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Misrepresentation

In the legal word, the term “misrepresentation” refers to a statement someone makes an untrue statement in order to encourage someone else to sign a contract. For example, misrepresentation occurs when a person signs a contract, then suffers damages as the result of taking the other person’s advice.

In this case, the wronged party can then sue for misrepresentation, and the court may order compensatory or punitive damages , or both. To explore this concept, consider the following misrepresentation definition.

Definition of Misrepresentation

  • A statement, which is untrue, made by someone for the purpose of encouraging another party to enter into a contract.

What is Misrepresentation?

A misrepresentation is information that is untrue, but which convinces someone to enter into a contract. For a better understanding, consider the following example of misrepresentation:

Tom agrees to a contract with RealMan Magazine Company. The details of the contract state that, if Tom subscribes to the magazine for a year, he will receive a gift worth over $100. After signing the contract, Tom realizes that the gift is not actually free, but the company has instead incorporated the price of the gift into the contract for the magazine subscription.

Had Tom known that beforehand, he would never have subscribed. Now, he is out over $100 because he has both an expensive magazine subscription and a “free” gift that he ultimately ended up paying for anyway.

The above is an example of fraudulent misrepresentation. The company knew they were baiting Tom to pay for the gift over the life of the magazine subscription, but they told Tom the gift was “free” to get him to sign up. Once Tom signed up, however, and read the fine print, he realized the company had taken him for a fool.

Three Types of Misrepresentation

There are three types of misrepresentation in contract law :

Fraudulent Misrepresentation

Negligent misrepresentation, innocent misrepresentation.

It is important to understand that all three types of misrepresentation is a misconstrued “fact,” not an opinion . If someone relies on another person’s opinion and suffers damages, that is not misrepresentation. If, however, that person claimed something was true when it wasn’t, that is a misrepresentation.

Fraudulent misrepresentation is the worst of the three types. This is because the person who shared the information knew that it was untrue, but he made the claim in order to convince another person to enter into a contract. Someone who falls victim to fraudulent misrepresentation can sue the offender for damages and ask the court for rescission .

Compensatory Damages

Compensatory damages are monies that a court awards to an individual who suffers damages or injury as the result of another person’s wrongful actions. This applies whether the acts are intentional or negligent. These damages are “compensatory” because they compensate for the costs incurred in replacing an item or seeking medical attention.

Courts typically award compensatory damages in cases concerning negligence or illegal conduct engaged in by the other party. In misrepresentation cases, courts can award compensatory damages to make up for the loss of money a person can suffer as the result of believing a lie.

Negligent misrepresentation occurs when a party to a contract does not care enough to verify information before passing it on to those whom he is encouraging to sign a contract. As a result, the other parties suffer loss of some type for believing his misinformation. Had he vetted the information properly, then he would have realized it was bogus before passing it on and damaging others. Victims of negligent misrepresentation can also sue for damages, and ask the court for rescission.

A party makes an innocent misrepresentation when he has no reason to believe that the information he has is untrue. He then shares that information with those who are entering into the contract, and they all suffer damages as a result. The victims here can sue for damages, but they cannot ask the court for rescission. To succeed on a claim of damages, the victims must be able to prove they suffered a loss by believing a misrepresentation.

Misrepresentation Example Involving

An example of misrepresentation, specifically fraudulent misrepresentation, exists in the matter of Nielsen v. Adams (1986). Here, Don Nielsen was looking for a house to purchase for his son in Nebraska in 1984. A house owned by Orlene Adams was one of the houses he considered.

On Nielsen’s inspection of the house, he noticed a sump pump in a closet near the basement stairs. When he asked Adams about it, she told him the sump pump was there to solve a minor issue involving moisture collecting at the bottom of the stairs.

Nielsen asked Adams if she had ever had issues with water in the basement, and she told him “absolutely not.” Nielsen bought the house shortly thereafter, and about one month after moving in, the basement flooded during a spring rain and suffered significant damage.

Nielsen sued Adams, alleging fraudulent misrepresentation, and asked the court for damages. During the trial , Adams admitted hiding information from Nielsen regarding past basement floods, but she claimed that telling him anything about it would have been irrelevant, as she believed someone had fixed the problem. However, Nielsen knew better because when he removed the paneling, he discovered enough damage to prove that the basement had suffered water issues for years.

The jury ultimately ruled in Adams’ favor, finding that Nielsen was unable to prove that Adams had deliberately lied to him. She stated that she believed the problem no longer existed when she sold the house to Nielsen, and the jury believed her.

Nielsen appealed the case to the Supreme Court of Nebraska, and the Court admitted that the trial court should not have instructed the jury to rule in the way that it did. Ultimately, the Court reversed and remanded the case back to the trial court for reconsideration. In the Court’s own words, this decision said:

“Having considered the history of the matter and the various cases within this jurisdiction , we conclude that adding ‘intent to deceive’ as a separate element rather than its being included in the element of knowledge or belief is error. Our earlier holding in Peterson v. Schaberg, ( citation omitted), and our recent holding in ServiceMaster Indus. v. J.R.L. Enterprises, (citation omitted), therefore, are correct statements of the law and ones which we should continuously, consistently, and uniformly follow. In doing so we believe we will nevertheless be true to the rules of law regarding the necessary elements of the offense of a tort action for false representation or deceit.

We therefore hold that in order to maintain an action for damages for false representation, the plaintiff must allege and prove by a preponderance of the evidence the following elements: (1) that a representation was made; (2) that the representation was false; (3) that, when made, the representation was known to be false, or made recklessly without knowledge of its truth and as a positive assertion; (4) that it was made with the intention that the plaintiff should rely upon it; (5) that the plaintiff reasonably did so rely; and (6) that he or she suffered damages as a result.

