How a representation becomes a misrepresentation 115A person who checks the truth of a statement cannot later say that the statement induced
the making a contract.
However, some statements of opinion imply statements of fact, as the following case shows.
Misrepresentations made without words
In Spice Girls LtdvAprilia World Service BV (2000)a company representing a pop group,
the Spice Girls, made an advertisement for another company. All of the Spice Girls took part
in the filming of this advertisement. Shortly afterwards, one of the Spice Girls left the group.
When the contract for the advertisement was signed, all of the group knew that one of them
was about to leave the group. It was held that the act of taking part in the filming amounted
to a representation by the company that it did not know at that time, and had no reasonable
grounds to believe, that one of the group intended to leave.
The statement must induce the other party to make the contract
A statement can amount to a misrepresentation only if it was one of the reasons why the
claimant made the contract. If a person makes a contract without checking the truth of a
statement, this suggests that the statement did induce the making of the contract.
Smith vLand and House Property Corporation (1884) (Court of Appeal)The claimants offered their hotel for sale, stating that it was occupied by ‘Mr Frederick
Fleck (a most desirable tenant)’. Before the sale went through, Mr Fleck went bankrupt. The
defendants discovered that for some time Mr Fleck had been badly in arrears with his rent.
They refused to go ahead with the purchase of the hotel, claiming that the statement that
Mr Fleck was a most desirable tenant amounted to a misrepresentation.
HeldThe statement was a misrepresentation. It sounded like a mere statement of opinion,
but it implied facts (such as the fact that the tenant paid the rent) which justified the opinion.
Bowen LJ said: ‘... if the facts are not equally known to both sides, then a statement of
opinion by the one who knows the facts best involves very often a statement of a material
fact, for he impliedly states that he knows facts which justify his opinion.’Redgrave vHurd (1881)The claimant, a solicitor, advertised for a partner who would also buy the solicitor’s house
and solicitor’s practice. The defendant answered the advertisement and was told that the
practice made about £300 p.a. The claimant produced papers which he said would prove
that his statement about the value of the practice was true, but the defendant did not read
the papers. If he had done so, he would have discovered that the practice was worthless.
When the defendant did discover that the practice was worthless he refused to go ahead
with the purchase.
HeldThe claimant’s statement about the value of the practice was a misrepresentation. It
could therefore be used as a defence for not going ahead with the contract. The fact that
the defendant did not check the papers showed that the claimant’s statement did induce
the defendant to make the contract.