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Contract Law Essay Question: Misrepresentation
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Contract Law Essay Question on Misrepresentation
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Word Count: 1666A misrepresentation is an unambiguous false statement of fact which is addressed to the party
misled and induces that party to enter the contact. 1 As the statement suggests, there are various
constituent elements or absolutes of a misrepresentation. Whilst it is generally correct that
contracting parties do not owe a duty of care to disclose information and that an opinion can never
be treated as a statement of fact or law, there are exceptions to both situations rendering neither
absolute. This essay will analyse these exceptions and explore the rest of the absolutes needed to
constitute an actionable misrepresentation including falseness, unambiguity, inducement, and
reliance.
Is there a duty to disclose information?
In the law of misrepresentation, it is an absolute that there must be a statement which, as per
Denning LJ in Curtis v Chemical Cleaning & Dyeing Co Ltd 2, is “any behaviour, by words or conduct”
which could “mislead the other”. However, there is a general rule that contracting parities do not
owe a duty of care to disclose information relating to an agreement following Turner v Green3.
Although, this is not absolute as there are five exceptional situations in which such a duty is
imposed.
Firstly, a statement, even if not completely false, can be a misrepresentation if a failure to disclose
all the information relevant to the contract at hand makes it misleading. For example, in Nottingham
Patent Brick & Tile Co v Butler4, the buyer inquired as to whether there were any restrictive
covenants on the land. The solicitor for the seller declared he was not aware of any but failed to
mention that he had not read the documents which might have revealed such information. Similarly,
1
McKendrick E, Contract Law: Text, Cases and Materials (9th Edn, Oxford University Press 2022) p 558-559
2
Curtis v Chemical Cleaning & Dyeing Co Ltd [1951] 1 KB 805
3
Turner v Green [1895] 2 Ch 205
4
Nottingham Patent Brick & Tile Co v Butler (1885 – 86) LR 16 QBD 778
1
, Word Count: 1666
following Dimmock v Hallet5, an intentional suppression of material facts can render a statement
false. In this case, the claimant purposely failed to mention that the current tenants renting the
fertile land in question were about to leave, greatly overestimating the amount of rent which could
be obtained to encourage inducement.
Secondly, a failure to correct a representation which, although true when made, is known to have
since become false due to a change in circumstances, is a misrepresentation. Following Davies v
London and Provincial Marine Insurance Co 6, there is a duty to disclose such change in
circumstances. In this case, the plaintiff paid the defendant not to arrest an individual only for it to
be later discovered that the defendant did not have the grounds to do so.
Thirdly, if there is evidence of an active effort to disguise a defect, it be inferred to be a
misrepresentation. The authority for this exception is Schneider v Heath7 where a boat was placed in
water to hide damage to the underside which made it not seaworthy in order to induce the other
party to buy the vessel.
Fourthly, there is a well-established duty of care for contracts concerning a fiduciary or confidential
relationship. All material facts must be disclosed upon contracting because these relationships
impose duties of care on those to whom the confidence is entrusted.
Lastly, in contracts of utmost good faith (‘uberrimae fidei’), all material facts must be disclosed at the
time of contracting. A failure to complete this duty may result in the other party not holding up their
end of the agreement like in Lambert v Co-Operative Insurance Society8, where the failure to disclose
5
Dimmock v Hallet [1866] LR 2 Ch App 21
6
Davies v London and Provincial Marine Insurance Co (1878) LR 8 Ch. D. 469
7
Schneider v Heath (1813) 3 Camp 506
8
Lambert v Co-Operative Insurance Society [1975] 2 Lloyd’s Rep 485
2
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