If the defendant can establish by a preponderance of the evidence that the defendant had a reasonable basis to believe that the statement of fact was true, then recovery will be denied. If, on the other hand, the evidence is such that a reasonable person in the position of the defendant could not have honestly believed the statement to be true, recovery may be had. In any event, it need not be shown that the defendant also had a ‘bad’ motive in doing what he or she did. The fact that the defendant deceives, itself, establishes scienter even though the defendant may have been unaware of the deception.”

Related Legal Terms and Issues

  • Compensatory Damages – An award of money in compensation for actual economic loss, property damage , or injury, not including punitive damages.
  • Contract – An agreement between two or more parties in which they make a promise to do or provide something in return for a valuable benefit.
  • Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property , or an injury.
  • Fraud – A false representation of fact, whether by words, conduct, or concealment, intended to deceive another.
  • Jury – A group of people sworn to render a verdict in a trial, based on evidence presented.
  • Negligent – Failure to act as, or to exercise the level of care of, another reasonably prudent person would likely to act.
  • Punitive Damages – Money awarded to the injured party above and beyond their actual damages, to punish the wrongdoer for outrageous misconduct in a civil matter.
  • Rescission – The revocation or cancellation of an agreement or contract.
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What Is a Misrepresentation?

  • How It Works

Special Considerations

  • How to Prove It
  • Financial Statements

The Bottom Line

  • Financial Crime & Fraud
  • Definitions M - Z

What Is Misrepresentation? Types and How It Works

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

misrepresentation in contract law

Investopedia / Hilary Allison

A misrepresentation is a false statement of a material fact made by one party which affects the other party's decision in agreeing to a contract. If the misrepresentation is discovered, the contract can be declared void. Depending on the situation, the adversely impacted party may seek damages.

Key Takeaways

  • Misrepresentations are false statements of truth that affect another party's decision related to a contract.
  • Such false statements can void a contract and in some cases, allow the other party to seek damages.
  • Misrepresentation is a basis of contract breach in transactions, no matter the size, but applies only to statements of fact, not to opinions or predictions.
  • There are three types of misrepresentations—innocent misrepresentation, negligent misrepresentation, and fraudulent misrepresentation—all of which have varying remedies.

How Misrepresentation Works

Misrepresentation applies only to statements of fact, not to opinions or predictions. Misrepresentation is a basis for contract breach in transactions, no matter the size.

A seller of a car in a private transaction could misrepresent the number of miles to a prospective buyer, which could cause the person to purchase the car. If the buyer later finds out that the car had much more wear and tear than represented, they can file a suit against the seller.

In higher-stakes situations, a misrepresentation can be considered an event of default by a lender, for instance, in a credit agreement. Meanwhile, misrepresentations can be grounds for termination of a mergers and acquisitions (M&A) deal, in which case a substantial break fee could apply.

In some situations, such as where a fiduciary relationship is involved, misrepresentation can occur by omission. That is, misrepresentation may occur when a fiduciary fails to disclose material facts of which they have knowledge.

A duty also exists to correct any statements of fact that later become known to be untrue. In this case, the failure to correct a previous false statement would be a misrepresentation.

Types of Misrepresentations

There are three types of misrepresentations.

Innocent Misrepresentation

Innocent misrepresentation is a false statement of material fact by the defendant, who was unaware at the time of contract signing that the statement was untrue. The remedy in this situation is usually rescission or cancellation of the contract.

Consider a situation where a seller of a piece of land mistakenly informs a buyer that there is planning permission granted for a new housing development nearby. The seller genuinely believed this to be true based on information received from a neighbor. Unfortunately, unknown to the seller, that planning permission had since been denied. Because the buyer relied on this information in deciding to purchase the land, the seller may be liable due to innocent misrepresentation since they made a mistake (even though it was an honest mistake).

Negligent Misrepresentation

Negligent misrepresentation is a statement that the defendant did not attempt to verify was true before executing a contract. This is a violation of the concept of "reasonable care" that a party must undertake before entering an agreement. The remedy for negligent misrepresentation is contract rescission and possibly damages.

Suppose a real estate agent, while showing a property to potential buyers, states that the roof was recently renovated. It turns out that the roof needs significant repairs. Despite not intending to deceive, the agent's negligent statement about the roof's condition played a part in the buyers making an offer on the property. If the buyers later discover the true state of the roof, they may have grounds to claim damages from the agent for the costs of repairing the roof as the agent was negligent in sharing incorrect information.

Fraudulent Misrepresentation

Fraudulent misrepresentation is a statement that the defendant made knowing it was false or that the defendant made recklessly to induce the other party to enter a contract. The injured party can seek to void the contract and recover damages from the defendant.

Imagine a scenario where a seller knowingly advertises a used car as having only 50,000 miles on the odometer. However, the car actually has 150,000 miles on it, and the seller has rolled back the odometer. The buyer relies on this false information and would buy the car based on the misrepresented mileage. In this case, the seller's fraudulent misrepresentation gives the buyer grounds to rescind the contract, return the car, and potentially seek damages for any losses suffered due to the deception.

How to Prove Misrepresentation

In order to recover damages due to misrepresentation, there are six legal bars for the plaintiff to overcome. The plaintiff must be able to show that:

  • A representation was made.
  • The representation was false.
  • The defendant knew at the time that the representation was false, or recklessly made the statement without knowledge of its truth.
  • The representation was made with the intention that the plaintiff would rely on it.
  • The plaintiff did rely on the false representation.
  • The plaintiff suffered harm by relying on the false representation.

All six of these requirements must be met in order for a plaintiff to win a case for misrepresentation. A defendant in one of these cases need not disprove all six of these claims.

