Contract Law critical evaluation questions.

..whilst a representation may become a term the opposite is also true in that a term may
provide evidence of a representation and this would of course allow the representee to
claim the remedies available under misrepresentation. At one time it might have been
important to establish a breach of a term rather than a misrepresentation since, with the
exception of fraudulent misrepresentation; the remedies for breach of contract were
more generous. This is no longer the case since the passing of the Misrepresentation
Act 1967”- Paul Richards, Law of Contract (13th Edition p. 289) Explain and critically
evaluate this statement citing relevant authorities.

Ans
To get a very good mark, you must critically evaluate the statement and discuss the
relevant law in the context of the quotation.

Pre-contractual statements may be terms and/or representations. The test is the

common intention of the parties. Objective test – consider relevant guidelines.
Timing of statements;
importance indicated by the buyer (Bannerman v White); relative knowledge of the
parties (Oscar Chess v Williams; Dick Bentley v Harold Smith Motors); verification (Ecay
v Godfrey), contract reduced to writing. For example, if the claimant stressed the
importance of the statement it is more likely to be a term. Similarly, if the statement was
made by an expert to a non-expert and /or the claimant sought verification of the
assurance just before the contract. Conversely, if the maker of the statement had told
the claimant to check, then the statement is more likely to simply be a representation.
Remedies for breach
damages available for all breaches. Aim= loss of expectation/bargain- Robinson v
Harman. If loss of bargain is too speculative then damages based on reliance loss may
be awarded – Anglia TV v Reed. Can only claim for losses that are not too remote –
Hadley v Baxendale. Explain the two limbs. A claimant is bound to take reasonable
steps to mitigate loss. Onus on defendant to show failure to mitigate- British
Westinghouse. Termination may be available (in addition to damages) if the contract has
not been completely performed and there has been breach of a condition or very
serious breach of an innominate term. Common law remedy which will be barred by
affirmation.
Misrepresentation.
For a representation to be a misrep. It would have to be an untrue statement of fact (not
intention or opinion) made by the other contracting party and which was an inducement
to enter the contract. Statements of honest reasonably held intentions and opinions are
not actionable (Bissett v Wilkinson). Normally silence will not amount to a misrep. But
may do so in limited circumstances eg conduct (Spice Girlsv Aprilia), where there’s a
fiduciary relationship and a half-truth (Curtis v Chemical Cleaning and Dyeing). Must be
an inducement (Attwood v Small) but no obligation to verify (Redgrave v Hurd).
Remedies for misrepresentation
Rescission is potentially available for all types of misrepresentation. Aim = restitution. It
is an equitable remedy and therefore subject to the equitable bars such as delay and
affirmation. It is also barred where restitution is impossible. Damages have always been
available in the tort of deceit (Derry v Peek) if the statement (s) was/were made
fraudulently, but deceit may be difficult to prove. Coverall consequential losses and the
measure in tort is to put the claimant in the position the claimant would have been in if
the misrepresentation had not been made. Under s2(1) Misrepresentation Act 1967
damages may be awarded unless the maker of the statement honestly believed the
statement to be true on reasonable grounds up to the time of the contract. Difficult
burden of proof to discharge(Howard Marine Dredging v Ogden).The court in Royscot v
Rogerson interpreted 2 (1) literally and held that damages should be the same as for
fraudulent misrep. and therefore cover ALL consequential losses. In East v Maurer
damages were awarded for loss of profit but they were calculated on a different basis to
loss of profit resulting from breach. Damages are awarded on a tortious basis. If the
misrep. had not been made the claimant would not have bought the particular business;
he would have bought a similar one. So damages were based on the difference
between the profit the claimant actually made and the profit he would have made if he
had bought a similar business.
Discuss and critically evaluate the above statement and reach a reasoned conclusion.

