Contractual term or representation

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Statements made during the course of negotiations could amount to a contractual term or a representation. It is important to know whether a particular statement is a contractual term or if it is a representation as this will determine the appropriate cause of action and remedy available. If the statement amounts to a term of the contract which is not fulfilled, the innocent party may sue for breach of contract. If the statement is merely a representation which turns out to be untrue, the innocent party may bring an action for misrepresentation. In deciding whether a statement amounts to a term or representation the courts look at four factors:
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The parole evidence rule Relative expertise of the parties Importance of the statement Time 1. The parole evidence rule: Where the contract has been put into writing only the terms included in the written document are terms any verbal statements will be representations. 2. Relative expertise: If the representor has the greater knowledge, it is more likely to be a contractual term. Conversely if the representee has the greater knowledge it is more likely to be a representation: Oscar Chess v Williams [1957] 1 WLR 370 (Case summary)

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Dick Bentley v Harold Smith Motors [1965] 1 WLR 623 11. (Case summary) 12. 13. 14. 15. 3. The importance of the statement and reliance: 16. <A href="http://ws.amazon.co.uk/widgets/q?rt=tf_c w&ServiceVersion=20070822&am p;MarketPlace=GB&ID=V20070822%2FGB%2Fel

awresources-21%2F8010%2F400f921e-140f-4ddb-b5f43d96e1dea33a&Operation=NoScript&a mp;quot; _wpro_href="http://ws.amazon.co.uk/widgets/q ?rt=tf_cw&ServiceVersion=20070822& amp;amp;MarketPlace=GB&ID=V20070822%2FG B%2Felawresources-21%2F8010%2F400f921e-140f-4ddb-b5f43d96e1dea33a&Operation=NoScript&a mp;quot;>Amazon.co.uk Widgets</A> 17. Where the representee indicates to the representor the importance of the statement, this is likely to be held to be a term: 18. Bannerman v White (1861) 10 CBNS 844. (Case summary) 19. Ecay v Godfrey [1947] 80 Lloyds Rep 286 (Case summary) 20. Schawel v Reade [1913] 2 IR 81 (Case summary)
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4. Timing 23. 24. The longer the time lapse between making the statement and entering the contract the more likely it will be a representation:
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Routledge v Mckay [1954] 1 WLR 615 (Case summary)