sales puff
A statement not meant to be believed; it is not actionable.
When is a false preliminary statement actionable?
When it amounts to a contractual term or a misrepresentation.
What test do courts use to decide if a statement is a term or representation?
An objective test based on parties’ intentions.
Does one factor decide whether a statement is a term?
No, courts consider multiple guidelines; none are decisive.
Why does relative skill and knowledge matter?
Statements by experts to non-experts are more likely to be terms.
Why is timing relevant?
Statements made close to contract formation are more likely to be terms.
What is the effect of telling the other party to check the statement?
It suggests the statement is a representation, not a term.
What if the innocent party stresses the importance of the statement?
It is more likely to be treated as a term.
What if a statement is omitted from a written contract?
There is a presumption it is a representation.
What are the three elements of misrepresentation?
An untrue statement of fact, made before the contract, which induces the contract.
Must the statement be the sole inducement?
No, it must only have influenced the decision.
Is silence usually misrepresentation?
No, silence alone is not misrepresentation.
When can silence become actionable?
Where there is a half-truth or a duty to disclose.
What happens if a statement becomes false before the contract is made?
There is a duty to correct it, or it becomes actionable.
What contracts require full disclosure?
Contracts of utmost good faith, e.g. insurance.
What relationships require disclosure of material facts?
Fiduciary relationships, e.g. solicitor and client.
Are opinions actionable as misrepresentation?
Generally no, unless dishonest or without reasonable grounds.
Why can false opinions be actionable?
They misstate the maker’s state of mind.
What is fraudulent misrepresentation?
A statement known to be false or made recklessly.
What is negligent misrepresentation?
A statement made without reasonable grounds for belief.
What is innocent misrepresentation?
A false statement honestly believed to be true.
What remedy is available for all types of misrepresentation?
Rescission.
What is the aim of rescission?
To restore parties to their pre-contract positions.
Why is rescission described as equitable?
It is discretionary and subject to equitable bars.
