Misrepresentation and Making Contracts Void

Misrepresentation is a type of tort that a defendant can be charged under civil law. Misrepresentation is a statement of fact made by one party to the contract (the representor) which while not forming a term of the contract, is yet one of the reasons that induce the representee to enter into the contract. A misrepresentation is simply a representation that is untrue.

It is also a false statement of fact made by one party to another, which, at the same time as not being a term of the contract, encourages the other party to enter the contract. The impact of an actionable misrepresentation is to make the contract voidable, giving the victims the right to withdraw the contract and/or claim damages.

Commonly, the plaintiff must show five elements in order to be successful in a misrepresentation suit. Firstly, the plaintiff must show that the defendant make a false statements that are just expressing an opinion usually are not considered false statements of fact.

There are three types of misrepresentation that may be made fraudulently, carelessly or innocently. Fraudulent misrepresentation is a statement of fact that made without knowing the truth. It was defined by Lord Herschell in Denny v Peak (1889) as a false statement “made knowingly, or without belief in its truth, or recklessly, careless as to whether it to be true or false”.

The statement is a lie and someone knows that it is a lie or disregards evidence that it is a lie in fraudulent misrepresentation. It is a situation where an individual or entity has taken deliberate steps to intentionally deceive one or more parties. The deception may be involved issuing statements that are known to be untrue or to deliberately omit relevant facts or information that ultimately lead to some types of damages. Often, the party who found guilty has to pay a sum of recompense to the injured party. The test of remoteness in deceit is that the injured party may pull through for all the direct failure incurred as a consequence of the fraudulent misrepresentation, in spite of foreseeable.

The case between John and Gina may be considered as fraudulent misrepresentation. This is because fraudulent misrepresentation because in this case false statement has been made to John by Gina. Fraudulent misrepresentation are considered when the party making the statement is aware that it is a false or disregards the probability of it being false but still making the false statement. As a consequence, the plaintiff suffers damages and loss. It can be said that this case is fraudulent misrepresentation because Gina did not tell the truth about the computer. Gina did not give a real detail about the computer to John. She only said that the computer is just the computer that compatible for John. Even though John remains hesitate but he already rely on Gina’s statement. The next day, John asks his friend Hector, who has a Degree in Computing from a local college. Hector has not enough time to check the computer but then John brought it anyway because he already relied on Gina’s statements yesterday moreover; the computer looks fine and cheap. John should never relied on Gina’s statement and he should get an advice from another computer expertise because Hector himself could not check the computer fully. So Hector has fallen to Gina’s first statement that is the computer is just the computer for him, large memory and reliable, fine and cheap. But after John starts typing, he notice there is something wrong with the computer, so he called Gina to complain and he had been asked to bring the computer back to the shop to be checked. But he refused to do that but after six months, the computer memory runs out and his last two chapters are lost. He collapses in distress and throw away the computer.

Negligence misrepresentation is happened when someone makes a false statement for the purpose making a deal, as a result the person who relies on his or her statement experiencing damages. When someone makes a statement without knowing whether it is true or not, this is under the case of negligence misrepresentation.

The case between John and Gina can also be considered as negligence. It can be negligence because Gina works at the computer shop and she does not know anything about the computer. All she knows is that she must sell the computer to the costumers. Maybe the computer that John has brought is not the one that supposes to be brought by anyone. The shop should inform Gina that the computer should not sell to anyone. Because the shop should know better about the computer and maybe it needs to be send back to the factory.

Innocent misrepresentation is when a person making a false statement but believe that the statement that made by him or her is true. This person may believe on the outdated information or incorrect information from someone else which that person has a reason to believe is true.

In this case between John and Gina, Gina is innocent. The reason behind this is that, she is just a salesgirl that sells computers in the shop. She is not an expert in computer. Her duty is only to sells computers to the customers and she is only doing her duty.

Rescission (setting aside the contract), is possible in all cases of misrepresentation. Rescission are use to “unwind” a contract; it is true, but important, to note that rescission disaffirms the contract (while most actions in contract, at least implicitly, affirm the existence and enforceability of the contract). Rescission is the unwinding of a transaction. This is done by bringing the parties, as far as possible, back to the position in which they were before they entered into a contract.

So for this case, it is impossible for John to have a rescission. This is because John had thrown away the computer. He should not do that, because in order to get rescission, he had to return the computer back to the shop in good shape. But in John’s case, he cannot have a rescission but he can sue for damages that he had abided.