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Misrep 5

The Misrepresentation Act 1967 allows claims for misrepresentation even if the defendant did not act on reasonable grounds, reversing the burden of proof from the claimant to the defendant. It distinguishes between fraudulent and negligent misrepresentation, allowing for similar damages in both cases, although some legal scholars argue that the culpability should lead to different damages. Additionally, the Act provides for damages under S.2(2) where the claimant can rescind the contract, with the measure of damages being less than those under S.2(1).

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3 views1 page

Misrep 5

The Misrepresentation Act 1967 allows claims for misrepresentation even if the defendant did not act on reasonable grounds, reversing the burden of proof from the claimant to the defendant. It distinguishes between fraudulent and negligent misrepresentation, allowing for similar damages in both cases, although some legal scholars argue that the culpability should lead to different damages. Additionally, the Act provides for damages under S.2(2) where the claimant can rescind the contract, with the measure of damages being less than those under S.2(1).

Uploaded by

bilalazhar462
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Write a note on the Misrepresentation Act 1967?

Misrepresentation is defined as an act of tricking someone to enter a contract on the basis of a


false statement of fact or law which is unambiguously made to the other party. The
Misrepresentation Act 1967 under its S.2(1) states that a claim for misrepresentation can even
be made where the Defendant has not acted on reasonable grounds in making the
representation to the Claimant. Two things need to be noted. Firstly, it reverses the burden of
proof. Under the fraudulent misrepresentation, it was the claimant who had to bear the burden
of proof. Secondly, he had to prove fraud committed by the defendant which means the claimant
had to show actual dishonesty or recklessness to the truth of the statement; Derry v Peek.

Now as it only requires the belief on reasonable grounds, this can be construed as a form of
negligent misrepresentation. Under this as per virtue of S.2(1) the Claimant could be awarded
the same damages that would be awarded under the fraudulent misrepresentation. Under the
latter, it has been held to cover all the losses flowing from misrepresentation; Yam Seng Pte v
International Trade. Further in Doyle v Olby it has been decided that remoteness of damages is
not an issue under tort of deceit here. The Court in Royscott v Rogerson has accepted that the
same damages which are based on reliance interest will be awarded to successful claims in
Statutory misrepresentation under S.2(1) of the 1967 Act.

This approach however, has been criticized by the Ewan McKendrick who thinks that though the
Act uses analogy with tort of deceit, the court is wrong to assume that Parliament would
anticipate equivalent damages in both cases where the defendant fails to prove that he did not
take reasonable care and the case where defendant has acted on fraudulent bases. According
to him and also Hooley agrees with McKendrick that since there is difference of culpability in
both cases, therefore, the damages subsequently awarded should also be different.

S.2(2) of the 1967 Act states that damages can also be claimed where the claimant has an
available right to rescind the contract. This however, is an equitable remedy and the court has
full discretion in considering all the facts of the case and then to reach a decision. This rule has
been accepted in Salt Stratstone Specialist. The measure of damages under S.2(2) will be less
than those under S.2(1) as per s.2(3). This has been found to be the case in Williams Sindall v
Cambridgeshire County where the Court held that measure of damages will be the difference
between the situation had the misrepresentation not been made and the value the claimant
received in the case. Since this right co-exists with right to rescission, it is also available in
cases of the innocent misrepresentation where the Defendant genuinely believes in the truth of
his statement though it is later found to be false.

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