not be a representation, as he was in no
better position than the insurance company to know the value of his
parent’s contents
o Therefore, the question to ask is whether the statement maker is in a
better position to know the truth than the plaintiff? If not, and the
plaintiff is aware of this, it will likely be classified as an opinion.
o If the statement maker is in fact in a superior position to know the true
fact, the position is different. If the statement is made with a reasonable
belief and they have reasonable grounds to make this statement, it will
amount to a statement of fact. Correspondingly, if the statement maker
holds themselves out to have reasonable grounds to make a
 statement, when in fact this is not true, it will amount to a statement of
fact for the purposes of proving misrepresentation.
 Exceptions - where if u give an opinion, it can amount to a misrep
o 1st Exception: not contradict any other facts
 the statement of opinion must not contradict any known facts by
the representor
 i.e. if i know smthg is bad, but i say its good, that means im
contradicting the fact that i know that it’s bad
 Case: Smith v Land and House Property Corp
 P placed an ad to sell his hotel saying that the hotel was
alr rented out to Mr Flack who was a most desirable
tenant. D agreed to purchase the hotel and later on found
out that Mr Flack was in arrears with the rent and became
bankrupt. court held that P was liable bec even though he
made the statement based on his opinion, he had known
the actual facts were contradictory
 P's opinion contradicts the actual fact that he alr knows it
 This case is an example of an opinion amounting to a
fact. The landlord sold a property and described the
tenant as ‘a most desirable tenant’, and this was not true.
Although this may have been expressed as an opinion,
the fact the defendant was in the best position to know
the true facts means this statement was held to be a
statement of fact.
o 2 Exception: made by an expert
nd

 a statement of opinion made by an expert will be assumed that

the expert has made the statement based on proper deliberation
of all significant circumstances
 if an expert makes a statement, even though he claims its a
statement of opinion, it will be considered as a statement of fact
bec he is an expert so it is assumed that he would have taken
into consideration all significant circumstances
 case: Esso Petroleum v Mardon
 Mardon wanted to buy a petrol station. a rep from Esso
estimated that the petrol station should be able to sell
200k gallons per year. however, the expert failed to
consider that local authority had imposed conditions on
planning commissions causing there to be no access
from the main road. Mardon suffered a loss and took
action on esso for misrepresentation. so even though the
statement was an opinion, the courts considered the fact
that the representative was an expert and therefore it
constituted a statement of fact
o 3 Exception: Representations as to future intention
rd

 A misrepresentation as to future intention is usually not

actionable for misrepresentation, as it will not amount to a
 statement of fact. The statement of future intent will not be held
to be a fact even if the defendant intentionally changes their
mind as to their intentions (cite: Inntrepreneur Pub Co v
Sweeney [2002])
 statements for the future are not statements of fact bec it hasnt
happened yet
 however, if a person makes a statement of future intention but at
the time the person makes the statement, they do not hv the
actual intention, then it is a misrep
 i.e. if ure saying smthg abt the future - it hasn’t happened yet so
it cannot be a fact. So technically, it cannot be a misrep bec it
hasn’t happened yet but if u make the statement and at the point
of time u made the statement u had no intention whatsoever of
following thru w the statement (u were lying) then that is a
misrep.
 case: Edgington v Fitzmaurice
 directors of a company offered shares stating that the
money to be used will be used to expand the business. in
actual fact the money used was to pay off the company's
debts. court held that the statement was in fact a
representation of the company's intention and could be
treated as a statement of fact. so when it turned out to be
untrue, it was considered to be a misrep
 Bowen LJ said the state of a man’s mind is as much a
fact as the state of his digestion... A misrepresentation as
to the state of a man’s mind is, therefore, a misstatement
of fact... such misstatement was material if it was actively
present to his mind when he decided to advance his
money.
 A statement of future intention made with absolutely no
intention at the time of the statement, however, will
amount to a misrepresentation, as seen in this case

