A misrepresentation is an untrue statement of fact made by one party to the other, which induces

that party to enter into the contract.

During negotiations prior to the making of a contract a number of statements may have been
made. Some of these statements will have become incorporated into the contract and will
therefore be contractual terms. If the statement is untrue it will amount to a breach of contract. A
claim in breach of contract can be brought and damages for any loss suffered claimed.
A misrepresentation must be of fact, not of opinion or intention. Silence in itself can be regarded
as a misrepresentation. Similarly the truth but not the whole truth can be a misrepresentation.
An untrue statement is a misrepresentation only if it induces the person to whom it is made to
enter into a contract. It will have no legal effect if the untrue statement is not relied on. Thus if a
person makes his own investigation to test the truth of a statement made to him he cannot then
claim on the ground of misrepresentation. It may however be a misrepresentation if a person is
given the opportunity to make investigations but does not do so. Action can be taken by reason of
a misstatement even if that misstatement was not the only inducement to enter into the contract.
Misrepresentations are of a three kinds. Fraudulent, Negligent and Innocent Misrepresentation.
The remedies available depend on which type of misrepresentation was made.
Fraudulent misrepresentation.
An untrue representation will constitute fraudulent misrepresentation if it is made knowingly
recklessly or carelessly by the maker without belief in its truth or as to whether it be true or false.
A fraudulent misrepresentation is simply a statement that the maker does not honestly believe to
be true.
A fraudulent representation makes a contract voidable. The party who has been misled may avoid
the contract and sue for damages. This claim will not be for breach of the contract, but as a claim
in fraud.
It is for the party suffering the fraudulent misrepresentation to choose whether to affirm or of
avoid the contract. If he decides to avoid the contract, there is no need to issue proceedings. All
that needs to be done is to give notice by words or conduct, that the party refuses to be bound by
the contract. However if the other party then refuses to hand back what the misled party has paid
or transferred in consideration of the contract it will be necessary to apply to the court for a
formal order of rescission.
Negligent misrepresentation.
Negligent misrepresentation provides a remedy in damages. This is based upon the special
relationship existing between parties intending to enter into a contract.
Innocent misrepresentation

This is where the person making the representation had reasonable grounds for believing that the
statement made was true. Innocent misrepresentation provides an entitlement to damages but not
to rescind the contract.