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Misrepresentation Act 1967

LAWS OF THE UNITED KINGDOM

MISREPRESENTATION ACT 1967
(1967 c 7)

An Act to amend the law relating to innocent misrepresentations and to amend sections 11 and 35 of the Sale of Goods Act 1893.

[22 March 1967]

Northern Ireland. This Act does not apply; see s 6(4) post.

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1 Removal of certain bars to rescission for innocent misrepresentation

Where a person has entered into a contract after a misrepresentation has been made to him, and-

(a) the misrepresentation has become a term of the contract; or

(b) the contract has been performed;

or both, then, if otherwise he would be entitled to rescind the contract without alleging fraud, he shall be so entitled, subject to the provisions of this Act, notwithstanding the matters mentioned in paragraphs (a) and (b) of this section.
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NOTES

Misrepresentation; fraud. The subjects of misrepresentation and fraud are considered at length in 31 Halsbury's Laws (4th edn) paras 1001 et seq.

If otherwise he would be entitled to rescind ... without alleging fraud. The conditions of the right to rescind are considered in 31 Halsbury's Laws (4th edn) paras 1116 et seq.

Subject to the provisions of this Act. See, in particular, s 2(2) post, under which the court has a discretionary power to award damages instead of ordering rescission.

Saving for past transactions. See s 5 post.
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2 Damages for misrepresentation

(1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true.

(2) Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled, by reason of the misrepresentation, to rescind the contract, then, if it is claimed, in any proceedings arising out of the contract, that the contract ought to be or has been rescinded the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so, having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party.

(3) Damages may be awarded against a person under subsection (2) of this section whether or not he is liable to damages under subsection (1) thereof, but where he is so liable any award under the said subsection (2) shall be taken into account in assessing his liability under the said subsection (1).

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NOTES

Misrepresentation ... made ... by another party. Where a misrepresentation is made by an agent of the principal acting under his express or ostensible authority, or by a person on behalf of the agent, neither the agent nor any person acting on his behalf is personally liable under sub-s (1) above; see Resolute Maritime Inc v Nippon Kaiji Kyokai, The Skopas [1983] 2 All ER 1, [1983] 1 WLR 857.

Misrepresentation; fraudulently. The subjects of misrepresentation and fraud are considered at length in 31 Halsbury's Laws (4th edn) paras 1001 et seq.

Would be liable to damages... had the misrepresentation been made fraudulently. As to actions for damages for fraudulent misrepresentation, see 31 Halsbury's Laws (4th edn) paras 1082, 1107 et seq.

Shall be so liable notwithstanding that the misrepresentation was not made fraudulently. See Gosling v Anderson 1972 EGD 709, CA (innocent misrepresentation as to availability of planning permission for a garage by vendor's agent), as applied in Watts v Spence [1976] Ch 165, [1975] 2 All ER 528 (contract for sale of land made by one joint owner without the knowledge of the other).

The measure of damages for an innocent misrepresentation giving rise to an action under sub-s (1) above is the measure of damages in tort for fraudulent misrepresentation, so as to put the misrepresentee in the position he would have been in had he never entered in to the contract; see Royscott Trust Ltd v Rogerson [1991] 2 QB 297, [1991] 3 All ER 294, CA.

He had reasonable ground to believe and did believe ... the facts represented were true. A similar defence is provided by the Companies Act 1985, s 68(2), Vol 8, title Companies, against a claim for compensation for misstatements in a prospectus.

He would be entitled ... to rescind the contract. The conditions of the right to rescind are considered in 31 Halsbury's Laws (4th edn) paras 1116 et seq; and note that the circumstances in which the remedy is available are extended by s 1 ante.

Arbitrator. As to the powers of arbitrators in this field, see, in particular, Heyman v Darwins Ltd [1942] AC 356, [1942] 1 All ER 337, HL.

Equitable to do so, having regard to ... the other party. As to the differing measures of damages that may be awarded under sub-ss (1), (2) above, see William Sindall plc v Cambridgeshire CC [1994] 3 All ER 932, [1994] 1 WLR 1016, CA.

Contributory negligence. Liability under this Act is founded essentially on negligence and thus contributory negligence is available as a defence to a claim for damages which is brought under this section; see Gran Gelato Ltd v Richcliff (Group) Ltd [1992] Ch 560, [1992] 1 All ER 865.

Saving for past transactions. See s 5 post.
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[3 Avoidance of provision excluding liability for misrepresentation

If a contract contains a term which would exclude or restrict-

(a) any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or

(b) any remedy available to another party to the contract by reason of such a misrepresentation,

that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies that requirement to show that it does.]

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NOTES

This section was substituted by the Unfair Contract Terms Act 1977, s 8(1).

General Note. Under this section, prior to its substitution, any contractual term purporting to exclude or restrict liability for misrepresentation was of no effect except to the extent that a court or arbitrator might allow reliance on it as being fair and reasonable in the circumstances of the case. That reasonableness test for exemption clauses is replaced by the test set out in the Unfair Contract Terms Act 1977, s 11(1), Vol 11, title Contract, and it is for those claiming that the term satisfies the requirement of reasonableness to show that it does.

Term which would exclude or restrict ... liability, etc. This section only applies to a provision which would exclude or restrict liability for a misrepresentation made by a party or his duly authorised agent, including an agent with ostensible authority; it does not qualify the right of a principal publicly to limit the otherwise ostensible authority of his agent; see Overbrooke Estates Ltd v Glencombe Properties Ltd [1974] 3 All ER 51, [1974] 1 WLR 1335.

The mere fact that the provision restricting liability is a common-form clause in standard conditions of sale will not make it reasonable; see Walker v Boyle [1982] 1 All ER 634 at 645, [1982] 1 WLR 495.

Requirement of reasonableness as stated in section 11(1). See also the Unfair Contract Terms Act 1977, s 9, Vol 11, title Contract, as to the effect of breach of contract.

Saving for past transactions. See s 5 post.

Unfair Contract Terms Act 1977, s 11(1). See Vol 11, title Contract.
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4 (Repealed by the Sale of Goods Act 1979, s 63(2), Sch 3.)

5 Saving for past transactions

Nothing in this Act shall apply in relation to any misrepresentation or contract of sale which is made before the commencement of this Act.

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NOTE

Commencement of this Act. See s 6(2) post.
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6 Short title, commencement and extent

(1) This Act may be cited as the Misrepresentation Act 1967.

(2) This Act shall come into operation at the expiration of the period of one month beginning with the date on which it is passed.

(3) (Applies to Scotland only.)

(4) This Act does not extend to Northern Ireland.

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NOTE

One month beginning with the day on which it is passed. "Month" means calendar month; see the Interpretation Act 1978, s 5, Sch 1, Vol 41, title Statutes. In calculating this period the day (ie 22 March 1967) on which this Act was passed (ie received the Royal Assent) is reckoned; see Hare v Gocher [1962] 2 QB 641, [1962] 2 All ER 763, and Trow v Ind Coope (West Midlands) Ltd [1967] 2 QB 899 at 909, [1967] 2 All ER 900, CA. Accordingly, this Act came into force on 22 April 1967.

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