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LAW 122 (614)
Chapter 9

Chapter 9 Notes

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Ryerson University
Law and Business
LAW 122
Kernaghan Webb

Chapter 9: Representations & Terms P RE-C ONTRACTUAL & C ONTRACTUAL S TATEMENTS 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. 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. It may induce the creation of a contract, but it does not form part of the contract. M ISREPRESENTATION The distinction bt the contractual term and pre-contractual representation is especially important if a statement is false. The distinction is important bc misrepresentation and breach of contract have different legal effects. Pre-contractual representation may result in a form of legal liability, such as actionable misrepresentation, but not in an action for breach of contract. The Nature of Misrepresentation o Misrepresentation: is a false statement of an existing fact that causes the recipient to enter into a contract. In contrast, a contractual term is not mean to describe an existing state of facts, but rather it provides a promise of future performance. Given promissory nature, a contractual term cannot be false when it is given. Nor can a breach of contract occur as soon as such a promise is made. A breach occurs only when one of the parties fails to perform precisely as promised. Misstatement of Fact Not every misstatement during pre-contractual negotiation is a misrepresentation. A misrepresentation occurs only if the speaker claimed to state a fact. The difficulty of that requirement is that ppl often make non-factual statements during negotiations. o Opinion: is the statement of belief or judgment. Opinions can range from carefree speculation to deliberate assessments based on a substantial body of evidence. It is not usually misrepresentation, even if its false. It is sometimes risky to offer an opinion; e.g. if you state an opinion in a way that leads me to think that it must be true, a court may find that your statement includes not only an opinion but also an implied statement of that can be treated as a misrepresentation. 1 of 8 www.notesolution.com
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