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MISREPRESENTATION: WHEN MISREPRESENTATION WILL GIVE RISE TO A CAUSE OF ACTION

By Amaka Ezeno, MCIArb.

It is a very trite position of the law that an agreement entered into, between parties are binding where the agreement is made voluntarily without any compulsion, misrepresentation and fraud. The reverse is also correct; an agreement entered between parties will not be binding and enforceable when the agreement is made under duress, fraud and misrepresentation.

The learned authors of Black’s Law Dictionary, 9th edition, page 1091 defined misrepresentation as the act of making a false or misleading assertion about something, usually, with the intent to deceive and that the word denotes not just written or spoken words but also any other conducts that amounts to a false assertion.

According to the learned author, Prof Itsejuwa Sagay, in his book, Nigerian Law of Contract, 2nd edition, Chapter 9, page 295, a misrepresentation is an untrue statement made by one party to a contract to the other before or at the time of contracting with regard to some existing fact or to some past event which is one of the causes that induced the contract.

In Street on Torts, 6th edition, page 379, the learned author wrote how misrepresentation occurs: “The tort is most often committed in the course of business bargaining: The tort of misrepresentation, now considered “deceit” is also termed “constructive fraud”. Lord Haldane, L.C. explained what “constructive fraud” means:

“What it really means in this connection is, not moral fraud in the ordinary sense, but breach of the sort of obligation which is enforced by a Court which from the beginning regarded itself as a Court of conscience…” I also refer to the foreign case of Nocton v. Lord Ashburton (1914) A.C. 932 at 952 which was cited with approval in the Nigerian case of Trenco (Nig.) Ltd. vs. African Real Estate (1978) 1 LRN 146 where Aniagolu, JSC held at page 154 that, “…a Court of conscience, must prevent the plaintiffs from suffering pecuniary injury against the dictates of conscience.

For misrepresentation to give rise to a cause of action, it is essential that the representation should be material, that it should be acted upon and should be a determining ground of the transaction. I refer to Smith v. Chadwick (1884) 9 App. Cas. 187 at page 190, and Young v. Smith (1915) 3 WLR. 642.

There must be an assertion of fact on which the person entering into the transaction relied upon and in the absence of which it is reasonable to infer that the representee would not have entered into it at all. I also call in aid to my submission the Nigerian Supreme Court case of Simeon Olusoji Kuforiji v. V.Y.B Nigeria Limited (1981) LPELR-1716(SC) Per Obaseki ,J.S.C ( Pp. 17-18, paras. F-E ).

Also in Smith v. Wheetcroft (1878) 9 Ch. D 223 page 230, Fry, J., recognised the principle that misrepresentation of the identity of purchaser may be a material one if the vendor would have been unwilling to enter into a contract in the same terms with anybody else.

In determining whether there was a misrepresentation, the knowledge, belief or state of mind of the person making the statement is irrelevant and does not change the fact that a misrepresentation was made as was held in the Nigerian Court of Appeal case of Mrs. Florence Titilayo Sodeinde v. Mr. Babatunde Allen & Anor (2018) LPELR-46782(CA).

A fraudulent misrepresentation, whereby the representor has induced the representee to alter his position by entering into a contract or transaction with the representor confers the right to the representee to either maintain an action for damages, or repudiate the contract or transaction. In such a case, the representee may institute proceedings for the recission of the contract or transaction. He may also set up the fraudulent misrepresentation as a defence to any action instituted for the direct or indirect enforcement of the contract or transaction as was held in the case of Albert Afegbai v. Attorney-General, Edo State and Anor (2001) LPELR-193(SC) PER Iguh ,J.S.C ( P. 53, PARAS. A-D )

In law to prove misrepresentation, the party so alleging must plead and prove the following elements constituting fraudulent misrepresentation, namely the representation must be a statement of existing facts; the representation must be material and unambiguous; and the representee must show that he has acted in reliance on the misrepresentation.

It is, however, my view that a statement of fact honestly made by a party cannot be held to be a misrepresentation simply because it turns out not to be quite correct. I rely on the English cases of Bisset v. Wilkinson (1927) A.C. 177.

Amaka Ezeno, MCIArb.

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