Misrepresentation

Misrepresentation is a false statement of fact which induces someone to enter into a contract. Finding a misrepresentation makes the contract voidable; the contract still exists but can be set aside if chosen to do so by the person receiving the offer. There are three types of misrepresentation and they are fraudulent, negligent and innocent misrepresentation.

Fraudulent misrepresentation is when the person making the statement knows it to be false before offering that part of the negotiation; it is when they don’t believe the statement to be true or they make the statement without carefully acknowledging whether it is true or false. An example of fraudulent misrepresentation would be offering insurance to someone for a set amount of money without ever having the intention of paying the customer back money if a claim is made because there was no system in place to do this.

Negligent misrepresentation is when a statement is made without reasonable grounds for belief in its truth. An example of this would be if someone was offering to sell an appliance or product to a customer without ever being sure whether it was in stock or in their possession. In negligent misrepresentation the burden of proof would be on the person making the offer to prove that they had reasonable grounds to believe that the statement that was made was true.

The final type of misrepresentation, being innocent misrepresentation, is when the person making the offer has reasonable grounds to believe that the statement is true before it is made. An example of this would be if someone agreed to sell their car but when they got home it had been stolen or had gone missing and they can no longer sell the car while it is not in their possession.

Moving on from this a mistake in contract law, is an inaccurate belief, at contracting that certain beliefs are true. It can be used in argument as a defence and if done successfully, can lead to the agreement or contract being void. There are three occasions of when a mistake can be made; these are when the parties make a mistake about the subject matter of the contract, when there is a mistake about the identities of the parties, and finally when a