Misrepresented Financial Statements

Companies and their financial statement preparers can falsify (knowingly or unknowingly) their financial performance. Misrepresentations in financial statements can impact various stakeholders, including investors, creditors, regulators, and the broader public. Here's how each group can be affected:

  • Investors: Misrepresentations, whether intentional or due to negligence, can distort the true financial health and performance of a company. For example, overstating revenues or understating expenses can artificially inflate profitability metrics, leading investors to overvalue the company's stock. Conversely, concealing liabilities or risks can mask the true financial risks faced by the company, potentially leading to losses for investors when the true financial situation is revealed.
  • Creditors: Creditors use financial statements to assess the creditworthiness of a company. Misrepresentations can mislead creditors about the company's ability to repay debt obligations. For instance, if a company falsely inflates its assets or understates its liabilities, creditors may extend credit thinking a company may be able to pay off its debt when, in fact, it might not be able to.
  • Regulators: Regulatory bodies such as the Securities and Exchange Commission (SEC) rely on financial statements to ensure compliance with accounting standards and securities laws. Misrepresentations can undermine the integrity of financial markets and erode investor confidence, a primary concern for regulatory bodies in charge of overseeing the stability of those markets. 
  • General Consumers: Misrepresentations in financial statements can undermine public trust in a company. Even if those consumers don’t own an equity stake in the company, consumers may choose to take their business elsewhere to support more honest operations if misrepresentations were to come to light.  

Misrepresented Financial Statements and Auditors

Auditors have a responsibility to provide an objective assessment of a company's financial position and performance, making sure that the information presented is reliable and follows accounting rules . To do this, auditors conduct detailed audit procedures to examine the financial statements and supporting documentation. This includes looking through financial transactions, reviewing accounting records, and testing the effectiveness of internal controls.

Through these procedures, auditors try their best to identify any discrepancies that could indicate potential misrepresentations. They focus on both quantitative things (like the accuracy of financial figures) and qualitative things (like the disclosure of significant risks). As part of the audit, auditors communicate their findings and observations to management, an audit committee, and potentially to regulatory authorities. In the end, an auditor strives to make sure no misrepresentation is happening within a company’s financial statements.

Example of Misrepresentation

In 2022, Tesla CEO Elon Musk offered to purchase X platform (formerly Twitter) for $43 billion, an offer which the company at first resisted and then accepted. A few weeks later, and after a substantial fall in the company's share price, Musk attempted to back out of the deal, claiming that X misrepresented the number of human users on the platform.

According to his termination letter, Musk alleged that the company knowingly misrepresented the number of live users on its platform and that he had relied on those false representations when he made his takeover offer. In response, the social media company claimed that Musk's allegations were "factually inaccurate" and that the billionaire was simply trying to back out of the merger that he himself had initiated.

What Is a Material Misrepresentation?

A material misrepresentation is a promise, false statement, or omission of facts that would cause another party to act differently if the whole truth were known. An example of a material misrepresentation is incorrectly stating one's income on a mortgage application or omitting key risk factors on an application for insurance coverage.

What Is Misrepresentation in Insurance?

In insurance, a misrepresentation is a lie or concealment of facts that can void an insurance contract if the insurer discovers the misrepresentation. For example, if a homeowner installs a pool but tells their insurer that they do not have a pool, the insurer may be able to void the policy if they discover the misrepresentation.

What Is Misrepresentation in Real Estate?

In real estate, misrepresentation is a lie or reckless untruth that affects the market value of a home or property. A common example of this is misrepresenting the square footage of a property. Since sales prices are often based on square footage, a buyer can often sue for misrepresentation even after a purchase is finalized.

What Are the Legal Consequences of Misrepresentation?

The legal consequences of misrepresentation vary based on the type and severity of the misrepresentation. The innocent party may have the right to cancel the contract if the misrepresentation is material. Damages may be awarded to compensate the innocent party for any losses suffered. In cases of fraudulent misrepresentation, punitive damages may be awarded to punish the party responsible.

What Steps Can Companies Take to Prevent Misrepresentations?

Companies can take proactive steps to prevent misrepresentations. They can establish and enforce ethical standards that promote honesty, integrity, and transparency. They can provide training and education to employees while also implementing robust internal controls. Companies can conduct independent reviews to verify the accuracy of the information it is reporting while also conducting due diligence and verifying information before formalizing it or communicating it.

Misrepresentation is a legal term for any type of falsehood or omission of fact that affects the behavior of a contractor or other party. Contrary to popular belief, misrepresentation does not just mean deliberate lies—it can also include accidental omissions or reckless statements without certainty of the facts. Misrepresentation can void a contract and in some cases allow the misled party to seek damages.

Cornell Law School, Legal Information Institute. " Misrepresentation ."

Campbell Law Review. " Fraudulent, Negligent, and Innocent Misrepresentation in the Employment Context: The Deceitful, Careless, and Thoughtless Employer ," Pages 61-62.

University of North Caroline, School of Government. " N.C.P.I.—Civil 800.10: Negligent Misrepresentation, General Civil Volume, March 2020 ."

Cornell Law School, Legal Information Institute. " Fraudulent Misrepresentation ."

Legal Information Institute. " Fraudulent Misrepresentation ."

The Hill. " Twitter Slams Musk Countersuit: 'Factually Inaccurate, Legally Insufficient, and Commercially Irrelevant .'"

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Misrepresentation in contract law: A brief on negligent, innocent and fraudulent statements

Contracts govern most of the transactions that a business carries out. When the representations that have induced someone to enter into a contract turn out not to be true or are misleading, this is misrepresentation.

If the person who has entered into the contract on the strength of a misrepresentation suffers loss, then they may be able to bring a legal claim for recission of the contract and/or damages.

What constitutes a misrepresentation?

A misrepresentation in contract law is a statement of fact that is not true and that persuades someone to enter into a contract. The contract does not have to be in writing, it can be a verbal agreement. The untrue statement can be made by an agent or employee on the part of their principal or employer.

A statement of opinion is not enough to constitute a misrepresentation, nor is a sales puff.

There are three types of misrepresentation, namely negligent misrepresentation, innocent misrepresentation and fraudulent misrepresentation.

