Written by Jeremy Boyle Last Updated: 12 November, 2025When one party is persuaded to sign a contract based on false or misleading information, the consequences can be serious. That’s where misrepresentation comes in — a legal safeguard that protects individuals and businesses from entering into agreements based on untruths.
In this guide, we explain how misrepresentation works, the potential consequences, and how claims are pursued when statements turn out to be false.
- What is misrepresentation?
- Misrepresentation vs. breach of contract
- Examples of misrepresentation
- The legal framework: the Misrepresentation Act 1967
- Types of misrepresentation in contract law
- How to prove misrepresentation in contract law
- Remedies to misrepresentation
- Director’s personal liability for misrepresentation
- The process for bringing a misrepresentation claim
- How to defend against a misrepresentation claim
- How to defend against a misrepresentation claim
- Misrepresentation and contractual clauses
- How to avoid and manage misrepresentation risks
- FAQ’s about misrepresentation claims
- Contact our contract misrepresentation solicitors today
What is misrepresentation?
Misrepresentation occurs when one party makes a false statement that persuades another to enter into a contract. The statement must be significant enough to influence the decision to contract and must later be shown to be untrue.
Misrepresentation sits at the heart of many contract disputes and litigation cases, as it undermines the very basis of informed consent.
Misrepresentation vs. breach of contract
- A breach of contract occurs when one party fails to fulfil a promise or obligation outlined in the contract itself. For example, failing to deliver goods on time.
- Misrepresentation concerns false statements made before the contract is signed.
Examples of misrepresentation
To illustrate how the law applies, here are a couple of real-world misrepresentation examples:
Patarkatsishvili and Hunyak v Woodward-Fisher
When a seller gives false or incomplete information about a property – whether about its condition, history, or known defects – the buyer may have grounds to bring a misrepresentation claim.
In 2025, a High Court case concerning a £32.5 million mansion provided a striking example:
- The buyers discovered a severe moth infestation shortly after purchasing the property, despite the seller having denied any issues in pre-contract inquiries
- The vendor had received multiple pest control reports detailing the infestation, but failed to disclose them, instead stating that he was unaware of any vermin problems
- The Court found these statements to be fraudulent, as he had knowingly misled the purchasers
- The Court ruled that the couple could return the property and receive most of their purchase money, minus deductions for the time they had lived there. They were also awarded substantial damages, including reimbursement of stamp duty, pest eradication costs, and compensation for ruined clothing.
MDW Holdings Ltd v Norvill & Ors
In mergers, acquisitions, and company sales, parties rely heavily on the accuracy of pre-contract information. When a seller provides false or incomplete assurances about a business’s performance, compliance, or liabilities, it can lead to significant losses and potential claims.
In this 2021case, the buyer of a waste management company discovered that the sellers had misrepresented the company’s environmental compliance:
- During due diligence, the sellers stated there were no breaches, no pollution incidents and no written complaints, despite persistent non-compliance and regulator concerns
- The Court found several statements were actionable misrepresentations
- The buyer was awarded substantial damages to reflect the overvaluation caused by the deception.
Misrepresentation isn’t confined to commercial or large consumer transactions. It can also arise in recruitment and employment contexts, where false assurances about job roles, pay, or company prospects are made, as well as in everyday consumer contracts influenced by misleading advertising or sales claims.
The legal framework: the Misrepresentation Act 1967
The Misrepresentation Act 1967 updated UK law by establishing clear legal rules and rights for those affected by false statements made before a contract is signed.
Before the Act, claimants often had to prove fraud to claim damages. The legislation simplified the process and allowed for damages even where the false statement was made negligently or innocently.
Key provisions include:
- Allows damages for negligent misrepresentation unless the maker of the statement proves they had reasonable grounds to believe it was true
- Gives courts discretion to award damages instead of rescission, where it would be fairer to do so
- Restricts clauses that seek to exclude or limit liability for misrepresentation unless they satisfy the test of reasonableness (as defined by the Unfair Contract Terms Act 1977).
The Misrepresentation Act 1967 mainly deals with non-fraudulent misrepresentation, providing protection for those misled by careless or innocent statements, while cases of deliberate deceit are largely addressed under common law or the Fraud Act 2006.
Types of misrepresentation in contract law
There are three main types of misrepresentation in contract law, each with distinct characteristics and remedies:
Fraudulent misrepresentation
Fraud by misrepresentation occurs when a false statement is made knowingly, without belief in its truth, or recklessly as to whether it’s true or false. It’s the most serious form of misrepresentation in contract law.
