The Misrepresentation Act 1967
The Misrepresentation Act 1967 provided, for the first time, a remedy of
damages for non-fraudulent misrepresentation. The remedy is available
where the person would have had a remedy, if the misrepresentation had
been fraudulent. This provision is found in s.2(1), and is as follows:
Where a person has entered into a contract after a misrepresentation has
been made to him by another party thereto and as a result thereof he has
suffered loss, then, if the person making the misrepresentation would be
liable to damages in respect thereof had the misrepresentation been
made fraudulently, that person shall be so liable notwithstanding that
the misrepresentation was not made fraudulently, unless he proves that
he had reasonable ground to believe and did believe up to the time the
contract was made that the facts represented were true.This section of the Act places a burden on the defendant to prove that it was
both reasonable to believe, and that he did in fact believe, in the truth of his
statements. Note that in this way, unlike the common law requirement to
prove liability, the burden of proof shifts to the maker of the statement to
disprove negligence, once misrepresentation has been alleged. This burden
is a heavy one to discharge, as seen in the following case.
Once it is decided that damages should be awarded, then the issue arises as
to the basis on which they should be assessed. Traditionally they are
Misrepresentation 177Howard Marine v Ogden (1978)
The hirer of some barges were told their carrying capacity by the
owners, who looked up the information in Lloyds register (the
established authority on this issue). In fact, on this occasion (and very
unusually) the register was wrong, and the hirers were given wrong
information, causing them inconvenience. On investigation the correct
information was found on the owner’s records at their main office. The
owners had done what most people would have regarded as a
reasonable practice, but since they owned the information, and made
false statements, what they said was held to be a misrepresentation,
albeit not a deliberately deceitful one. This shows that the burden of
disproving misrepresentation is a very heavy one indeed.Applying the above case, if a person selling a house is asked if the woodwork
is sound, and replies that it is, and later some woodworm is found in the
corner of the roof, he would be liable for misrepresentation, as he owns the
house.What could he do to avoid such a situation?