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Published: Fri, 02 Feb 2018
Allows for a remedy of recession and sometimes damages
The statement made by a party to a contract, that a thing relating to it is in fact in a particular way, when he knows it is not so. It means a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract. A misrepresentation allows for a remedy of recession and sometimes damages depending on the case and type of misrepresentation.
Misrepresentation can either be by words or by conduct, but not everything that has been said or have been done reserves rights of constituting a misrepresentation. Generally, statements of opinion or intention are not are not included in the context of misrepresentation.
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. But those false statements that are just expressing an opinion of one usually are not considered false statements of fact.
Types of misrepresentation:
There are three types of misrepresentation.
Fraudulent misrepresentation is a situation in which an individual or entity has taken deliberate steps to deceive intentionally to one or more other parties. The deception may involve issuing statements that are known to be untrue or to deliberately omit relevant facts or information that ultimately lead to some type of loss.
Fraudulent misrepresentation is one of the three recognized varieties of misrepresentations in contract law. Basically, it means that you not only lied or misrepresented something about a transaction, but that you did it on purpose, in order to trick the other party. Therefore, it is the most serious of all the types of misrepresentation and has the worst penalties. In many jurisdictions, this type of negligent misrepresentation is punishable by fines, prison, or a combination of the two. Often, the party found guilty of the misrepresentation is ordered to make some type of recompense to the injured party.
CASE UNDER FRAUDULENT:
The case between John and Gina can come under the fraudulent misrepresentation because in this case a false statement by Gina to John can be seen. When the party passing the statement is aware that it is untrue or disregards the probability of it being false but still making the false statement, it is considered to be fraudulent misrepresentation. As a result, the plaintiff suffers damages and loss.
If we take Gina’s statement into consideration, “It has large memory, and is reliable”, we can find out that it’s a false statement because at the end we see that John run out of memory and finds the computer slow in saving the material. This statement of Gina can lie under the fraudulent misrepresentation because John was relying on her statement. If we focus on John’s contribution towards buying, we see that he consults his friend for buying. His friend told him that he is running out of time and said that it looks good and is also cheap. So John falls for her statement. 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. After getting know about the condition of computer, john calls Gina and she ask him to get
the computer back to the shop but because he was anxious and don’t want to disturb his flow he continued typing. After six months, when he couldn’t save his novel because of running out of memory, getting in distress, he throws the computer out of his window.
Negligent misrepresentation is a concept which arises in contract law. In general, misrepresentation refers to a situation in which someone makes a false statement for the purpose of making a deal, which results in harm of a person who relies on that statement. In the case of negligent misrepresentation, without knowing on the ground of knowledge whether it is true or not, makes a statement. The involvement of carelessness can be seen in negligent misrepresentation. For example, if a car dealer claims that they believe the previous car owner changed the oil without actually knowing it to be true; they may be committing negligent misrepresentation.
Negligent misrepresentation differs from innocent and fraudulent misrepresentation. Unlike a fraudulent misrepresentation, which requires that the person making the representation know it is false or incorrect and intend to deceive or mislead, a negligent misrepresentation merely requires that one fail to exercise reasonable care or competence to obtain or communicate information that is true or correct Misrepresentation in a contract does not necessarily provide grounds for a suit.
CASE UNDER NEGLIGENCE MISREPRESENTATION:
In my opinion the case between John and Gina can also underlie negligence misrepresentation. Gina works at the computer shop and she is just a sales girl, whose work is to sale computers. There could be a factor of negligence here because she might be informed with the wrong information regarding that computer by the owner of that shop. And she doesn’t know whether the information provided to her is true or not. Her intention might not be to fraud anyone but just to sale the computers with the information she is provided. She was not aware that the configuration she told to John was wrong. Because she passed the statement that it has a large memory and reliable but it was not like that because it ran out of memory when john was trying to save his novel.
One more point that proves Gina negligent but not fraud is that when John called her she told him to return back the computer so that she can check it out. If her intention was to do fraud with John then she wouldn’t have said that. And we know that if the person is unaware of the real facts, not having an intention to harm and passes a statement it comes under negligence misrepresentation.
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 other words, a statement made by a person, believing it to be true, that actually misrepresents some material fact. An innocent misrepresentation results, in essence, in mutual mistake of fact. Therefore, the only remedy to an injured party is generally rescission of the contract.
CASE UNDER INNOCENT MISREPRESENTAION:
In this case of John and Gina, according to my observation, Gina is innocent. She works in a computer shop and was just performing her duty as a sales girl. She is not an expert so what information she provided to John must be from her senior or owner of the shop. She definitely said false but she can’t say anything from her.
Even after provision of information regarding computer from Gina, John was hesitant so the very next day he brought his friend Hector who had a degree in computing from a local college to verify the authenticity of a computer, who said that he don’t have enough time and computer looks fine and surprisingly cheap.
So I consider Gina to be innocent. But now the question is that whether John will get the rescission or not?
In contract law, rescission has been defined as the unmaking of a contract between parties. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract. Mutual rescission, or rescission by agreement, is a discharge of both parties from the obligations of a contract by a new agreement made after the execution of the original contract but prior to its performance
When rescission is void?
It is unmaking (called setting aside) of a contract by a court in the interest of fairness and justice. However, the right of rescission may not be exercised where,
(1) It is not possible to restore both parties to their original (pre-contract) positions.
(2) Such step would upset the rights acquired by a third-party under the contract.
Rescission for this case:
In this case, it is not possible for John to have a rescission. This is because when John ran out of the memory, he threw away the computer from the window in anger. He shouldn’t have done that in order to get rescission. What he should have done is, return the computer in a good shape. But law does not promote injustice. John can definitely sue them for the damage and harm he got.
WORD COUNT: 1505
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