Example of fraudulent misrepresentation case
In November 2024, in the case of London Capital & Finance plc (“LCF”), the Court ruled that the company had made false representations to bond-holders about how investor money would be used and, in fact, the business was operated as a Ponzi scheme.
The judgment held that the company’s behaviour amounted to a widespread and systematic instance of fraudulent misrepresentation.
Relationship between misrepresentation and fraud
Fraud by misrepresentation is both a civil and criminal issue. While most business disputes are resolved in the civil courts, in serious cases – such as investment or financial scams – the Crown Prosecution Service may bring criminal charges.
Negligent misrepresentation
Negligent misrepresentation arises when a statement is made carelessly or without reasonable grounds for believing it to be true. It is the most common type of misrepresentation in commercial contexts.
In negligent misrepresentation cases, the burden of proof falls on the party who made the statement to show they acted reasonably. If they can’t, they may be liable for damages.
Example of negligent misrepresentation case
In early 2025, waste management company Biffa brought a £160 million claim against the Scottish Government after the collapse of Scotland’s Deposit Return Scheme. Biffa argued that assurances given by a Scottish Minister in a letter amounted to negligent misrepresentation, as the letter failed to disclose that a key legal exemption under the UK Internal Market Act was still required for the scheme to proceed.
The Scottish Ministers denied the allegations. However, the Court refused to dismiss the claim at an early stage, finding that Biffa had presented a sufficient case to suggest it may have reasonably relied on the Minister’s assurances. At the time of writing, the case remains ongoing and is expected to proceed to a full evidential hearing.
Innocent misrepresentation
Innocent misrepresentation occurs when the person genuinely believes the statement to be accurate and has reasonable grounds for that belief.
Example of innocent misrepresentation case
In 2015, the Court of Appeal considered a claim for innocent misrepresentation involving the sale of a luxury car. Mr Salt purchased a Cadillac advertised by Stratstone Specialist Ltd as “brand new”. But, in reality, the vehicle had previously been registered and suffered water damage.
When Mr Salt discovered the truth, he sought to rescind the contract and recover his purchase price. Stratstone argued that was impossible because Mr Salt had used the car for several years and its value had depreciated, and offered to pay damages instead.
The Court ruled that while the misrepresentation was innocent, returning the vehicle and refunding the price would restore the parties as closely as possible to their original positions.
This landmark case illustrates that even where a misrepresentation is made honestly and without intent to deceive, the Court can still order remedies if the false statement induced the buyer to enter into a contract.
How to prove misrepresentation in contract law
- The other side made a false statement of fact
- The statement was material. Meaning it was significant enough to influence their decision to enter into the contract
- Their reliance on that statement directly caused them to suffer financial loss or another form of detriment.
Remedies to misrepresentation
The remedies available depend on the type and seriousness of the misrepresentation. The main options are:
Rescission
This unwinds the contract, restoring both parties to their pre-contract positions. It’s typically available for all types of misrepresentation unless:
- Restoring the original position is impossible
- Third-party rights have intervened
- The misled party affirmed the contract after discovering the truth.
Damages
The level and type of damages depend on the kind of misrepresentation proven:
- Fraudulent misrepresentation: Damages are calculated to restore the claimant to the position they were in before the contract was made. As if the misrepresentation had never happened. All losses that flow directly from the deceit can be claimed, even if they were not foreseeable at the time of the deceit.
- Negligent misrepresentation: Damages are assessed on a similar basis, but without any element of punishment. The aim is to compensate for losses caused by carelessness rather than deliberate dishonesty.
- Innocent misrepresentation: Where rescission isn’t practical or fair, the Court may instead award discretionary damages.
Contractual remedies
If the false statement was also written into the contract as a term or warranty, it may give rise to a breach of contract claim in addition to, or instead of, a claim for misrepresentation.
Director’s personal liability for misrepresentation
Directors can, in certain circumstances, be held personally liable for misrepresentation.
- If a director knowingly or recklessly makes a false representation, this may amount to fraudulent misrepresentation
- Where a company is nearing insolvency, continuing to make optimistic assurances may also breach directors’ statutory duties under the Companies Act 2006.
The consequences can be serious. Directors found personally liable may face court-ordered compensation, disqualification from acting as a director, and, in cases involving fraud, criminal investigation or prosecution.
Directors should therefore exercise caution when providing information or assurances on behalf of their company, ensuring all representations are accurate, verified, and fully documented.
The process for bringing a misrepresentation claim
Pursuing a misrepresentation claim usually follows a structured process.
