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Misrepresentation and answers to enquiries

This article deals with a number of issues that arise when buying and selling property:
  • "Not so far as the vendor is aware" - what exactly does this phrase mean? Is it safe to use it?
  • Missing fixtures that were there on inspection and which have been lifted prior to exchange - is there any liability if the seller does not tell the buyer that they have been taken away?
  • Do entire agreement clauses work?
  • Do exclusion clauses work?
  • If there is a misrepresentation, will the contract be rescinded or will the court award damages in lieu?
Gary Webber
Revised June 2012

Starting point

When confronted with a misrepresentation issue the two core provisions to have in mind are (i) s2 of the Misrepresentation Act 1967 and (ii) the terms of the contract, the key provisions of which will usually be contained in standard conditions.

Misrepresentation Act 1967

Section 2(1) of the 1967 Act is in the following terms:
    "Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable nowithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable grounds to believe and did believe up to the time of the contract was made that the facts represented were true."
The key points to note about the section are that:
  • It establishes a duty of care - there is no need to establish that it was reasonably foreseeable that if a misrepresentation was made a loss would be suffered.

  • It reverses the usual burden of proof - so that once it is established that there has been a misrepresentation it is for the person who made the representation to prove that he had reasonable grounds for believing that the representation was true.

  • The person who made the representation must prove that he had reasonable grounds to believe it was true up to the time of the contract.
Section 2(2) of the 1967 Act deals with remedy of rescission and the ability of the court to award damages in lieu or rescission. Thi ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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