When negotiating to enter into a contract, a person may have a duty to disclose material facts which come to his notice before the conclusion of a contract if they falsify a representation previously made by him. A representation as to the profits of a medical practice made with a view to inducing purchasers to buy the practice was a continuing representation. The vendor had a duty to communicate a change in circumstances to the purchaser. When a party makes a statement that is true at the time, there is an obligation to rectify if that statement becomes untrue in the course of negotiations.
Lord Wright MR observed that ‘a representation made as a matter of inducement to enter into a contract is to be treated as a continuing representation’, and added: This question only occurs when there is an interval of time between the time when the representation is made and when it is acted upon by the party to whom it was made, who either concludes the contract or does some similar decisive act; but the representation remains in effect and it is because that is so, and because the court is satisfied in a proper case on the facts that it remained operative in the mind of the representee, that the court holds that under such circumstances the representee should not be bound.’
Judges:
Lord Wright MR, Romer LJ
Citations:
[1936] Ch 575, [1936] 1 All ER 727
Jurisdiction:
England and Wales
Citing:
Approved – Brownlie v Campbell; Brownlie v Miller HL 1880
Silence where there is a duty to speak, may amount to a misrepresentation. Lord Blackburn said: ‘where there is a duty or an obligation to speak, and a man in breach of that duty or obligation holds his tongue and does not speak, and does not say . .
Cited by:
Cited – Spice Girls Ltd v Aprilia World Service Bv ChD 24-Feb-2000
Disclosure Duties on those entering into contract
The claimants worked together as a five girl pop group. The defendants had signed a sponsorship agreement, but now resisted payment saying that one of the five, Geri, had given notice to leave the group, substantially changing what had been . .
Cited – Director of Public Prosecutions v Ray HL 25-Jul-1973
The defendant ordered a meal at a restaurant believing his companion would lend him the money to pay. He later decided to seek to avoid payment and took a opportunity to escape.
Held: The appeal was allowed and the conviction restored. The . .
Cited – Wickens v Cheval Property Developments Ltd ChD 8-Sep-2010
The buyer of land sought a reduction in the purchase price complaining of the removal of several items (worth possibly andpound;300,000) by intruders after exchange. The seller said that the fixtures had been excluded under the contract.
Held: . .
Cited – Cramaso Llp v Ogilvie-Grant, Earl of Seafield and Others SC 12-Feb-2014
The defenders owned a substantial grouse moor in Scotland. There had been difficulties with grouse stocks, and steps taken over years to allow stocks to recover. They had responded to enquiries from one Mr Erskine with misleading figures. Mr Erskine . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 23 November 2022; Ref: scu.194206