Negligent misrepresentation

Where misrepresentation is made carelessly or without reasonable grounds for believing it to be true, this can constitute negligent misrepresentation. The claimant will need to show that the statement was not true and in defending a claim, the party making the statement will have to prove that they believed the statement and demonstrate that this belief was reasonable.

If the court grants the claim, then it can order rescission of the contract or damages instead, as well as damages for losses caused, even if they were not foreseeable.

Innocent misrepresentation

When someone unknowingly gives false information and this is not done fraudulently or negligently but the information induces someone to enter into a contract, this is innocent misrepresentation.

Where it can be proved that the information was not true, then a court can intervene to remedy the situation. This is usually done by rescinding the contract, with the aim of putting the parties back into the position they would have been in, but for the contract.

If rescission is not possible, then damages may be considered.

Fraudulent misrepresentation

Fraudulent misrepresentation, being founded on deliberate deceit, is the most serious type of misrepresentation. To bring a successful claim, the claimant will need to show that the untrue statement was made knowingly or recklessly, that they relied upon it and that it induced them to enter into the contract.

Because of the seriousness of the allegation, the standard of proof is high. The fraudulent allegation will need to have been clearly stated and it will need to be shown that the person making the statement knew it was false or had no belief in its truth or was reckless as to whether it was true or false.

It also needs to be demonstrated that the defendant intended the claimant to rely on the representation. The court will generally presume that, had it not been for the fraud, the claimant would not have entered into the contract.

The claimant must also show that, as a result of their reliance on the claim, they suffered loss and damage.

Proving a case of fraudulent misrepresentation is not simple and could require a substantial amount of evidence from the period leading up to the making of the contract, such as what each party knew, what was discussed or disclosed by way of marketing materials, emails, meetings and correspondence and what promises were made.

If the court finds fraudulent misrepresentation, then it can order rescission of the contract and damages for any losses caused. The losses do not have to be reasonably foreseeable.

Statements made in cases of misrepresentation

In cases of misrepresentation, the false statement or representation does not need to be made in writing, although the claimant must be able to prove to the court what was said.

It can be stated expressly or implied by conduct. Where the statement is implied, the context in which the inference is made can be important.

The court will ask what a reasonable person would assume were the facts in the circumstances.

While silence does not of itself constitute misrepresentation, when a statement is true in part but silent as to another aspect, then misrepresentation can be inferred from the fact that something was left out.

Bringing a claim for misrepresentation

If you believe that you have experienced loss because of misrepresentation in a contract you have entered into, then you are advised to seek legal advice as soon as possible. There are strict deadlines

for starting a claim. It may also be more likely that you are able to resolve issues without the need for litigation if you ask a legal expert to intervene on your behalf.

At Lincoln & Rowe, our dispute resolution team have in-depth experience of solving difficult problems across a range of sectors. We will give you our honest opinion of your case and discuss your options with you so that you have a good idea of the best course of action.

We can negotiate with the other party on your behalf to try and reach an agreed settlement. Where this is not possible, we can assist you through alternative dispute resolution, such as mediation or adjudication, to seek agreement.

In the event that your case goes to court, we will ensure that you have a strong case and expert representation. For more information in respect of our services, see Misrepresentation .

We are pleased to announce that we have won the Global Awards by ACQ5 award for Best Firm for Commercial Disputes London 2023. We were named as the ‘Commercial Disputes Specialists of the Year’ in the Corporate Livewire Innovation & Excellent Awards 2020 as well as ‘Boutique Litigation Law Firm of the Year’ in both the 2019 and 2020 Global Awards by ACQ5 . Partner, Dipesh Dosani, was named Commercial Litigation Lawyer of the Year in 2019 and 2020 in the ACQ5 Law Awards .

If you would like to talk to one of our expert legal team about a contract dispute, call us on 020 3968 6030 , email us at [email protected] or fill in our contact form and we’ll be happy to help.

misrepresentation in contract law

The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor .

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Dipesh Dosani Partner

Dipesh advises clients on a wide range of commercial disputes including breach of contract, directors’ disputes, shareholder remedies, partnership issues, professional negligence and intellectual property. he is also able to provide clients with advice on all aspects of insolvency as well as investigations including misfeasance, undervalue transactions, preferences, transactions to defraud creditors and wrongful trading..

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What Are the Consequences of a Misrepresentation in a Contract?

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By Olivia O'Rourke Lawyer

Updated on March 22, 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

What Is Misrepresentation?

What are the different types of misrepresentation, how can a misrepresentation be made.

  • Misrepresentation In Consumer Law 

What Are the Consequences of Misrepresentation in a Contract?

Key takeaways, frequently asked questions.

When you engage with your customers, you will likely have terms and conditions which outline each parties’ rights and responsibilities. You will also frequently enter into contracts with other stakeholders, such as manufacturers, suppliers, contractors, and investors. When you enter a contract , both parties rely on the other party’s representations t o decide whether they want to proceed. Where one party makes a false or misleading statement to induce the other party to enter into a contract, this is called a misrepresentation . In these scenarios, the parties may have protection under the common law. However, keep in mind that under consumer law in Australia, misrepresentation overlaps with misleading and deceptive conduct.

This article will explore what misrepresentation in a contract is and how a contracting party can make a misrepresentation. It will then examine the consequences for each party when they make a misrepresentation. 

A misrepresentation is a false statement t hat one party give s to another before entering into the contract . This can result in one party inducing the other party to enter into the contract. The statement must be based on a past or present fact.  Statements as to what would happen in the future would also be considered an opinion. Therefore, the court is unlikely to find this to be a misrepresentation. However, the court may find a future statement to be a misrepresentation if the party makes the statement without any genuine intention of fulfilling it, or there are no reasonable prospects of fulfilling the expectation.

