Presentation on theme: "Group 2. Definition of Misrepresentation: A pre-contractual statement, whether by words, conduct, or silence, which is false, either innocently, negligently."— Presentation transcript:
Definition of Misrepresentation: A pre-contractual statement, whether by words, conduct, or silence, which is false, either innocently, negligently or fraudulently, and which induces a party to contract, whether at all, or on particular terms. Novick v Comair Holdings 1979 (2) SA 116 (W)
Elements A false statement Wrongfully made That induces the contract (ie. Must be material) NB. Innocent misrepresentation excludes the element of fault
Facts Ben and Shivani entered into a contract of sale of a house. Shivani was specifically looking for a house that needed no further work done on it and would require little maintenance. Ben assured her that his house was in good condition and would be of little problem to her. The deeds were transferred and she paid him the R2mil sale price in cash. 1 month down the line it was found that there were termites beneath the flooring of the house and they were eating away at the wooden floors. The damage was substantial (about 55% of the floors were wooden) and would require R200 000 to repair. Upon inspection, it was found that the termites had been eating at the floors for approximately 4 months. Shivani is furious with Ben and would like to cancel the contract and recover her money.
General An innocent misrepresentation which induces a party to enter into a contract may be relied upon by that party to cancel the contract. It does not give rise to a claim for damages because there is no fault. In this case, it is a contract of sale therefore aedilitian remedies are available to Shivani, i.e. Reduction of the sale price or cancellation and restitution.
Back to the Essentials A representation Which was false Which was made by the defendant Which is material Which was intended to induce the person to whom it was made to enter into the transaction That the representation did induce the contract (causation)
A representation... Ben explicitly told Shivani that his house was in good condition and would require little maintenance.
Which was false... The house had had termites eating away at its floors for up to four months. This was causing the flooring to deteriorate and thus the house was not in good condition. Ben was simply unaware of this.
Which was made by the defendant... As stated, it was Ben that made the statement. (Shame on Ben..)
Which is material... It was obviously very important to Shivani that the house was in good condition and needed little maintenance or further work done to it. Bens assurance of this was material to the agreement.
Which was intended to induce the person to whom it was made to enter into the transaction... Ben made this statement knowing what Shivani was looking for and in assuring her that his house met her stipulated requirements, he intended to induce her to buy it.
That the representation did induce the contract (causation)... Shivani only bought the house because she was assured that it would require little to no major maintenance. Had she known that 1 month down the line she would have been faced with a situation demanding R200 000 worth of repairs, she likely would not have entered into the contract.
Therefore... The plaintiff (Ms Shivani) claims, repeating the tender: Repayment of R2 000 000