Pre-contractual statements and misrepresentation. It is possible to view pre-contractual statements in more than one light: if the statement is PROMISSORY in nature it may be held to be part of the final contract – and be incorporated as a term of the contract
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It is possible to view pre-contractual statements in more than one light:
i.Mere ‘puffs’ of sales talk – for instance, a phrase such as, ‘you won’t regret buying this stereo from me’. Such phrases have NO LEGAL EFFECT – but are seen as sales talk.
ii.Representations – statements of fact made prior to the contract that do not become terms of the contract
iii.Terms – statements made prior to the contract that are held to be actual terms of the contract
Whether a pre-contractual statement is regarded as a mere representation or a term is significant in relation to any damages that might be payable to the wronged party and the wronged party’s ability to set the contract aside.
The courts make use of various guidelines in an attempt to work out what was the INTENTION of the person making the statement – and they do this OBJECTIVELY. If they consider the person making the statement intended to bind himself in the future by his statement, then this element of ‘futurity’ is likely to encourage the courts to see the statement as being a term of the final contract.
Schawel v Reade 1913
Ecay v Godfrey 1947
Couchman v Hill 1947
Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd 1965
Oscar Chess Ltd v Williams 1957
Routledge v McKay 1954
McInery v Lloyd’s Bank Ltd 1974
- a representation will not be actionable just because the representee interprets it as being false – it will only be actionable if on a ‘reasonable’ interpretation the statement, which can be by words or conduct, could be interpreted as being false, an objective test.
Gordon v Sellico 1986
This case therefore shows that ‘conduct’ can amount to a misrepresentation
The Court of Appeal held that liability under section 2 (1) of the Misrepresentation Act 1967 depended on four elements:
a) a misrepresentation made by one person to another;
b) a subsequent contract between them;
c) consequential loss and
d) an absence, at the time the contract was made, of a belief or reasonable grounds for belief in the truth of the facts represented.
This case is generally cited as authority for the fact that there is NO GENERAL RULE OF DISCLOSURE – which means that you do not have to tell the other party things that would affect his decision to contract.
Demonstrates 2 points:
Are not normally actionable but may be if the person stating them does not genuinely hold that opinion or belief - Bisset v Wilkinson 1927 - one has to take account of:
The topic of misrepresentation will be continued in the next lecture.