Actionable Misrepresentation

A misrepresentation is a false statement of fact made by one party to another, which whilst not being a term of the contract, induces the other party to enter the contract. In Museprime properties V. Adhill properties (1990) 36 EG 114, the judge referred, wire approval, to the view of Goff and Jones: Law of Restitution that, any misrepresentation which induces a person to enter into a contract should be a ground for rescission of that contract. If the misrepresentation would have induced a reasonable person to enter into the contract, then the court will presume that the represented was so induced, and the onus will be on the represent or to show that the represented did not rely on the misrepresentation either wholly or in part. If the misrepresentation would not have induced a reasonable person to contract, the onus will be on the misrepresented to show that the misrepresentation induced him to act as he did.
Once misrepresentation has been established, it is necessary to consider what type of misrepresentation has been made. There are three types of misrepresentation. They are, Fraudulent, Negligent and Innocent misrepresentation.
Fraudulent Misrepresentation: This type of misrepresentation is made fraudulently as the name implies. In Sule V. Aromire (1951) 20 NLR 20, the defendant advertised certain premises for sale. In order to prove the validity of his title, the defendant gave reference to a lawsuit which purportedly declared him the owner. In reality, the lawsuit was in respect to an adjoining property. When the plaintiff bought the property, he discovered that it’s validity belonged to third parties. The court held that this was a case of fraudulent misrepresentation, thus the defendant was held liable.
Negligent misrepresentation: This type of misrepresentation occurs when a person with a duty of care makes a false statement to his client intentionally or without caring to ascertain its truth. Orginally, negligent misrepresentation could only apply in cases where there was a direct contractual relationship between the representor and the representee. However, this has been extended to include person who are affected by the representation, although there is no contractual relationship with the representee. This was laid down by Lord Denning in Candler V. Crane Christmas & Co (1951) 2 KB 164, he stated that, the people upon which liability would rest include: accountants, surveyors, valuers and analysts, whose profession and occupation is to examine books of account and other things and to make reports on which other people other than their clients, rely in the ordinary course of business.
Lord Denning further classified the class of persons, apart from their direct clients, to which a duty was held as:
. Any third person to whom they themselves (the make of the statement) show the statement.
. Any person to whom they know their employer is going to show the accounts in order to induce them to invest some money.
Innocent misrepresentation: This is a false statement which the person makes honestly believing it to be true. See Derry V. Peek (1889) 14 App cas 337.
Actionable misrepresentation therefore is to make the contract voidable, giving the innocent party the right to rescind the contract or claim damages.

Nkechi Bright – Ewere