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LAW 122 (616)
Chapter 9

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Ryerson University
Law and Business
LAW 122
Avi Weisman

Chapter 9 Representations and TermsPreContractual and Contractual Statementsy Not every statement communicated during the negotiation process is a contractual term Contractual Term is a provision in an agreement that creates a legally enforceable obligation y y Contractual term is a promissory statement y PreContractual representation is a statement one party makes by words or conduct with the intention of inducing another party to enter into a contract y It does not impose a contractual obligation it could induce the creation of a contract it does not form part of that contractMisrepresentation y The distinction bt the contractual term and precontractual representation is especially important if a statement is false y The distinction is important bc misrepresentation and breach of contract have different legal effects y Precontractual representation may result in a form of legal liability such as actionable misrepresentation but not in an action for breach of contractTHE NATURE OF MISREPRESENTATION y Misrepresentation is a false statement of an existing fact that causes the recipient to enter into a contract o In contrast a contractual term is not mean to describe an existing state of facts but rather it provides a promise of future performance o 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 promisedMisrepresentation of Fact y Not every misstatement during precontractual 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 nonfactual statements during negotiations Opinionis the statement of belief or judgment Opinions can range from carefree speculation to y deliberate assessments based on a substantial body of evidence o It is not usually misrepresentation even if its false o It is sometimes risky to offer an opinion eg 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 o It is also risky to offer an opinion if you have no reason to believe that it is actually true y During precontractual negotiation a person may describe how they will act in the future y Future Conductis a second type of nonfactual statement It is a nonpromissory statement as to a partys future conductis usually not usually treated as a misrepresentation o However a statement of future conduct is a misrepresentation if it is made fraudulently or if the future conduct is described in terms of present intention o However the court may find a misrepresentation if you inaccurately describe the consequence of a lawEg suppose you are trying to persuade me to buy your land It is not a misrepresentation if you in incorrectly tell me that the zoning laws do not apply to the property That is a matter of law However it may be a misrepresentation if you
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