Inducement/Reliance
 Once it has been proven that a false statement of fact has been made, the
next step is to prove that this statement of fact induced the claimant to enter
the contract.
 Where the representor must make a statement that induces the representee
to enter into the contract and the representee must have relied on the
statement for being induced to enter into the contract
 Bowen LJ in Edgington v Fitzmaurice
o he explains that a statement must be one of the reasons u enter into a
contract. if a person makes a statement, and u dont rely on the
statement to enter into a contract, then u dont have inducement
o what was the state of the plaintiff's mind, and if his mind was disturbed
by the misstatement of the defendants, and such disturbance was in
 part the cause of what he did (this person's mind was affected by the
other person's statement)
 case: Horsfall v Thomas
o A representation will not be actionable and will not have induced the
representee unless the representee was aware of the representation.
o Horsfall v Thomas (1862) is an excellent example of this. The
defendant hid a serious defect in a product, and when the representee
discovered this defect, he claimed this was misrepresented to him. It
was held it could not amount to a representation as the representee
never inspected the product and was therefore never aware of the
misrepresentation.
 A representation made to one party which then induces a third party may be
amount to a misrepresentation
o The authority for this principles comes from Yianni v Edwin Evans and
Sons [1981]
 case: Attwood v Small
o P wanted to purchase a mine from defendant who had made
exaggerating statements on the profit of the mine. P appointed their
own agent to examine the mine and the agent wrongly gave the same
incorrect info as the D. based on this the P purchased the mine and
later discovered the false info. they attempted to rescind the contract
based on misrep. courts did not allow this as they had rely on their own
experts instead
 What if you get an opportunity to discover the truth?
o Redgrave v Hurd
 If the representee has an option to validate the truth of the
representor’s statement, but refuses to do so, this will not
prevent the statement as being held to be a misrepresentation,
as the representee has relied upon this statement, thus being
induced by it
o Museprime Properties v Adhill Properties [1990]
 Inducement test: If a misrepresentation would have induced a
reasonable person to enter into the contract, the onus will be on
the representor to show that the representee was not induced by
the misrepresentation
 If a misrepresentation would have induced a reasonable person
to enter into the contract, the onus will be on the representor to
show that the representee was not induced by the
misrepresentation
Types of Misrepresentation

Remedies:
1) Fraud – rescission [CHEE XUAN AMILIA], damages at common law [DARWIN]
and s2(1) misrep act 1967 [ASRA]
2) Negligent - rescission, damages and claims under statute
3) Innocent - rescission, indemnity at common law [NADY] and damages s(2)(2)
misrep act [CHANIC]

 Fraudulent
o the significance of a misrepresentation being classified as a fraudulent
one is that the measure of damages may be greater under certain
circumstances. There are two remedies available for fraudulent
misrepresentation: recession and damages
o Representees should attempt a claim for fraudulent misrepresentation
with caution, as the courts impose a much higher standard of proof due
to the serious allegations. There may also be penalties in the event the
claim is not made out.
o defined in Derry v Peek by Lord Herschell:
 fraudulent misrepresentation was defined in Derry v Peek (1889)
as a false statement which is ‘made knowingly, or without belief
in its truth, or recklessly, careless whether it be true or false’
 wanted license for steam tram so he had published in his
prospectus but it was pending and that approval was denied.
court said no fraudulent
 FM is a misrep made knowingly OR w/o belief in its truth OR
recklessly whether it be true or false
 basically the person knew that hes making a false statement or
they dk that it's false but they dont believe it's true
 the person making the statement is reckless and disregards its
truth or falsity. there is the absence of honest belief that the
statement is true
 due to the recklessness asserting it is true when it may not be.
o case: Bottin Itnl Investment v Venson
o In order to assess whether a statement has been made fraudulently,
you should consider whether:
 The statement maker knows that the statement he has made is
false. Here, there will clearly be a fraudulent statement.
 The statement maker has reasonable grounds to believe his
statement is true even if it is false. Here, ff the statement maker
has made a false statement, but has reasonable grounds to
believe his statement, it will not amount to a fraudulent
 statement, as it has not been made recklessly or carelessly. A
statement made recklessly or carelessly needs to be a
statement made which the statement maker has no belief in the
truth
o case: Thomas Whitter v TBP Industries
 clarified that where a statement is made where the statement
maker has no idea whether or not it is true or false, this
statement would be fraudulent
o some statements made may be true at the time of the statement, but
later become false. In those situations, it was established that there is a
duty for the statement maker to make the representee aware of this
change
 in With v O’Flanagan [1936] it was suggested that
misrepresentation as a result of a change of circumstances
might result in either a fraudulent misrepresentation or a
negligent one.

