LAW 122 Study Guide - Final Guide: Uberrima Fides, Rescission

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Not every statement communicated during the negotiation process is a contractual term. A statement becomes a contractual term only if it is included in the agreement as a legally enforceable obligation. If it is untrue, it is a breach of contract. A contractual term is a promissory statement. The person who makes it voluntarily agrees to do something in the future. In contrast, a pre-contractual representation is a statement one party makes by words or conduct with the intention of inducing another party to enter into a contract. In other words, meant to convince the hearer to enter into the contract. It may induce the creation of a contract, but it does not form part of the contract. Puff: if untrue, there are no legal consequences. The distinction between the contractual term and pre-contractual representation is especially important if a statement is false. The distinction is important because misrepresentation and breach of contract have different legal effects.

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