1. Contextual Considerations:
o The significance of representations evolving into contractual terms may
vary depending on the nature of the contract and the intentions of the
parties. In complex commercial transactions, parties often negotiate
detailed contractual terms that may supersede any initial representations,
whereas in consumer contracts, pre-contractual representations may carry
greater weight.Bannerman v White (1861): This case illustrates the
significance of pre-contractual representations in determining the basis of
the contract. The court held that a specific representation regarding the
absence of sulphur in hops was fundamental to the contract's formation,
emphasizing the importance of representations in shaping contractual
obligations.
2. Impact on Contractual Certainty:
 o While the fluidity between representations and terms may reflect the
evolving nature of contractual negotiations, it could also introduce
uncertainty and ambiguity into contractual relationships. Ambiguous
statements made during negotiations may inadvertently become
contractual terms, leading to disputes over the interpretation and
enforceability of the contract. Oscar Chess Ltd v Williams (1957): In this
case, the court emphasized the need for clarity and specificity in
determining whether a statement constitutes a contractual term or a mere
representation. The court considered factors such as the parties'
expertise, the subject matter of the statement, and the context of the
negotiations to ascertain the parties' intentions.
3. Role of Intention:
o The determination of whether a representation constitutes a contractual
term often hinges on the parties' intentions at the time of contracting.
Courts may assess factors such as the parties' conduct, the context of the
negotiations, and any written agreements to ascertain their intentions.
However, discerning the parties' subjective intentions can be challenging
and may require extensive factual inquiry. Ecay v Godfrey (1947): Here,
the court emphasized the importance of discerning the parties' subjective
intentions in determining the status of a statement. The court considered
whether the statement was made with the intention of inducing the other
party to enter into the contract and whether it was sufficiently specific to
constitute a contractual term.
4. Risk of Misunderstanding:
o The blurring of the distinction between representations and terms may
increase the risk of misunderstandings between parties. Parties may
inadvertently rely on statements made during negotiations as contractual
terms, only to realize later that they do not have legal force. This can lead
to disputes and undermine the efficacy of the contract as a mechanism for
allocating rights and obligations. Heilbut, Symons & Co v Buckleton
(1913): This case illustrates the risk of misunderstanding when
representations are not clearly distinguished from contractual terms. The
court emphasized the need for parties to exercise caution and diligence in
distinguishing between representations and terms to avoid misconceptions
and disputes.
5. Need for Clarity in Drafting:
o Given the potential for representations to transform into contractual terms,
there is a heightened need for clarity and precision in contract drafting.
Parties should clearly delineate between statements of fact, expressions
of opinion, and contractual commitments to minimize the risk of
 unintended consequences and facilitate the interpretation of the contract
by courts. Interfoto Picture Library Ltd v Stiletto Visual Programmes
Ltd (1989): In this case, the court highlighted the importance of clear and
unambiguous language in contractual agreements. The court emphasized
that parties should ensure that representations are expressly incorporated
into the contract's terms to avoid uncertainty and ambiguity.
6. Judicial Interpretation:
o Judicial decisions play a crucial role in shaping the boundaries between
representations and contractual terms. Courts must strike a balance
between upholding the parties' reasonable expectations and preserving
the certainty and predictability of contract law principles. However,
differing judicial approaches may lead to inconsistent outcomes,
complicating the legal landscape for contracting parties. Petroleum v
Mardon (1976): This case demonstrates the courts' role in interpreting
contractual terms and resolving disputes arising from representations. The
court emphasized the principle of contractual interpretation based on the
parties' reasonable expectations, balancing the need for predictability with
the need to uphold the parties' intentions.

1. Legal Certainty:

Legal certainty refers to the principle that laws should be clear, predictable, and
accessible to all individuals. In the context of the Misrepresentation Act 1967, legal
certainty ensures that parties understand their rights and obligations regarding
misrepresentations, promoting fair and efficient resolution of disputes. Redgrave v
Hurd (1881): In this case, the court emphasized the importance of legal certainty in
determining the consequences of misrepresentation. The court held that the plaintiff
was entitled to rescind the contract based on the defendant's fraudulent
misrepresentation of the property's value, providing certainty regarding the remedies
available for fraudulent misrepresentations.

2. Consumer Protection:
o Statute: Misrepresentation Act 1967
o Caselaw: The Act enhances consumer protection by offering redress to
individuals who enter into contracts based on false or misleading
statements, aligning with broader public policy objectives aimed at
safeguarding vulnerable parties.
3. Efficient Remedial Mechanism:
o Statute: Misrepresentation Act 1967
o Caselaw: By offering a distinct set of remedies for misrepresentation,
including rescission, damages, and potentially punitive measures for
 fraudulent misrepresentation, the Act provides an efficient mechanism for
rectifying contractual injustices.

Against:

1. Complexity of Application

The Misrepresentation Act 1967 provides a statutory framework for addressing

misrepresentations in contract law. However, the application of this statute can be
complex, particularly in categorizing misrepresentations and determining the
appropriate remedies.

In the case of Royscot Trust Ltd v Rogerson [1991] 2 QB 297, the court faced the
challenge of navigating the intricacies of misrepresentation law. The case involved a
dispute over the sale of a motor vehicle, where the buyer alleged that the seller had
misrepresented the vehicle's condition.