For example, saying that your car is worth $10,000, when it is really worth $5,000, is not a misrepresentation as you are expressing an opinion. However, telling the other party that you paid $10,000 for it when you only paid $5,000 would be a misrepresentation, as you are falsely stating a fact.

A misrepresentation is different from mere ‘puffery.’ For example, wild promotional statements made during advertising would not be a misrepresentation . This is because a reasonable person would not believe that to be a statement of fact.

For example, if you are selling coats and state to your customers that the coat is the ‘best looking coat in the world,’ this would not be a misrepresentation. This is because a reasonable person would not believe this as a fact. However, if you stated that the coat was 100% cashmere when it was a polyester blend, this would be a misrepresentation. 

Misrepresentation can be innocent, negligent, or it can be fraudulent. The critical difference is whether the person making the statement believed it to be true when they made the statement. In addition, the statement that was made must have ‘induced’ the person to enter into the contract. 

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A misrepresentation can be made in many ways, including orally, by conduct or in writing. However, it must be a false statement of fact stated to induce the innocent party to enter the contract. This must result in the party being induced into the contract. These factors will deem it to be a misrepresentation. 

Misrepresentation In Consumer Law 

In consumer law, the sale of goods and services is a contract between the seller and buyer. If you sell goods or services in Australia, you must adhere to the Australian Consumer Law (ACL) set out in the Competition and Consumer Act 2010 . When you are selling your goods online or otherwise, you will make representations about the quality of the goods and services, its features, inclusions, its appearance and origination. If you make a false representation about the good or service, which induces the buyer to purchase it, you could be liable for its misrepresentation. This would amount to ‘misleading or deceptive conduct’. It would also be misleading or deceptive conduct if the conduct is deemed by the court to ‘likely’ mislead or deceive. 

For example, if you advertise that the phone you are selling has a front and back camera but really only has one at the back, this could amount to a misrepresentation. 

Suppose the buyer enters into a contract relying on this misrepresentation and consequently suffers loss. In that case, they may be able to cancel the contract or claim for damages . This can be either by negotiating this solution with the seller or if this is not effective, going to court. A common remedy for a wronged party is ‘rescission ‘. In this case, the contract is cancelled and the parties are brought back to the position they were in previously.

A misrepresentation is a false statement that one party gives to another before entering into the contract. This can result in one party inducing the other party to enter into the contract. Unbelievable statements that are clearly untrue are not sufficient, as they are not based on fact. Misrepresentation can be innocent, negligent, or it can be fraudulent. The type of misrepresentation will certainly impact the damages available to the wronged party.

If you need assistance with misrepresentation, call  LegalVision’s contract lawyers  on  1800 532 904  or fill out the form on this page.

A misrepresentation is made where someone makes a false statement to induce someone into entering a contract. 

There are various consequences for misrepresentation, including a rescission of the contract, paying damages to the innocent party, a charge of fraud, or a claim for breach of the Australian Consumer Law.

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What is a Misrepresentation under Contract Law (with Examples)?

15 Jan 2021

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Business contracts are often the subject of protracted negotiations in which much is said by both parties to lure the other to enter into a contract on particular terms. These representations may or may not be included in the contract.

One of the biggest risks to your business when engaging in such negotiations is misrepresentations. These misrepresentations may be damaging to your business and whether there are remedies if the contract has been concluded based on these misrepresentations.

This guide provides an overview of misrepresentations in contract law including the common protection mechanisms any business should use to limit their liability should they, unfortunately, make a misrepresentation.

misrepresentation in contract law

What is a misrepresentation?

A misrepresentation is a false statement of law or fact made by one party (party A) to another party (party B) which induces that other party (party B) to enter into a contract. 

Such statements of law or fact constituting a misrepresentation are normally in written words. Such statements can also be made by other modes of communication – such as verbally, through gestures, or conduct.

A statement constituting a misrepresentation may be found in sales literature, a company website, or an advertisement.

Legal elements in misrepresentation:

There are two elements, generally, which must be found to be present for a misrepresentation:

1) There must be a false statement of fact or law made to a party intending to enter into a contract, which

2) Induces that the other party to enter into a contract

misrepresentation in contract law

Which statements can constitute a misrepresentation?

The first legal element which must be present for misrepresentation is a false statement of fact or law made to a party intending to enter into a contract.

Depending on the type of statement you have made, it may or may not be able to constitute a misrepresentation.

1) Statements of fact

Statements of fact, whether concerning past or present events, will constitute representations.

2) Statements of opinion

A statement of opinion, if false, as a general rule, does not constitute a misrepresentation.

This is unless the statement is interpreted to be a statement of fact. If it is a statement of fact, and it can be proved that the person who gave it, did not hold it then this will constitute a misrepresentation.

Whether a statement is a statement of opinion or fact is to be interpreted by the courts in light of the circumstances in which the statement was made.  

3) Statements of future intention:

Statements that indicate the future intentions of a party often amount to statements of fact. This is because such statements of future intention often imply that a particular state of affairs exists at present. 

Silence by a party, generally will not constitute a misrepresentation. This is because pre-contractual negotiations, in most common law jurisdictions, are thought to be an adversarial affair. Neither party, as part of such pre-contractual negotiations, thereby, have a responsibility to disclose anything to the other party which may influence their decision to enter into a contract.

This rule is not absolute, however. There are exceptions to it, including:

A) Half-truths

A half-truth is where a party makes a statement of fact or law that is on the face of it true, but, because of certain things left unsaid, the representation is false, and thereby constitutes a misrepresentation.

B) Certain contracts of utmost good faith ( uberrimae fidei ) and contracts involving fiduciary relationships

Certain contracts such as contracts Uberrimae Fidei (contracts of the utmost good faith) require a party to disclose all material facts to the other that may influence their decision to enter into a contract.

Contracts of uberrimae fidei are often characterised by one party having nearly all information relevant to a contract, whereas the other has nearly none. A common example of such contracts of utmost good faith is insurance contracts.  

