Читать книгу Canadian Business Contracts Handbook - Nishan Swais - Страница 55

Misrepresentation is another basis on which a court may invalidate a contract. Misrepresentation occurs when one party makes a statement to the other party that turns out to be wrong, that is, turns out to be a misstatement, not a mistake. Misrepresentation differs from a mistake in that a mistake is usually unintentional or concerns a matter outside of the mistaken party’s control.

Not every misstatement in a contract results in a misrepresentation. To be considered a misrepresentation, at law, a statement must be false, concern a matter of fact (not opinion), be addressed to the party who was misled by the statement, and must have actually induced the party to whom it was addressed to enter into the contract.

Inducement is the key. If a party did not rely on the statement of another party in entering a contract, it is unlikely that it will be able to seek compensation from that other party if that statement turns out to be a misstatement.

Returning to our example: Suppose you had told the buyer that the forklift could lift several tons of cargo? Suppose also that that was a misstatement. Now suppose finally that the buyer merely meant to move boxes of cotton balls with the forklift and, therefore, wasn’t concerned about the forklift’s load capacity. In other words, the buyer wasn’t induced into buying the forklift based on how much you said it could lift. In that case, the buyer will not be able to successfully claim that your misstatement amounted to a misrepresentation compensable at law. The reason is she was not induced into buying the forklift on the basis of the misstatement. She would have bought it anyway.

One could fill volumes with a discussion of misrepresentation. For our purposes, it is enough to know something about four of the most commonly encountered types of misrepresentation:

• Pre-contractual misrepresentation occurs when a statement leading up to the formation of a contract turns out to be false. Typically, pre-contractual misrepresentation takes place during contractual negotiations. For example, if the buyer had, in our example, been induced into buying the forklift on the basis of its stated load capacity (it was needed to move truck parts, not cotton), then your misstatement will have amounted to a pre-contractual misrepresentation.

• Negligent misrepresentation arises where a party making a statement is careless about whether the statement is true. For example, if you never even bothered to determine the forklift’s load capacity but carelessly stated to the buyer that it could lift several tons of cargo, your statement amounted to negligent misrepresentation if the buyer was induced by that statement to purchase the forklift. Note that negligent misrepresentation differs from a mistake in that your statement was not unintentional. You didn’t mistakenly believe what you said to be true. Rather, you never sought out the truth of what you were saying, in the first place. In short, you didn’t care if what you said was true.

• Fraudulent misrepresentation is the most serious form of misrepresentation in the eyes of the law and can even lead to an award of punitive damages. Fraudulent misrepresentation occurs when, as an inducement, a party deliberately and knowingly misleads another party about a contractual matter. For instance, you know that the forklift cannot lift even one ton of cargo but you tell the buyer that it can lift several.

• Innocent misrepresentation is a kind of legal catch-all that is applied to any misrepresentation that is not fraudulent, negligent, or fits the profile of a mistake. For example, you may have checked the number of tons the forklift could carry and you had no intention of misleading the buyer, but it just so happens that you weren’t aware of the difference between metric and imperial tons and innocently misrepresented the forklift’s capabilities.

In each of these cases of misrepresentation, a court is likely to invalidate a contract (or the relevant term of it).