 Negligent
o A negligent misrepresentation is made out where the statement maker
has belief in his statement, but has been careless in reaching this
conclusion. It is considered ‘negligent’ as there has been a breach of
duty of reasonable care and skill when making the statement. As
mentioned earlier in this section, the difference between a negligent
misrepresentation and a negligent misstatement is the remedies
available.
o An alternative approach to a claim for negligent misrepresentation is to
pursue the claim under statute. The Misrepresentation Act 1967
Section 2(1) allows for such a claim
o It should be noted that a claim under the Misrepresentation Act cannot
be made by a third party relying on a statement; the statute only
applies where the party to whom the statement is directly made is
induced into the contract.
o Established in: Howard Marine and Dredging Co Ltd v A Ogden & Sons
(Excavations) Ltd [1978] QB 574
 The representor cannot escape liability simply by proving that he
was not negligent, it must be proven that he had reasonable
grounds to believe the statement, as shown in this case
 o NM: false statement made by a person who believes it to be true but
was careless as to assuring the validity of that statement
o Hedley Byrne & Co Ltd v Heller & Partners Ltd
 A claim for a negligent misrepresentation that is based in tort
under the common law is usually referred to as a ‘negligent
misstatement’ This claim was first established in the case of
Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.
As per Caparo Industries plc v Dickman [1990] 2 AC 605, in
order for a claim in negligence to be successful, there must be a
special relationship between the parties so that there would be a
duty of care which arises.
 4 criteria’s to be proved
 a fiduciary relationship of trust & confidence arises/exists
between the parties;
 the party preparing the advice/information has voluntarily
assumed the risk;
 there has been reliance on the advice/info by the other
party, and
 such reliance was reasonable in the circumstances.
 A negligent misstatement may give rise to an action for
damages for economic loss. When a party seeking information
or advice from another – possessing a special skill – and trusts
him to exercise due care, and that party knew or ought to have
known that the first party was relying on his skill and judgment,
then a duty of care will be implied.
o The significance of a negligent misrepresentation under a tortious claim
is that the aggrieved party has the burden of first proving the duty of
care, and then proving that this duty of care has been breached. As will
become clear from the following section, a claim under the statute is
much easier to prove and therefore favourable.
o Case: Esso Petroleum v Mardon
 Looks at the duty of care
 Innocent
o a statement made by a person who has reasonable grounds for
believing in its truth and who honestly believes that it is true
o With the development of the Misrepresentation act the claim for
innocent misrepresentation is extremely limited. A claim for innocent
misrepresentation will arise when a claim for negligent
misrepresentation under the Misrepresentation act has failed. The
remedy for an innocent misrepresentation will usually be rescission of
the contract.
o looks @ the honest belief
o claim for damages has a limit
o there is a remedy for rescission
o 3rd remedy - there is no remedy for X but courts allow damages in liew
 o Case: Thomas Whitter v TBP industries

Rescission (remedy for all types of misrep)

