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(. \ / l 111
MARCH 1982
Contractual and Statutory
Remedies for Misrepresentation
by
Brenda Hannigan, Lecturer in Law, University College Cardiff,
and Alex Schuster, Lecturer in Law, Trinity College, Dublin.
P
ART V of the Sale of Goods and Supply of Services
Act 1980 provides statutory remedies for
misrepresentation similar to those enacted in the U.K.
Misrepresentation Act 1967.
1
This article examines the new revisions and makes
suggestions for further reform.
"Contract"
Section 43 provides that "contract in this Part means
a contract for the sale of goods, a hire purchase agree-
ment, an agreement for the letting of goods or a con-
tract for the supply of a service". There is no equivalent
to this section in the English legislation which applies to
all contracts. The Irish provision is limited to selected
categories of contracts, the most obvious exclusion be-
ing contracts relating to land and houses. Whether this
is a satisfactory approach to adopt will be considered
later. It will be seen that it is precisely in respect of con-
tracts for the sale of land and houses that many of the
difficulties have arisen, for example, in relation to
misrepresentations made by auctioneers or vendors.
There are, than, two branches of the law of
misrepresentation, with certain contracts governed by
statute while others remain subject to the common law.
An important consequence of this segregation is in
respect of the rule laid down in
Wilde
v.
Gibson
2
and
Seddon
v.
North Eastern Salt
Co.
1
followed here in
Lecky
v.
Walter\
This rule provided that there could be
no rescission for innocent misrepresentation where the
contract had been performed. Section 44 (b) purports to
abolish the rule, but because its application is restricted
by section 43, the rule will continue to apply to contracts
for the sale of land and houses.
Removal of certain bars to Rescission
Section 44 (a) provides that where a person has
entered into a contract, after a misrepresentation has
become a term of that contract, then, if otherwise, he
would be entitled to rescind the contract without alleg-
ing fraud, he shall be so entitled. This is the equivalent
of section 1 (a) of the U.K. Act.
This provision covers the situation where a represen-
tation actually becomes a term of the contract. It had
been the case that where the representation merged in
the subsequent contract, the representee is left only with
such rights as may be available under that contract
5
.
Section 44 (a) alters this position.
The remedies available for breach of a contractual
term depend upon whether that term is a condition or a(
warranty or an innominate term. Where the term
broken is only a warranty, then the injured party is only
entitled to damages. However, should he under this pro-
vision, elect to treat the term broken as a misrepresenta-
tion, he will be entitled to rescind the contract, notwith-
standing the fact that the term broken is only a warran-
ty. It should, however, be noted that it is a necessary re-
quirement that the representee "would otherwise be en-
titled to rescind". Wylie notes that this requires proof
that the misrepresentation induced the contract. This,
he suggests, may not be possible if the representation
has been reproduced in the terms of a contract
6
. See
George Wimpey & Co. v. Johrl\96llCh.
487.
Another possibility is that even if the plaintiff can
overcome this hurdle and seeks rescission for what is a
breach of warranty under section 44 (a), the court may
exercise its discretion under section 45 (2) to award
damages in lieu of rescission. So the injured party may
be no better off than if he had sued for breach of
warranty. That is, of course, unless the measure of
damages for breach of warranty and for misrepresenta-
tion is different.
While some cases have held that the measure of
damages for non fraudulant misrepresentation should
be the same as for breach of contract
7
, others have
taken the view that the yardstick is that for deceit or
fraud, being without the limitation as to foreseeability
that applies in damages for negligence
8
.
The English Law Reform Committee recognised that
"some anomalies and much uncertainty result from the
distinction between the legal consequences of
misrepresentation and of a breach of contract.
9
Section
44 (a) abolished the artificial distinction between the in-
dependent misrepresentation (which sometimes enabled
the contract to be rescinded) and breach of an identical
term in the contract itself (which gave only a right to
damages). Although section 44 (a) narrowed the
dividing line between a contractual term and an in-
dependent misrepresentation, it is submitted that the
mischief referred to by the Law Reform Committee will
be perpetuated unless the measure of damages applied
under section 45 (2) is the same as that in contract.
Section 44 (b) provides that where a person has
entered into a contract after a misrepresentation has
been made to him and the contract has been performed
4 0