Certain other contracts involving fiduciary relationships, similarly require one party to disclose all material facts to the other.

C) Misrepresentation by conduct

Misrepresentations by conduct by virtue do not involve any communication by words, whether written or spoken. Misrepresentations by conduct, by definition, thereby, can be made in silence.

Whether conduct amounts to a misrepresentation, is to be interpreted by the courts in light of the circumstances in which the statement was made.

D) Change in circumstances

A misrepresentation can be found, despite a party being silent, because of a change in circumstances.

This happens when a party makes a statement of fact or law to another party, which when made is true. However, there is a change of circumstances before the other party enters into the contract, which renders the representation false. The statement of fact or law – the representation – is now a misrepresentation.

For the party making the representation to avoid making a misrepresentation, the party making the representation has a positive duty to notify the other of the change in circumstances. In other words, the party making the representation should notify the other party about the change in circumstances and the fact that the representation is no longer true.

misrepresentation in contract law

What is inducement?

The second legal element which must be present for misrepresentation is the statement made to induce another party to enter into a contract.

For there to be an inducement, four additional elements must be present. We will go through each one in turn.

Firstly, for inducement, the party to whom the misrepresentation is made, must be materially influenced to enter into the contract by it (except in the case of fraudulent misrepresentations).

This requirement for inducement means, that if the party to whom the misrepresentation is made knows about the misrepresentation and thereby does not rely on it, there is no inducement.

The misrepresentation need not be the sole reason or influence for the party entering the contract, however. It is not enough for the party to merely show they were encouraged to enter into the contract by the misrepresentation. It must materially influence the party – or in other words, have a strong influence on the party’s decision to enter into the contract.

Secondly, for inducement, the claimant must actually know about the misrepresentation. If a claimant does have knowledge about the misrepresentation, there is no way they could be influenced by it and thereby no way they could be induced by it.

Thirdly, it must be shown that the party making the misrepresentation intended to induce the other party into a contract.

Finally, it must be shown that the claimant actually relied upon the statement and actually, in fact, entered into the agreement.

What types of misrepresentation are there? 

There are three types of misrepresentation: fraudulent misrepresentation, negligent misrepresentation, and innocent misrepresentation.

They each have different requirements, and different corresponding remedies if found to be present. We will cover each one in turn.

1) Fraudulent Misrepresentation

A fraudulent misrepresentation is made where a false statement of fact or law is made by a party to another:

Without belief in its truth; or

Recklessly as to its truth

The party making the representation should be shown to make a statement knowing it is false or without belief in its truth. In other words, it must be proven that the party making the representation did not honestly believe that the statement was true.

If the party making the statement does honestly believe the statement made to be true, there is no fraud.

A fraudulent misrepresentation will also be found if it can be proven that a false statement was made recklessly by a party. A false statement is made recklessly if it is made by a party without caring whether the statement is true or not.

If a party is merely negligent in making a false statement – in other words, makes a statement without care – there is no fraudulent misrepresentation. It may, however, constitute a negligent misrepresentation (see below).

2) Negligent Misrepresentation

This is a false statement made by a person to another without any reasonable grounds for believing it true.

In England & Wales, negligent misrepresentations are governed by s.2(1) of the Misrepresentation Act 1967.

Under s.2(1) of the Misrepresentation Act 1967, the injured party must first prove that a statement was made to him which was false and induced him/her to enter into a contract. The party making the statement must then prove that they had reasonable grounds for believing the statement to be true.

3) Innocent Misrepresentation

Innocent misrepresentation is where a statement of fact or law is made by a party, honestly believing it to be true.

For an innocent misrepresentation, there is no fraudulence or negligence by the party making the statement. In other words, there is no dishonesty or carelessness when making the statement.

misrepresentation in contract law

Why are misrepresentations risky to your business?

The possibility of making a misrepresentation is risky, firstly because you can be sued. Not only is being sued bad for your business’ reputation but it could also be for its bottom line.

It can be bad for its bottom line because of the harsh remedies you might be subject to if successfully sued by another party.

There are generally two remedies available for misrepresentations: recission of contract and/or damages.

Rescission is where a contract is set aside, and the parties are put back into the position in which they were before the contract was made. Damages are a monetary award to compensate the injured party for some loss or injury – in this case, misrepresentation.

As stated above, the different types of misrepresentation are significant because the remedies available for each differ.

This is because, whether only one or both of the remedies are available – rescission and damages - in a particular case depends upon whether the misrepresentation at issue is fraudulent, negligent, or innocent.

The following table should clearly show the remedies available for each type of misrepresentation:

It is important to note that in the case of negligent misrepresentations and innocent misrepresentations, the court can offer damages in the place of rescission. This is not the case for innocent misrepresentations, however.

The damages for misrepresentation are particularly harsh because they are calculated based on the law of tort not the law of contract. This is important for your purposes because the damages in the law of tort have scope to be considerably higher.

This is because damages in the law of tort are calculated differently and a lot of rules that would otherwise apply in the case of damages for contract do not apply in the case of tort, leading to higher damages.

The possibility of making a misrepresentation is risky, secondly, because it can jeopardise other contracts your business might have entered into.

If your business is found to have made a misrepresentation, this can have knock-on effects on many other different agreements to your business is a party.

This is especially so in the case of loans. It is common for loan agreements to include a clause stating that any finding of misrepresentation will constitute an event of default.

This event of default might lead to the loan being accelerated – in other words, you might be liable to pay the loan immediately, well ahead of the originally intended schedule of payments.

In the worst case, it might even lead to cross-accelerations – in other words, multiple loans might become wholly due for payment immediately. This can quickly lead to cash-flow problems for your business, and in the worst case, bankruptcy.

misrepresentation in contract law

What should one do if another party makes misrepresentation them?

