Misrepresentation In Contract Law

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The issue to be dealt with in this problem is misrepresentation. It is therefore necessary to advise SkyReach Ltd. on the possible courses of action regarding misrepresentation. First, the ability of SkyReach Ltd. to rescind the contract on the grounds of ‘ innocent misrepresentation,’ based on the fact that Holgers statement regarding planning permission, was not a factual statement but a statement of opinion made prior to the contract. Also the possibility of a claim for damages based on the fact that Holger’s statement was non fraudulent. Each claim will be examined separately. The Misrepresentation Act (1967) has made it possible for the recission of contract by removal of certain bars to innocent misrepresentation. Section 1(b) of the Misrepresentation Act (1967) stated that, ‘Where a person has entered into a contract after a misrepresentation has been made to him, and the contract has been performed; he would be entitled to rescind the contract without alleging fraud.’ Consequently, SkyReach can proceed to rescind the contract on the ground of innocent misrepresentation based on the fact that Holger believed that his statement was true and that the local news was reasonable ground for Holger’s belief. Although, Holger’s statement was made during a meeting before the contract, there is a possibility of SkyReach Ltd. arguing reliance on the misrepresentation specifically by entering into the contract with Holger. Lord Denning LJ, in Oscar Chess Ltd v Williams (1957) argued that the more important a statement made during negotiations, the more likely it is a term of the contract. Hence, the fact that specific question regarding planning permission was asked by SkyReach, is evidence enough to prove its level of importance to SkyReach Ltd. and can therefore be considered a term of the contract. Also, SkyReach can claim that reliance on Holger’s

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