What is a Misrepresentation Claim?

Whilst many claims for misrepresentation arise out of property transactions, particularly following the sale of residential property, misrepresentation claims can arise as a result of any contract for the sale of goods or services. For example, a misrepresentation claim can arise from a contract for the sale of a medical or legal practice, a contract of insurance, a contract for the sale of shares, a hire contract and a contract of guarantee to name a few. In fact, any contract can give rise to a misrepresentation claim.
Man and woman talking at desk

Types of Misrepresentation Claims

Misrepresentations can be made in the following ways:

  • Fraudulently where the party making it did not believe in its truth or was reckless as to its truth.
  • Negligently where the party making the misrepresentation made it carelessly or without having reasonable grounds for believing in its truth.
  • Innocently where the party making it can show that he had reasonable grounds for believing it to be true even though it was false.

Claims for misrepresentation are governed by the common law and by statute namely the Misrepresentation Act 1967.

What Do You Need to Make a Misrepresentation Claim?

For there to be a misrepresentation, there must have been a false statement of fact or law that induced the other contracting party who relied upon it to enter into the contract causing that person to suffer loss.

Property Misrepresentation Claims

In residential property transaction cases, the seller’s misrepresentation is often made in the Seller’s Property Information Form (PIF). The PIF contains a list of questions that the prospective buyer puts to the seller about the property being sold. The seller does not have to answer these questions (in which case the buyer may become concerned) but if the seller does answer a question, the seller should take great care to ensure that the answer given is accurate.

Importantly, if a seller answers a question in the PIF the law expects the seller to have taken reasonable steps to ensure that the answer is correct. In some circumstances, the seller’s answer requires the seller to have made such investigations as would be reasonably expected from the seller under the guidance of a conveyancer, to ensure that the answer is true and correct.

Remedies

The remedy for a successful misrepresentation claim is damages and/or rescission cancelling the contract depending upon the type of misrepresentation that was made and the circumstances of the case.

Where a misrepresentation was made fraudulently, the party making the misrepresentation will become liable to pay damages to the innocent party at a more generous level. In other words, the party who made the fraudulent misrepresentation will be liable to compensate the innocent party for all losses directly suffered by the innocent party, even if those losses were not foreseeable or anticipated.

Our solicitors have successfully brought claims for misrepresentation following the purchase of property where the seller has given false, incorrect or misleading information to the buyers.

Please contact us if you are thinking of making a misrepresentation claim