Chapter 9: Representations & Terms
It is also risky to offer an opinion if you have no reason to believe that it is actually
During pre-contractual negotiation, a person may describe how they will act in the future
oFuture Conduct: is a second type of non-factual statement. It is a non-promissory statement as
to a party’s future conduct & is usually not usually treated as a misrepresentation.
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.
However, the court may find a misrepresentation if you inaccurately describe the
consequence of a law.
E.g. 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 inaccurately tell me that zoning approval has been
granted and that I therefore would be able to develop the land.
Silence as Misrepresentation
As a general rule, parties are not required to disclose material facts during pre-contractual
negotiations, no matter how unethical non-disclosure may be.
There are, however, at least 4 occasions when failure to speak will amount to misrepresentation:
i.When silence would distort a previous assertion: A party’s silence sometimes
has the effect of falsifying a statement that was previously true. When a change in
circumstances affects the accuracy of an earlier representation, the party that made
that statement has a duty to disclose the change to the other party. Failure to do so
amounts to a misrepresentation. A misrepresentation may also occur if a party tells
half of the truth and remains silent on the other half.
ii.When the contract requires a duty of utmost good faith: the requirement of
utmost faith arises when one party is in a unique position to know the material fact.
The best e.g. involves insurance contracts. Since the customer is the only person that
has the info required by insurance comp., the law imposes an obligation of good faith
that requires the customer to disclose all of the relevant facts. A breach of that
obligation = insurance comp can avoid the contract.
iii.When a special relationship exists b/t the parties: When the relationship b/t two
parties is one of trust, or when one of the parties has some other form of special
influence over the other, a duty of disclosure may arise. E.g. pg 195
iv.When a statutory provision requires disclosure: Some statute requires the
disclosure of material facts in a contractual setting.
Insurance legislation in many provinces contains statutory conditions that
are deemed to be part of every insurance contract and must be printed on
every document. Many provinces have statutes that automatically insert
certain conditions into every insurance contract.
Some financial officers have a duty to disclose material facts. E.g. an officer
or director has to speak up if they have an interest in a contract with their
own company. If they fail to do so, the company may be entitled to set aside
the contract. The same holds true for some Crown corporations. A similar
disclosure requirement arises in the securities law.
Many provinces have legislation regulating the formation of domestic
contracts. If a party failed to disclose significant assets or significant
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