 When a contract has been induced by misrepresentation of any kind, the
contract does still confer obligations upon the parties, but the contract will be
voidable. Voiding the contract as this stage is using the remedy of rescission.
The aim of this remedy is to put the parties back into the position they were
before the start of the contract.
 Meaning: I give u back what u gave me and u give me back what i gave u
 go back to position as if they have never contracted
 Gov. s.1 Misrepresentation Act 1967
 4 bars of rescission
o Affirmation
 Affirmation refers to an affirmation of the contract, whereby
despite the misrepresentation, the representee had held
themselves out to be happy with the contract as it is, therefore
affirming the misrepresentation
 In the event of a misrepresentation, it is expected that the
representee, if they are not happy with the contract, will take
action to remedy the contract. Conduct that will affirm the
contract includes positive affirmation via words, positive
affirmation via conduct, or making no attempt to remedy the
issue.
 Case: Long v Lloyd: the party confirms that they wanna continue
w the contract after discovering the misrep
o Lapse of time
 The next bar to rescission is where there has been a significant
lapse of time between the formation of the contract and the
discovery of the misrepresentation. There is a differing approach
by the courts for different types of misrepresentation.
 In the case of fraudulent misrepresentation, the lapse of time will
begin at the time the fraud was either discovered, or could have
been discovered.
 there are 2 diff lapse of time
 fraud: diff
 negligent & innocent: another diff time
 case: Zanzibar v British Aerospace
 case: Leaf v International Galleries
 As for misrepresentation which is negligent or innocent,
the lapse of time will begin from the date of the contract.
Leaf v International Galleries [1950] highlights this
sometimes harsh approach. In this case, a painting was
purchased as one painted by a famous painter. Five
 years later it was discovered this was not true. Due to the
lapse of time, this contract could not be rescinded.
o Restitution becomes impossible (restitution in intergum impossible)
 where the goods under the contract have been used, consumed,
or have perished
 This bar to rescission refers to where a rescission of the contract
is no longer possible. This is the case where the goods under
the contract have been used, consumed or have perished.
 U can no longer restore
 Case: Clarke v Dickson
 the claimant bought shares in a company. The company
got into financial difficulty. The claimant wants his money
back. Here, Crompton J gave an example of a contract
for a sale of a cake; once this cake has been eaten, the
contract may not be rescinded
 Case: Viger v Pike
 the right to rescind may be lost where it is impossible to
restore the parties to their original position even if the
goods are not perished or destroyed but JUST altered.
Basically, it can be said that it was just partially
consumed and it was referred to as an ‘all or nothing
approach
 case: De Molestina v Ponton
 this approach was rejected, and it was argued a partial
rescission may be possible where you can split the
contract into multiple parts. Means, if you can sever and
separate some parts, it will be possible to rescind the
parts with goods that are yet to be consumed. For
example, a contract for a can of orange juice cannot be
separated once consumed, BUT a contract for 3 diff cans
could be separated so that the contract for any can which
was yet to be consumed may be separated and
rescinded.
 Therefore, if there is a multi-part contract which you could sever
and separate some parts of, it will be possible to rescind the
parts with goods that are yet to be consumed. For example, a
contract for one keg of beer could not be separated and
rescinded once consumed, however, a contract for 5 kegs of
beer, each of different types, could be separated so that the
contract for any keg which was yet to be consumed may be
separated and rescinded
o 3rd Party Rights
 Where rescission would encroach on the rights of a third party,
the remedy will be unavailable. Usually this will be where the
goods have been sold to a third party who had no knowledge of
the misrepresentation.
  Where rescission would take the rights of a third party, the
remedy will be unavailable
 this will be where the goods have been sold to a third party who
had no knowledge of the misrepresentation.
 ur item is passed to a 3rd party
 case: Lewis v avery
 where the mistake in the real identity of the rogue did not
prevent a valid contract from being created.
 There was a face-to-face interaction, where the law
presumes contract. Yes, this was fraud and
impersonation by the rogue, which would render a
contract voidable and it could be set aside. Yet, this must
be done before a third party acquires the rights. In this
case, the contract was not set aside before Mr Averay, in
good faith, purchased the car
 Case: White v the garden
 Case: Phillips v Brooks
 person A purchased a ring from person B using person
C’s name and address. Person B knew of C and where
he lived (not personally. Just know of him), so person B
then allowed person A to take the ring. But, person A
turned out not to be person C. Person A then sold the
ring to a third party. Court held that there was no relevant
mistake. Where parties contract face to face, the courts
will normally presume that they intend to contract with
each other – regardless of whether each party is telling
the truth about their identity.

