ABSTRACT
It has already been suggested that not all statements made to induce a contract can be treated as statements having legal effects. A mere advertising puff does not, to put it another way, amount to a ‘misrepresentation’ in law. The statement must be of a particular kind in order to be a misrepresentation and the starting point is the definition of a misrepresentation itself. A misrepresentation is an untrue statement of existing fact which induces the representee to enter into a contract with the representor and to suffer loss in consequence.152 As a result of this definition neither a statement of opinion153 nor a statement of law154 can in theory amount to a misrepresentation, but in practice the court will look closely at ‘opinions’ to see if they do amount to statements of fact.155 The definition also excludes statements of future intention and silence. The former is excluded on the questionable ground that a promise to do something in the future cannot be said to have been true or false at the time when it was made.156 The latter is subject to exceptions – indeed contracts of insurance, contracts uberrimae fidei, actually impose a positive duty of disclosure,157 although this nondisclosure will not necessarily found a damages (as opposed to a rescission) action.158 Non-disclosure may however give rise to an action in restitution (cf Chapter 11 §§ 2(a), 3(d)) if a party to a fiduciary relationship (cf Chapter 4 § 5(e)) gains an unjustified profit as a result of the silence.159
