Misrepresentation damages may also be ordered in respect of the loss arising. The Misrepresentation Act 1967 provides that damages can be paid instead of rescission of the contract where negligent misrepresentation is proved.
If the statement can be shown to be false, then the party who made the statement will have to show that they reasonably believed it was true to defend the allegation of negligent misrepresentation.
Negligence occurs when the person making the statement makes it carelessly or without reasonable grounds for believing it to be true. Where a statement is made that is found to be negligent and the claimant relied on this statement and suffered a loss as a result, this is negligent misrepresentation. The loss does not have to be reasonably foreseeable. If fraudulent misrepresentation is proved, the court can order rescission of the contract as well as damages for loss arising from the misrepresentation. When coming to a decision, the court will ask, ‘But for the misrepresentation, might the claimant have acted differently?’ It is also necessary to demonstrate that the claimant would not have entered into the contract, but for the misrepresentation. Where the allegation is of serious misconduct, the court may be more inclined to infer the necessary state of mind. that they knew the statement was false or were reckless as to whether it was true or false, which is generally shown by inference. The claimant must show that the defendant had the requisite state of mind, ie. The claimant suffered loss as a consequence of their reliance on the representation.It was intended that the claimant rely on the false statement.The defendant knew that the representation was false or was reckless as to whether it was true or not.A false representation was made to the claimant.This type of misrepresentation is taken seriously by the courts, who will look for evidence of the following: Recklessly or carelessly as to whether it is true or false.It applies to a false statement that is made: There are three main types of misrepresentation:įraudulent misrepresentation is based on deceit, where a false representation has been made which has induced someone to enter into a contract. If misrepresentation can be proved, then the contract may be rescinded by the court and if a loss has occurred, damages may also be awarded. The false statement does not need to be in a formal written document, it can be information given in a conversation, meeting or sales pitch. If someone enters into a contract in reliance on a statement that later turns out to be untrue, this is misrepresentation. When entering into a business contract, a variety of statements are usually made setting out the details and background of the deal. 1.10 The Government is to end temporary insolvency measures for UK companies post Covid-19
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