Which of the following best describes a misrepresentation in a contract? An innocent statement of opinion (B) A clear and unambiguous contractual term (C) A failure to disclose a material fact (D) An expression of future intentions
The correct answer and explanation is:
The correct answer is (C) A failure to disclose a material fact.
Explanation:
Misrepresentation in contract law refers to a false statement of fact or law that induces one party to enter into a contract. It must be a material representation (i.e., one that influences the decision to contract) and not merely an opinion, future intention, or silence unless there is a duty to disclose.
Breakdown of the Options:
- Innocent statement of opinion (B): An opinion is generally not considered a misrepresentation unless the person giving the opinion had no reasonable grounds to believe it or pretended it was based on facts. Misrepresentation must involve factual assertions, not subjective opinions.
- A clear and unambiguous contractual term (C): This refers to the actual terms of a contract, not representations made prior to its formation. Misrepresentation arises from pre-contractual statements, not from the terms of the contract itself. Contractual terms bind parties once the contract is formed, but they do not qualify as misrepresentations.
- A failure to disclose a material fact (D): While silence alone is not typically misrepresentation in English contract law, a failure to disclose a material fact can amount to misrepresentation when there is a duty to disclose, such as in fiduciary relationships or insurance contracts. For example, failing to reveal known defects in goods being sold may constitute misrepresentation if there is a duty to inform the buyer.
- An expression of future intentions (D): Statements about future intentions are not typically misrepresentations unless the person making the statement has no intention of fulfilling the declared intent. Misrepresentation relates to past or existing facts, not future possibilities.
Conclusion:
Misrepresentation occurs when a material fact is concealed or misrepresented, leading to reliance and contractual agreement. The duty to disclose a material fact distinguishes misrepresentation from mere silence, ensuring fairness in contractual dealings.