Common Forms of False Representation
Occurs when one makes representation with intent to deceive and with the knowledge that
it is false. Example – A car repairer made representation told a customer more repair work was needed on their car than was necessary. This is done to elicit money out of the car owner than perform the actual job required.
Occurs when the defendant carelessly makes a representation while having no reasonable basis to believe it to be true. For instance, if a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another… with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable.
Example - A real estate broker tries to sell a house to a buyer, who stresses his need for peace and quiet. The broker promises that the house is very quiet. In reality, the house next door is undergoing a very noisy reconstruction. Although the broker did not know this, her promise that the house was quiet was made without her having any reason to believe that that was the case. She simply assumed it. This would be a negligent misrepresentation (had she known about the construction and lied about it, however, that would be a much more serious fraudulent misrepresentation.
Occurs when the representor had reasonable grounds for believing that his or her false statement was true. This type of representation primarily allows for a remedy of rescission, the purpose of which puts the parties back into a position as if the contract had never taken place. This is judged on both the nature of the innocent misrepresentation and the losses suffered by the claimant from it.
Example - Mr Redgrave, an elderly solicitor, advertised for a partner to join the business and buy the accompanying house. He said in an interview with Mr Hurd that the practice brought in £300 pa, when it was only £200 pa. Mr Redgrave showed him summaries that came to a £200 pa average income and said that the rest of the £300 figure was borne out by other papers in the office that he could check (in fact they showed no business). Mr Hurd did not inspect the papers, until he realised the truth just before completion of the agreement. He had signed the contract but he refused to go through.