Damages (remedy for fraud and negligent only)

 An award for damages is the most commonly sought after remedy for misrepresentation.
Although rescission is effective in releasing the parties from their obligations under the
contract, there are often circumstances in which the damage caused goes beyond the
contract in question. In this case, damages are an effective remedy.
 The measure of damages differs for each of the types of misrepresentation, therefore each
will be considered in turn
 Fraudulent misrep
o A fraudulent misrepresentation requires a high standard of proof, subsequently, the
measure of damages reflect the difficulty of proving this. The case of Doyle v Olby
(Ironmongers) Ltd [1969] 2 QB 158 is authority to the effect that damages are
awarded on a tortious basis, aiming to put the aggrieved party in the position they
would have been if the misrepresentation was true.
o This standard is usually subject to a test of ‘reasonable forseeability’, where a loss
will only be claimable if the statement maker could have reasonably foreseen that
the fraudulent statement would have resulted in such a loss.
o However, following Doyle v Olby (Ironmongers) Ltd, it was established that damages
for a fraudulent misrepresentation are not subject to this test of forseeability, the
 damages will extent to all consequential loss of the control, irrespective of
forseeability or remoteness of damage.
 Negligent misrep under the common law
o Negligent misrepresentation claimed under Hedley Byrne v Heller and the tort of
deceit are extremely limited in comparison to those for fraudulent
misrepresentation. Unlike damages for fraudulent misrepresentation, under the tort
of deceit the damages are limited by the test of remoteness.
o the test of remoteness, from Overseas Tankship (UK) Ltd v Morts Dock &
Engineering Co (The Wagon Mound) [1961], only allows damages to be claimed that
are “reasonably foreseeable”. You should have an understanding of how this will
affect misrepresentations from the previous example of the contract for the car. If
the claimant has also been negligent to some extent, damages may be reduced by
way of contributory negligence, apportioning some of the blame to the claimant.
 Negligent misrep under the misrep Act
o We have already discussed the misrepresentation act being a favourable avenue as
to a claim for negligent misrepresentation due to the burden of proof being
reversed. A claim made under the misrepresentation act is even more favourable in
respect of the damages it may award.
o [FRAUD MISREP – asra ] – REFER TO ASRA’S PDF
 Under Section 2(1) of the Misrepresentation Act 1967, damages are
awarded on exactly the same basis as fraudulent misrepresentation.
Therefore, the statement maker will be liable in damages for all
consequential losses as a result of the statement, irrespective of their
forseeability. This was confirmed in Sharneyford Supplies Ltd v Edge [1987]
 Damages is a type of remedy that differs from rescission in that it puts the
injured party in the same position as he would have been in if he had not
sustained the wrong whereas rescission puts the injured party in the
position he was in before the contract started
 Section 2(1) creates a right of action for damages where the
misrepresentation has been made by the other party to the contract
 It allows a claimant to claim damages for fraudulent misrepresentation only
if the representor can prove they had reasonable grounds for believing the
statement to be true
o [INNOCENT MISREP – REFER TO CHANIC’S ] Section 2(2) of the Misrepresentation
Act clarifies the relationship between rescission and damages. The courts have
identified that rescission can often result in unfair consequences, and therefore,
damages may be awarded as an alternative to rescission. This means that there
cannot be a claim for rescission and damages; it must be one or the other.
o Interesting, this suggests that damages may be subject to the same bars that
rescission is (affirmation, lapse of time, third party rights and impossibility). This is
because of the exact wording of the statute, it states damages may be awarded “in
lieu of rescission”, therefore, when rescission is not possible, it may be held that
damage will not be a possible remedy either.
o The current position from Zanzibar v British Aerospace (Lancaster House Ltd) [2000]
is that in order to claim for damages under the misrepresentation act, the right to
rescission must still be active at the time.
 Innocent misrep
o As mentioned previously, the only remedy for innocent misrepresentation is
rescission, meaning damages will not be possible for an innocent misrepresentation.