After long negotiations with another party, your company agrees to buy an expensive piece of machinery from them. You receive the machine and find out that it doesn't have many of the functions it was held out to have. You realise, the other party has misrepresented the machine to you! What do you do now? 

You should start by, firstly, writing a letter of complaint to the other party requesting a full refund and explaining that they have made a misrepresentation. This complaint will hopefully lead to negotiations with the other party for some sort of settlement. Coming to a mutually agreeable settlement in this way is often the best and cheapest form of resolution for a misrepresentation. 

DocPro offers comprehensive template letters for misrepresentation which you can use. You can find it at the following web address: https://docpro.com/doc1125/complaint-letter-for-misrepresentation-product-service

If both parties are unable to come to a settlement by negotiation, you may have to pursue more formal legal action in the form of litigation. For this, you should consult a lawyer in your jurisdiction.

Limiting liabilities for misrepresentations

Making a misrepresentation can have a detrimental impact on your business. It is pivotal, therefore, that you take care when making statements as part of pre-contractual negotiations for your business.

It is also wise, for you to take steps to limit your liability should a misrepresentation, nonetheless, unfortunately, be made by your business. This can be done by including clauses to this effect in your contracts, including the following:

Exclusion clauses

Limitation of liability clauses

non-reliance clauses

Businesses should make sure that when inserting such clauses into agreements, to make sure it is ‘reasonable’. If they are drafted too broadly, they may be struck down in accordance with unfair contract legislation in the business’ respective jurisdiction.

Kim has more than 20 years of legal experience in corporate and finance law, including experience in the securities, commodities and capital markets. Prior to founding DocPro, he worked for major international law firms and investment banks. Kim is qualified in 5 common law jurisdictions. If you would like to become a blog contributor to DocPro, please click the link below:

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Misrepresentation in Contract Law: negligent, innocent and fraudulent statements (and the remedies)

What is misrepresentation in contract law.

Before a contract is formed, statements can be made by one party to induce the other to enter into the contract.

Statements can be made during sales pitches, casual conversations and formal meetings. It doesn't matter when, where or how they're made. 

And they may be made in contracts themselves. They can begin with the words, "The [party name] represents: ...".

There are legal consequences when representations or statements are made to induce a business to enter a contract, and they're false. 

The misrepresentation misleads a party into signing the contract, when they otherwise might not have. 

They give rise to legal claims for rescission of the contract and damages.

Elements of Misrepresentation

The law of misrepresentation operates when:

  • a pre-contractual statement of fact is made
  • to a party intending to enter a contract, and  
  • the statement is relied on to enter the contract, and
  • the statement is false.

The misrepresentation doesn't even need to be made by the person benefiting from it.

Representations become misrepresentations when they're false. There are 3 types of misrepresentation:

  • innocent misrepresentation
  • negligent misrepresentation, and
  • fraudulent misrepresentation

The meaning and effect of a statement or conduct is interpreted by the circumstances in which the misrepresentation was made. Those circumstances will include the course of the negotiations and any representations made before the contract was finalised.

If a person making a representation realises that it is false, they are under a legal duty to correct the mistake or misunderstanding, and inform their counterpart.  They can also modify or withdraw a prior representation at any time before it is relied on.

Representations can be found in advertisements, sales literature, material published on a website stating capabilities of software, products or services.

If the statement isn't correct, it may be an actionable misrepresentation.

Forms of Misrepresentation

The misrepresentation will usually be in words, written or spoken. But other forms of communication will be sufficient to amount to a misrepresentation. 

In precontractual discussions, statements might be:

  • made verbally
  • communicated with gestures
  • in the terms of draft contracts, which end up being signed, or
  • statements that have no legal effect or consequence.

In written contracts , the more important statements made prior to the contract are - or should be - written into the contract. These will be the warranties and conditions.

In agreements made verbally :

  • a condition of the contract, a warranty or an innominate terms and form part of the contract, or 
  • a representation, and not form part of the contract
  • whether it is a term of the contract or a representation is decided by reference to the relative importance of the term to the parties in the context of the contract.

Conduct of can also amount to a misrepresentation. For example, production of promotional material can amount to a misrepresentation by conduct.

A series of misrepresentations may have cumulative effect . The effect of a series of continuing representations made throughout months of negotiations might lead to an overwhelming misleading impression of a state of affairs, and make it an actionable misrepresentation.

Nature of the Representation

Not all precontractual representations have legal consequence if they are false.

Words which are used might include sales talk (aka 'puffery') or laudatory words in respect of the goods or services such as:

  • "Best pies in the UK" or
  • "Finest after-sales service this side of Newcastle".

These sorts of statements are vague, not specific and lack any specific contractual meaning and not actionable in law. 

But they may be statements of fact , which are able to be verified .  They are actionable, because they to induce the other party to enter into the agreement.

Type of Statement

Statements of fact.

The representation must be a statement of fact, which relates to an existing or past event.

Statements of Future Intentions

Statements of future conduct or intention can amount to statements of fact, because they frequently contain implied representations with regard to the present state of affairs , or the knowledge of the person making the representation.

So where the person never had an intention he claims to have had, it will a misrepresentation as an exception to the rule. 

Here's an example:

Statements were made by company directors that money to be raised to buy assets for a business to improve its profitability. In fact, the money invested was used to pay the company’s debts. The directors never intended to acquire the assets for the business. It was said in the course of judgment: A misrepresentation as to the state of a man's mind is, therefore, a misstatement of fact. The real purpose of raising the money for the business was not as stated before the contract was signed. The statement induced the investor to invest his money. The directors had lied about their intentions, and were liable for fraudulent misrepresentation.

Statements of Opinion

Statements of opinion don't qualify unless the maker of the statement knows that their expressed opinion:

  • is false or
  • if they have special knowledge, and in a better position to know the true facts regarding the subject matter. 

