Business Law

Misrepresentation can be regarded as an untrue representation and in some situation; it can be amounted to be an actionable misrepresentation. ‘An actionable misrepresentation is an untrue statement of fact made by one party to a contract which induced the other party to entre into the contract’ (Macintyre, p144) To be an actionable misrepresentation, there are two requirements should be reached. One is stating a fact untruly and another is forming a contract induced by the untrue statement of fact. In Brian’s case, it can be seen as an actionable misrepresentation as Charlie and Nick make a contract to buy the van because Nick’s statement that the van was owned by the Beastie Girls.

It is necessary to classify actionable misrepresentation as three types, namely, fraudulent, negligent and wholly innocent. Fraudulent misrepresentation (Derry v Peek (1889)) is defined as ‘one made either knowing that it was false, or without belief in its truth, or recklessly, careless as to whether it was true or false’. The maker of fraudulent misrepresentation must act dishonestly and has intention to mislead the victims to believe the untrue fact. In the process of dishonesty proved, the claimant must provide a strong standard of proof to convince the court. It may be a bit difficult for many claimants so they usually sue for negligent misrepresentation instead of fraudulent misrepresentation. A negligent misrepresentation (Section 2(1) of the Misrepresentation Act 1967) is a kind of non-fraudulent misrepresentation as the maker of the misrepresentation does believe in what he misrepresents has a reasonable reason to be true up until the time the contract is made. The injured party also needs to prove that he has a loss as a consequence of an actionable misrepresentation but the maker of the misrepresentation must make a burden of proof that he does believe in what he misrepresents is true with proper reasons, up until the time the contract is made.