What is misrepresentation?

Misrepresentation is a legal concept that refers to the making of false statements or representations with the intent to deceive or induce another party to enter into a contract. Misrepresentation can occur during negotiations, discussions, or the formation of a contract, and it may involve false statements, omissions, or half-truths.

There are three main types of misrepresentation recognised under English law, including:

Fraudulent misrepresentation:

Fraudulent misrepresentation arises when a false statement is made knowingly, with the intent to deceive, and with the purpose of inducing the other party to enter into a contract. If a party can prove fraudulent misrepresentation, they may have the right to rescind (cancel) the contract and potentially claim damages.

Negligent misrepresentation:

This type of misrepresentation involves false statements made without reasonable care, meaning that the person making the statement did not exercise due diligence in ensuring its accuracy.

The injured party may be entitled to rescind the contract and seek damages if they can demonstrate that they relied on the negligent misrepresentation.

Innocent misrepresentation:

Innocent misrepresentation occurs when false statements are made without any knowledge of their falsehood. The person making the untrue statement genuinely has belief in its truth. In cases of innocent misrepresentation, the injured party may have the right to rescind the contract, but damages are generally not available.

Making a misrepresentation claim

The Misrepresentation Act 1967 governs misrepresentation claims in contracts. It provides a statutory framework for dealing with misrepresentations made during the formation of a contract. The Act applies to both innocent and negligent misrepresentations but not to fraudulent misrepresentations, which can be pursued under common law.

The threshold for bringing a claim, regardless of the type, generally involves key elements that need to be established.

False statement:

The claimant must show that a false statement or representation was made. This could be an assertion of fact, a promise, or a statement that induces the other party to enter into a contract.

Materiality:

The false statement must be material, meaning that it played a significant role in inducing the claimant to enter into the contract. If the misrepresentation is trivial or unlikely to have influenced the decision, it may not meet the threshold for a valid claim.

Reliance:

The claimant must demonstrate that they relied on the false statement when deciding to enter into the contract. The misrepresentation should have been a factor that influenced their decision.

Causation:

There must be a causal connection between the misrepresentation and the harm suffered. In other words, the claimant must show that the false statement directly led to them suffering a loss or damage.

Intent (for Fraudulent Misrepresentation):

In cases of fraudulent misrepresentation, the claimant must prove that the false statement was made knowingly, with the intent to deceive. Fraudulent misrepresentation involves an element of dishonesty.

Exclusion clauses (for negligent and innocent misrepresentation):

The Unfair Contract Terms Act 1977 sets out that exclusion clauses attempting to limit liability for negligent or innocent misrepresentation must be reasonable. If an exclusion clause is found to be unreasonable, it may be ineffective.

Remedies for misrepresentation can include damages, recission, restitution, specific performance and injunction.

Misrepresentation claims can be difficult to prove, so it is always advisable to seek legal advice for your case.

Misrepresentation claim costs

The general rule on costs in misrepresentation claims is that the losing party pays the winning party’s costs; however, the Court can apply their discretion in making an alternative cost order in litigation.

If you are the successful party to a misrepresentation claim, it is likely that you will be entitled to recover all or some of your legal costs incurred.

In this case, a Bill of Costs will need to be prepared and submitted to the paying party to recover your legal costs and disbursements. The paying party may wish to negotiate costs by serving their points of dispute, which you can further negotiate using points of reply.

If an agreement cannot be reached, parties may proceed to a detailed assessment hearing to have their costs assessed by a Judge.

How can ARC Costs assist?

ARC Costs maintains an extensive legal network of expert commercial litigation solicitors with a track record of success on these types of cases, and we would be happy to pass on your details to assist in your case. 

In addition to introducing you to a solicitor to assist in dispute resolution, we can also assist in the recovery and negotiation of legal costs in commercial cases, whether you are the paying or receiving party.

ARC Costs are highly experienced in advising and assisting with costs issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can assist in your misrepresentation claim costs.

If a costs award has been made, allowing you to recover costs from your opponent, we can assist with preparing a Bill of Costs on your behalf to ensure maximum recoverability. We can also assist in Costs Negotiations and represent you at detailed assessment proceedings which can determine the amount of costs you may be able to recover.

If you have been ordered to pay costs to your opponent, we can assist in disputing costs which may be sought and which you may deem to be excessive and unreasonable. We can do this by way of preparation of  Points of Dispute and also through negotiations to ensure you will only pay for costs which are reasonably incurred and not exaggerated.

Should you wish to discuss your costs query with us, please contact us on 01204 397302 or via email at info@arccosts.co.uk. Alternatively, you can complete our online query form and we will contact you to discuss your query further. We can provide expert legal advice on costs in our free, no obligation initial consultation.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.