Legal Article - Business Law

Misrepresentation of Goods and the Motor Industry

If one person, in pre-contract negotiations, makes a false statement and the other person relies on that statement when entering into the contract then the aggrieved party can make a claim for misrepresentation.

The law entitles people who have been misled in this way to unwind the contract, providing both sides can substantially get back to square one. If they can't or if the misrepresentation was made negligently or fraudulently then the aggrieved party can claim compensation.

As an example you may advertise a large service at a promotional price. The customer may ask for a large service on a vehicle but you only carry out a small service. The customer is entitled to the cost of having the rest of the service items carried out. 

 In practice of course you would offer to do it for them. Because of the misrepresentation theoretically the customer could seek a reversal of the deal but given the difficulties of such reversal the courts would generally favour the compensation route.

Note though if the customer asks for a large service but only receives the small a criminal offence also occurs for which you may be liable.

 

 

Published: 10 Mar 2011

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