The court's deliberations in Royscot Trust Ltd v Rogerson exemplify the complexities
inherent in determining the nature and extent of misrepresentation. Factors such as the
seller's knowledge of the vehicle's defects, the extent of disclosure to the buyer, and the
parties' respective conduct all influenced the court's decision-making process.

Despite the statutory framework provided by the Misrepresentation Act 1967, the court
had to grapple with interpreting and applying the law to the specific facts of the case.
This process often involves a detailed analysis of evidence, witness testimony, and
legal arguments, contributing to protracted legal proceedings and uncertainty for the
parties involved.

Ultimately, the case of Royscot Trust Ltd v Rogerson serves as a poignant example of
the challenges faced by courts in adjudicating misrepresentation claims. It underscores
the need for a nuanced approach to misrepresentation law, one that considers the
complexities of each case and strives to achieve fairness and justice for all parties.

2. Inequities in Remedies:

The Misrepresentation Act 1967 endeavors to furnish equitable remedies for innocent
parties who suffer losses due to misrepresentations. However, critics contend that the
Act's provisions may inadvertently tilt the scales in favor of claimants, leading to
disproportionate liabilities for defendants. This perceived imbalance raises concerns
about fairness and the risk of opportunistic litigation, particularly in cases involving
negligent or innocent misrepresentations.

Case law, such as Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158, exemplifies the
potential for inequities in remedies under the Misrepresentation Act 1967. In this case,
the court awarded substantial damages to the claimant based on an innocent
misrepresentation by the defendant. While the court sought to redress the claimant's
losses, critics argue that such rulings may impose undue financial burdens on
defendants, especially in situations where the misrepresentation was unintentional or
made in good faith.

Furthermore, the availability of rescission as a remedy under the Misrepresentation Act

1967 can exacerbate the perceived inequities. Rescission allows innocent parties to
unwind the contract and return to their pre-contractual positions. While rescission aims
to restore parties to their original positions, it can pose logistical challenges and
financial burdens, particularly if significant time has passed since the contract's
formation. A recent case that exemplifies the challenges in applying the
Misrepresentation Act 1967 is Al-Hawasi v Nottingham City Council [2020] EWHC 3110
(QB). In this case, the claimant alleged that the defendant, Nottingham City Council,
made negligent misrepresentations regarding the condition of a property leased to the
claimant. The claimant argued that they relied on these misrepresentations to their
detriment and sought damages under the Misrepresentation Act 1967.

The court's analysis of the case underscored the complexities involved in assessing the
nature and extent of the alleged misrepresentations. It required a thorough examination
of the facts and evidence presented by both parties to determine the validity of the
claimant's allegations. Additionally, the court had to consider the applicability of the
statutory provisions and relevant precedents to the specific circumstances of the case.

While the court ultimately ruled in favor of the claimant and awarded damages, the case
highlighted the intricate nature of claims brought under the Misrepresentation Act 1967.
It emphasized the need for careful scrutiny of all relevant factors and evidence to
ensure a fair and just outcome for both parties involved.

3. Need for Modernization:

The nature of commercial practices and the emergence of new challenges necessitate
periodic review and potential reform of the legislation.

One area where legislative amendments could prove beneficial is in clarifying

ambiguous provisions within the Act. Over time, legal interpretations and precedents
may lead to uncertainty or inconsistencies in the application of certain provisions.
Clarifying these provisions through legislative reform can enhance legal certainty and
facilitate more consistent judicial decisions.

Moreover, harmonizing remedies across jurisdictions is essential, particularly in an

increasingly globalized business environment. Inconsistencies in remedies for
misrepresentation between different legal systems can create challenges for parties
engaged in cross-border transactions. Legislative reforms that promote alignment and
consistency in remedies can contribute to greater predictability and efficiency in
resolving disputes arising from international contracts.
Furthermore, societal norms and technological advancements have evolved since the
enactment of the Misrepresentation Act 1967, necessitating updates to address
contemporary issues. For example, the rise of online contracts presents unique
challenges not explicitly addressed in the Act.

The case of Petromec Inc v Petroleo Brasileiro SA [2005] EWCA Civ 1031 highlights the
need for legislative amendments or clarifications to the Misrepresentation Act 1967. The
areas that require attention are distinguishing between statements of fact and opinions,
addressing international transactions, modernizing the legal framework for online
contracts and enhancing remedies for misrepresentation. The case underlines the
necessity for regular review and reform of the Misrepresentation Act 1967 to ensure its
relevance in today's world, especially in light of digital commerce and international
transactions.