Typical steps include:
- Pre-action correspondence: The claimant writes to the other party, setting out the alleged misrepresentation, the loss suffered, and the remedies sought. This is referred to as a ‘letter before action‘. The other side should be given an opportunity to respond before any court action.
- Evidence gathering and disclosure: Both parties exchange documents and information to establish whether the statement was false, whether it induced the contract, and how any loss was caused.
- Settlement discussions or mediation: Many disputes, especially those involving negligent or innocent misrepresentation, can be resolved without going to trial.
- Issuing court proceedings: If a settlement is not possible, formal proceedings are started to seek rescission or damages. The Court will then determine liability and assess the appropriate remedy.
How to defend against a misrepresentation claim
- Pre-action correspondence: The claimant writes to the other party, setting out the alleged misrepresentation, the loss suffered, and the remedies sought. This is referred to as a ‘letter before action‘. The other side should be given an opportunity to respond before any court action.
- Evidence gathering and disclosure: Both parties exchange documents and information to establish whether the statement was false, whether it induced the contract, and how any loss was caused.
- Settlement discussions or mediation: Many disputes, especially those involving negligent or innocent misrepresentation, can be resolved without going to trial.
- Issuing court proceedings: If a settlement is not possible, formal proceedings are started to seek rescission or damages. The Court will then determine liability and assess the appropriate remedy.
How to defend against a misrepresentation claim
- The statement was true: The alleged misrepresentation accurately reflected the facts at the time it was made.
- No reliance: The claimant did not actually rely on the statement when entering into the contract.
- Reasonable belief: In cases of alleged negligent misrepresentation, the defendant can argue they had reasonable grounds to believe the statement was true.
Misrepresentation and contractual clauses
Many commercial contracts attempt to limit liability for pre-contract statements through “entire agreement” or exclusion clauses. But the law only allows these limits if they’re fair and reasonable.
Courts examine:
- Whether the clause was clearly worded and properly explained
- How much negotiating power each side had
- How important the statement was to the deal.
In short, businesses should have their legal advisers carefully review any clauses that try to restrict liability before signing.
How to avoid and manage misrepresentation risks
- Verify key facts before making statements in negotiations or marketing
- Avoid assumptions and only state what can be supported by evidence
- Document representations in writing and specify which are relied upon in the contract
- Provide disclaimers where appropriate, though these must be reasonable and transparent
- Seek legal advice when drafting complex agreements or disclosures.
FAQ’s about misrepresentation claims
Below are some of the most common questions our clients ask about misrepresentation claims.
Misrepresentation in contract law is a false statement of fact made by one party that induces another to enter a contract. Depending on intent, it can be fraudulent, negligent, or innocent.
A material misrepresentation is one that significantly influences the decision to enter a contract. If the false statement wouldn’t have changed the outcome, it’s unlikely to be considered material.
Yes, you can sue for misrepresentation if you relied on a false statement that caused you loss. Remedies may include contract rescission or damages, depending on the circumstances.
Generally, silence does not amount to misrepresentation. There’s no duty to volunteer information in English law. However, silence can amount to misrepresentation where:
- A previous statement becomes false before the contract is finalised>
- Partial disclosures mislead the other party>
- There’s a fiduciary or statutory duty to disclose.>
Yes, a contract induced by misrepresentation is voidable, but not automatically void. If the other party disputes the misrepresentation or refuses to agree to rescission, the contract remains in force until the issue is resolved.
In that case, the misled party may need to ask the court to confirm their right to rescind or to award damages instead. The court will then decide whether a misrepresentation occurred and what remedy is appropriate.
To prove fraudulent misrepresentation, you must show that the statement was false, made knowingly or recklessly, and intended to deceive. Evidence such as internal communications or inconsistencies can support the claim.
Misrepresentation is not necessarily a breach of contract. It occurs before the contract is formed, while a breach happens after. However, a misstatement may also be incorporated as a contractual term, giving rise to a breach of contract claim.
Yes, negligent and fraudulent misrepresentation are actionable as torts, meaning damages can be claimed for financial loss even outside the contract itself.
Contact our contract misrepresentation solicitors today
- Assess the merits of your case: Analysing the facts, evidence, and type of misrepresentation involved to determine your legal position.
- Advise on remedies and strategies: Identifying whether rescission, damages, or settlement is the most effective route to protect your interests.
- Handle the pre-action and court process: Preparing correspondence, gathering evidence, and representing you through negotiations or proceedings.
- Provide ongoing representation: Guiding you from initial advice through to resolution, mediation, or final judgment.
