Chapter 9 Key facts checklist

Misrepresentation

Where the making of a contract has been induced by a false statement of fact (or some forms of misleading conduct), the party induced to contract (the misrepresentee) may have a remedy for actionable misrepresentation.
Misrepresentation renders the contract voidable so that the misrepresentee may be able to set aside (rescind) the contract and be restored to the position that misrepresentee was in before the contract was made. This may involve an additional award of damages for misrepresentation.
However, the ability to rescind will be lost where any of the bars to rescission apply, e.g. if the misrepresentee has affirmed the contract or failed to avoid the contract in a timely manner. In such circumstances, the only way for the misrepresentee to be restored to their original position is by means of an award of damages (where available).
The availability and measure of damages for misrepresentation are determined by the state of mind of the misrepresentor, and whether the misrepresentor was fraudulent (damages in the tort of deceit), negligent (common law damages for negligent misstatement, or damages for negligent misrepresentation in accordance with s. 2(1) Misrepresentation Act 1967 (MA 1967)), or wholly innocent (damages in lieu of rescission where rescission would otherwise have been available).
Controversially the judicial interpretation of s. 2(1) MA 1967 means that damages awarded under this section are based on the principles governing the measure of damages for fraud due to the 'fiction of fraud'.
Following the amendments to the Consumer Protection from Unfair Trading Regulations 2008 (CPRs 2008) made by the Consumer Protection Amendments Regulations 2014, SI 2014/870, after 1 October 2014 consumers who entered into a contract for the sale or supply of a product by a trader or who entered into a contract to sell a product to a trader (e.g. selling their car to a car dealer) or made a payment to a trader for the supply of a product, and that trader engaged in certain prohibited practices in relation to the product (e.g. a misleading action—misrepresentation) have an extended range of specific consumer‘rights to redress’ under the CPRs (right to unwind, right to a discount, and specific right to damages). This regime is separate from the consumer’s general remedies but the consumer cannot make a claim twice in respect of the same loss. In addition, there is an amendment to s. 2 MA 1967 which removes the ability of consumers to recover damages under that legislation where they have a right to redress under the CPRs in respect of the misrepresentation. This is an important removal of a consumer remedy of damages and makes it more likely that the CPR remedies will be used in practice in B2C misrepresentation claims.