Representation and Warranty

• Author: John D. McCamus
• Pages: 785-798

785

CHAPTER 18

REPRESENTATION AND

WA R RA N T Y

A. INTRODUCTION

As we have seen in Chapter 10, a variety of remedies are available to an

individual who is induced into an agreement by a misrepresentation.

Whether the misrepresentation is fraudulently or innocently false, the

misrepresentee may be able to rescind the agreement. If the misstate-

ment is made fraudulently or negligently, the misrepresentor may be

liable in tort to a claim for compensatory damages. A further alterna-

tive form of relief may be available if a misrepresentation inducing a

contract can be characterized as being subject to an implicit undertak-

ing that the representation is true. In such circumstances, it may be

possible to render that undertaking enforceable either as a collateral

contract that is subsidiary to the main contract induced by the rep-

resentation or, indeed, as part of that main contract itself. In either

case, the falsity of the representation would constitute a breach of the

implicit undertaking and would give rise to a claim for damages for

breach of contract. If the undertaking is a simple warranty that the

statement is true, liability will be strict and not dependent on a f‌inding

of fraud or negligence. The measure of damages in a clai m for breach of

contract would be in the expectancy measure, a measure of relief that

is potentially more comprehensive than a compensatory award in tort

as it may include an element of the prof‌it that would have been secured