Types of Misrepresentation: Innocent, Negligent, and Fraudulent

Innocent Misrepresentation: When Statements Are Made in Good Faith

Negligent Misstatement: Duty of Care in Professional Relationships

Fraudulent Misrepresentation: Intentional Deception and Its Consequences

Proving Fraudulent Misrepresentation: Key Legal Requirements

For a claim of fraudulent misrepresentation to be established, the representee must demonstrate that:

1. He/she was “materially influenced” by the misrepresentation to the point of being induced into a contract, that, but for the misrepresentation, they otherwise would not have entered into, had it not been for the misrepresentation; and
2. That they have incurred losses as a direct consequence of the misrepresentation.

Assessing Representations: The Reasonable Person Test

The representations in question are assessed objectively, according to the impact that the statement can be expected to have on a reasonable person in the position and with the known characteristics of the actual representee. Furthermore, the representation need not be the only factor that induces the representee, but it must be a material factor. It must be such that a reasonable person, familiar with the facts of the matter, would be compelled to enter into the contract without questioning the statement made.

Causal Link: Connecting Misrepresentation to Losses

In respect of damages, there ought to be a direct causal link between the defective goods or services, and the losses incurred.

Remedies for Misrepresentation: Rescission, Termination, and Damages

Depending on the type of misrepresentation made, the claimant may be entitled to rescind or terminate the contract, and/or seek damages.

Restoring the Representee: Seeking Pre-Misrepresentation Position

Where the representation became a term of the contract, the representee may be entitled to ask the court to put him/her in the position they would have been had it not been for the misrepresentation.