In Smith v Land and House Property Corporation (1884) a vendor lied about the tenant being ‘most desirable’. He knew it wasn't true.  It was held that there was a misrepresentation of fact as the vendor was in a position to know the true facts .

In contrast, an owner of a farm stated that he believed it would hold 2,000 sheep, even though it was not a sheep farm.  It was held to be a statement of opinion, and therefore there was no misrepresentation of fact.

Can silence be a misrepresentation?

The general rule is that silence will not amount to a misrepresentation.  There is no duty to disclose facts which would affect the other party’s decision to enter into the contract. 

This general rule has exceptions, such as:

  • Half truths: Where a statement is true, but does not reveal the whole truth which therefore makes the statement misleading, it will probably be a misrepresentation
  • Change of circumstances: Where a statement is true when made, but due to a change of circumstances or lapse of time it becomes false, there is a duty on the maker of the statement to correct it.  Failure to do so will amount to a misrepresentation.
  • Contracts u berrimae fidei (of the utmost good faith, such as contracts of insurance):  Where a party is in a strong position to know the truth, there is a duty to disclose all material facts.  The most common type of contract in this class are contracts of insurance.
  • Fiduciary relationship: Where a fiduciary relationship exists between the parties, there is a particular duty to disclose all material facts upon the fiduciary to discharge their fiduciary duties to their principal.
  • Active concealment: This involves going beyond remaining silent and involves concealment of a defect, such as painting over a cracked wall to hide the defect.  

In the law of misrepresentation, the representation can be express or implied, ambiguous and state the literal truth - and still be misleading in the relevant sense.

Once made for the purpose of an intended transaction, the effect of the misrepresentation will continue until the transaction is completed or abandoned or the representation ceases to be operative on the mind of receiver of the representation.

Essential Element: Inducement

Just because a false statement has been made is not enough to succeed in a claim for misrepresentation.

The false statement must have induced the other party to enter into the contract. 

There are four conditions which need to be satisfied in order for there to have been an inducement:

  • Material statement: There will only be an inducement if the statement made is material.  It must represent a fact upon which a party decides to enter into the contract. It does not have to be the sole inducement: it is enough if it is one of the inducements.
  • Known to the Claimant:  There can't be an inducement unless the misrepresentation made was known to the claimant.  In Horsfall v Thomas (1862), the active concealment of a defect in a gun was held to be a misrepresentation, but the buyer did not inspect the gun - so he was not to know about the misrepresentation, therefore it did not induce the buyer to enter the contract.
  • Intended to be acted upon by the defendant: The statement made must be intended by the making it to be acted upon by the other party.
  • Actually acted upon: If the claimant relies upon the misrepresentation when entering into the contract, this will amount to an inducement, even where the claimant did not take advantage of an offer to check the statement made.

There can be no inducement when a person:

  • relies upon their own judgement, or
  • made their own investigations to ascertain the true state of affairs.

The overall effect of the misrepresentation is assessed as a whole, throughout the precontractual period, which includes documents and the conduct of the person making the misrepresentation.

Different Types of Misrepresentation

Precontractual misrepresentations come in 3 types. Each of them are different causes of action .

1. Innocent Misrepresentation

The pre-contractual statement was false, but the maker of the statement wasn’t negligent in making the statement.

The maker of the statement must reasonably believe that what was stated to be true. Then, the statement will be regarded as ‘wholly innocent’.

Rescission can be claimed as a remedy for innocent misrepresentation where:

the statement has become a term of the contract

the contract has been performed, according to s 1 of the Misrepresentation Act 1967, and

common law tests are satisfied.

The remedy of rescission entitles the affected party to an indemnity (or court orders to a similar effect) to restore them to the position they were in before the contract was made (known as restituio in integrum).

2. Negligent misrepresentation

 Traditionally, damages could only be claimed for fraudulent misrepresentation.  Not negligent misrepresentation. Only the remedy of rescission was available.

Section 2(1) of the Misrepresentation Act 1967 changed that. It introduced the availability of damages as a remedy for negligent misrepresentation. Also, a court has a discretion to refuse the remedy of rescission and award damages instead.

The Misrepresentation Act 1967 enables statutory damages for negligent misrepresentation: 

Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable grounds to believe and did believe up to the time the contract was made that the facts represented were true.

The burden of proving that there was no negligence falls on the maker of the statement.

Further, in Hedley Byrne and Co v Heller and Partners Ltd (1994), the law of negligence (which is a different cause of action to negligent misrepresentation) was extended. Negligent statements which cause loss became actionable.

The duty of care owed must arise from a "special relationship", that is to say, where one party has special knowledge about the subject matter, that person can reasonably assume that the other party will rely on the statement.

3. Fraudulent Misrepresentation

What constitutes Fraud?

When a false statement is made:

  • knowingly, or 
  • without belief in its truth, or
  • recklessly, careless as to whether it be true or false.

The first two obviously amount to fraud.

For the purpose of making a reckless statement, there is no need to prove dishonesty or fraud: only that the statement was made without caring whether the statement was true or not.

The difference between fraudulent misrepresentation and negligent misrepresentation is the existence of a fraudulent intention . 

There's no reason in principle why a fraudulent misrepresentation can't also be a negligent misrepresentation, provided the facts of the case satisfy the test for each cause of action. 

Consequences of Misrepresentation

The primary remedy for misrepresentation is rescission , which places the parties in the position they would have been in, if the contract had not been made. The effect of the contract is reversed.

Damages are not available for innocent misrepresentation. A higher scale of recovery of damages is available for fraudulent misrepresentation, because of the deceit involved by the person inducing the other contracting party to enter the contract in the first place.

A series of bars apply to obtain misrepresentation, where a party would be prevented from rescinding the contract. These are usually referred to as bars to rescission .

Damages for negligent and fraudulent misrepresentation are calculated in accordance with the usual law of damages. When coupled with rescission, an award of damages is designed to put the party in the position they would have been, had the misrepresentation not been made. