If they didn’t ask… The Complexities of Misrepresentation by Silence

The Complexities of Misrepresentation by Silence

Today our solicitors discuss misrepresentation by silence.

Purchasers of substantial assets such as property or shares can find problems with the asset at a later point that were not disclosed by the seller. Purchasers may need to consider whether they have a claim against the seller based on misrepresentation by silence.

Purchasers caught up in the emotion and excitement, or simply the administrative details, of a purchase may forget to ask pertinent questions. Does a seller have a duty to disclose? If the seller remains silent on an issue, can that amount to actionable misrepresentation by silence? The answer is – it depends.

A duty to disclose?

Generally, a failure to disclose does not amount to a misrepresentation. There is no obligation on a contracting party to ensure that the other party knows all aspects of the transaction they are about to enter. However, legislation may impose an obligation to make disclosure. For example, estate agents are now bound by the same obligations as retailers under the Consumer Protection from Unfair Trading Regulations 2008 . Estate agents now have to disclose “fair” information to property purchasers. “Material information” about a property must be given in a clear and unambiguous way and estate agents cannot deliberately mislead or withhold information from buyers. While this example may give peace of mind for those looking to enter the property market (or perhaps considering their next purchase), it may be of little comfort for those who are entering into transactions in other areas.

Partial disclosure

While there may be no recourse against a party who has been completely silent about some aspects of a contract, the same does not apply if a party makes some disclosure during the transaction. One example may be that same motor vehicle, where a vendor represents that the timing belt has been replaced. The vendor may be unable to tell you exactly when it was done, or may not mention it again. You may proceed with the purchase in reliance on that advice, only to later discover that, in fact, the timing belt requires urgent repair. The vendor’s silence about some aspects of vehicle maintenance, while making statements about other aspects, may constitute misrepresentation. In these circumstances, you may have a claim for damages under the Misrepresentation Act 1967.

If you think you may have a claim for misrepresentation or breach of contract, advice from a breach of contract solicitor is a good idea. South Bank Legal is a London law firm specialising in these matters and you can contact us for a confidential discussion about any of the content you see on this website.