Misrepresentation In Business Law

Introduction

Misrepresentation is a form of distortion whereby a person is persuaded to enter into a contract entirely or partly by a false statement of fact, not opinion or intention made by the other contracting part. According to Law of Contract misrepresentation refers to a false statement of past or present fact, not law or opinion, made by one party to another before or at the time of the contract concerning some matter or circumstance relating to it . A misrepresentation may be made fraudulently, negligently, or non‐negligently (innocently).

The Consequences of Misrepresentation

• Cancellation of contract on the ground of fraudulent misrepresentation.

Therefore in this case the cancellation of the contract may be due to fraudulent misrepresentation

Damages

In this case whether the representee decided to cancel or stand by the contract, he/she may in addition be entitled to recover damages in respect of any patrimonial loss by misrepresentation, depending on the state of mind with which the representation was made. According to the case of Doyle v Olby (Ironmongers) Ltd [1969] the court hold that the defendant is bound to make compensation for all the actual damage directly flowing from the fraudulent inducement therefore it does not lie in the mouth of the fraudulent person to say that they could not have been reasonably foreseen.

Question

A contract where the consent is obtained by misrepresentation is voidable at the option of the aggrieved party Thus Mistake refers to erroneous belief about something. In the case of Thabo and Lamiki, at the time of the purchase Thabo was not aware of the fact that the car was the 2004 model therefore he was under false belief that the model was of 2010. Thus in this case Lamiki obtained Thabo’s consensus by improper means not by error because it was evidently that Thabo was aware that the car was 2004 model. In the case of Du Toit v E Atkinson's Motors Bpk, The appellant, enticed by an advertisement of the respondent in a newspaper offering a "Mercedes-Benz 350, 1979" for sale, had negotiated with the respondent for the purchase of the vehicle and had agreed orally with the respondent to purchase the vehicle. After the respondent had the vehicle registered, the appellant returned to the respondent's premises and, at the request of the respondent's sales manager, signed a document as purchaser without reading any of the printing on it. The document contained a provision excluding the liability of the respondent in connection with any representation, the year of manufacture of the vehicle. About three months later the appellant discovered that the vehicle was a 1976 model. He then instituted action in a Provincial Division against the respondent for