A misrepresentation is an untrue statement, which induces the other party to enter into the contract. A misrepresentation may be fraudulent, negligent misstatement, or wholly innocent. The applicable remedy depends on the nature of the misrepresentation. In order for a representation to amount to an actionable misrepresentation it must be:
b)one of fact as oppose to intention, opinion, or law;
c)The statement must be addressed to the party who claims to have been misled;
d)it must be the chief reason which induced the other party to enter the contract. If the representation that is being challenged satisfies these four requirements, then it is an actionable representation.
Statement of Fact or Opinion
A statement which is made to the other party that is false and induces him to enter into the contract, this is an actionable misrepresentation. The false statement must be one of fact and not of law because no one can misrepresent the law since everyone is presumed to know the law. A statement of opinion is not actionable per se as a misrepresentation because it is not a statement of fact. In Bisset v. Wilkinson, the respondent purchased from the appellant, two plots of land in New Zealand for the purpose of sheep farming. During the negotiations, the appellant told the respondent that, if the place was worked properly, it would carry two thousand sheep. The respondent, it was admitted, bought the place believing that it would carry two thousand sheep. As both parties were aware, the appellant had not and, so far as appeared, no other person had at anytime carried on sheep farming on the land. In an action for rescission for misrepresentation, Sim J. said: In ordinary circumstances, any statement made by any owner who has been occupying his own farm, as to its carrying capacity would be regarded as a statement of fact…. This, however, is not such a case … in these circumstances. The plaintiff were not justified in regarding anything said by the defendant as to the carrying capacity as being anything more than an expression of opinion on the subject. Their Lordships concurred in their view on the matter, and therefore held that the purchaser had no right to rescind the contract since an erroneous opinion stated by the party affirming the contract, though it has been relied upon and has induced the contract on the part of the party who seeks rescission, gives no title to relief unless fraud is established. The ratio decindendi of this decision is that the respondent had no previous or present knowledge of the capacity of the land, neither was he an expert in sheep farmingSo in the opinion of the Court the most he could have averred was a mere opinion. However, in certain circumstances, an opinion because it presupposes the possession of certain knowledge, may be an actionable misrepresentation. In Smith v Land and House Property Corporation, the vendor of an hotelier described it as let to a Mr. Frederick Fleck, a most desirable tenant. The tenant was in fact in arrears with his rent. It was held that the statement was not a mere expression of opinion because the vendor was impliedly stating that he has facts, which justifies his opinion. The court deemed the vendor to have knowledge of particular facts; therefore the ‘opinion’ was regarded as a misrepresentation of fact, which induced the other party to enter into the contract. The decision in Bisset’s case was followed in Esso Petroleum Co. Ltd. v. Mardon. Esso’s experienced representative told Mardon that Esso estimated the through-put of petrol on a certain site would reach 200,000 gallons in the third year of operation, and so persuaded Mardon to enter into a tenancy agreement in April 1963 for three years. Mardon did all that could be expected of him as tenant but the site was not good enough to achieve a through-put of more than 10,000 gallons. In July 1964 Mardon gave notice to quit, but Esso...