Property Misrepresentation

There are three types of misrepresentation that you can make a claim for:

1. Fraudulent misrepresentation - based on the law of deceit, this is where a statement was made knowingly, or without belief in its truth, or recklessly as to its truth.
2. Negligent misrepresentation – where a statement is made carelessly and in breach of a duty owed by the seller or supplier to the buyer to take reasonable care that the statement is accurate.  If no “special relationship” exists between you and the seller or supplier as the contracting parties, there may be a misrepresentation under section 2(1) of the Misrepresentation Act 1967 where a statement is made carelessly or without reasonable grounds for believing it to be true.
3. Innocent misrepresentation - where a statement is made that is neither fraudulent nor negligent misrepresentation; generally silence is not a misrepresentation.  If you were buying a house or car for example, the doctrine of caveat emptor  (“let the buyer beware”) applies and the seller has no duty to disclose problems to you voluntarily.  While there is no obligation on the seller to correct your misapprehension, the seller must not mislead by telling only part of the truth.  Similarly, if the seller subsequently becomes aware that something has changed before the contract is concluded, he must correct his earlier statement if it is no longer true.

The general remedy for misrepresentation is cancelling or setting aside the contract so that both parties are put back in the position they were in before they made the contract. Damages or financial compensation will also be available in some circumstances, either in addition to or as an alternative to rescinding the contract; a court cannot order both for innocent misrepresentation.

There are, however, steps that can be taken to limit liability for a false pre-contractual statement, for example, the use of exclusion or non-reliance clauses in a contract.  A clause attempting to limit or exclude liability for misrepresentation must satisfy the test of reasonableness to be enforceable.

Many misrepresentations of fact that arose during the sale of property can usually be resolved fairly quickly. 

We have successfully recovered damages and avoided legal proceedings when a buyer later finds that statements made by the seller about the property they were buying are subsequently found to be incorrect.  It is important to act promptly though as any delay can be construed as having “affirmed” the contract.

If you are concerned, or believe you have a claim for misrepresentation for a property, please contact our expert Adam Manning on 02392 660261 or amanning@biscoes-law.co.uk