Misrepresentation in Contract Law: Case of Dale, Bob and Marcy

Legal Case

Issue:
“Is Dale liable to compensate for damagessuffered by Bob and Marcy”
Law:
Misrepresentation
 Misrepresentation can be understood as the false statement made by one party to
another. In such case, if the other party has entered into the contract on the
grounds of misrepresentation then, such contract is considered as voidable.
 A contract is considered as voidable when the transaction is capable of being set
aside at the option of one of the party, usually the innocent party. Until this
happens,the contract is said to be legally binding on both the parties.
 The law of vitiating factors govern the setting aside of the contract for the
innocent party. These vitiating factors affect only those contracts that are genuine
in nature. Depending upon the type of misrepresentation, the party can claim for
damages or the contract may be set aside.
 Misrepresentations are of three types fraudulent, innocent and negligent
 Fraudulent misrepresentation takes place when the representor knows that the
statement being made by him is false and still, he is presenting it as true in order
to make the other party enter in to the contract. Because of this false statement,the
other party suffers damages. In such case,the other party that is the representee
can claim for damages from the represent.
 Innocent misrepresentation is undertaken when the representor does not intend to
tell lie to the representee or to deceive them. In the case of innocent
misrepresentation, the misrepresentation is made unintentionally. In case of

innocent misrepresentation, the parties affected cannot claim for damages, they
can only rescind the contract.
 Negligent misrepresentation takes place when the representor makes an honest but
false statement either negligently or carelessly. In this case of
misrepresentation,the representee can claim for damages.
 The remedies available for misrepresentation includerescission or compensation
for damages. Rescission is provided in the case of innocent misrepresentation,
whereas, compensation for damages are made in the case of fraudulent or
negligent misrepresentation.
 In this case, the innocent misrepresentation is valid as Dale has claimed that he
had no previous information related to the boat.
 Oscar Chess v Williams (1957) case can be referred for the judgement regarding
such case. In this case, the court ruled that the statements claimed by the
representor in his own knowledge can only be inferred to the contract (Law
Teacher, 2013).
Application
In the case Dale had claimed earlier that he knows the full history of boat and claimed that it
is in good condition and is a recent model whose valuation will increase in the coming year.
Whereas, this was not the case when Bob and Marcy purchased the boat and started to use it.
The boat breaks down within two months of purchase. From further investigation, it was
found that the information provided to Bob and Marcy was incomplete and the boat was used
for many years and was not in a proper condition to work further and add future valuation to
the boat. Also, the log books of the boat were falsely documented. But, after knowing this it
was claimed by Dale that he had no idea about who used the boat earlier and that the log