8 CONTRACT LAW 2: MISREPRESENTATION


Misrepresentation in a contract False statement of fact


An actionable misrepresentation must be a false statement of fact.


The following do not therefore constitute actionable misrepresentations: 


an opinion which proves to be false


 a false statement of future intention, unless the statement forms part of the contract  a false statement of the law


Exceptions There are three fundamental exceptions to this rule:


1 half-truths, which are partially true statements intended to deceive or mislead 2 statements which become false 3 contracts uberrimae fidei which means they are made in the utmost good faith


A


Bisset vWilkinson [1927] AC 177, HL


B


Hedley Byrne and Co Ltd v Heller and Partners [1964] AC 465, HL


C


Williams v Natural Life Health Foods [1998] UKHL 17


Bisset bought land from a farmer called Wilkinson because he wanted to farm sheep on the land. Wilkinson told Bisset: ‘If you work the land properly, you could have 2,000 sheep on it.’In fact, Wilkinson had never farmed sheep on this land and Bisset knew this.


Bisset later found that the land could not support that number of animals and he sued Wilkinson for misrepresentation.


Hedley Byrne (HB) were advertising agents. They intended to advertise for Easipower Ltd and wanted to know if the company was creditworthy. Easipower’s bankers, Heller, told HB’s bankers that Easipower were good for £100,000 per year for advertising. They wrote in the letter that this information was in confidence and without responsibility on our part.


HB relied on this statement and placed orders on Easipower’s behalf. Easipower went bankrupt. HB sued Heller for damages.


Natural Life Health Foods (NLHF) sold health food products through franchises. In their brochure, they offered prospective franchisees substantial income. The brochure was mainly written by Richard Mistlin, NLHF’s managing director.


Williams took out a franchise but the business was not successful so he sued NLHF but it subsequently went out of business. Williams then claimed that Mistlin should be personally responsible for the losses as Mistlin had made the negligent misstatements.


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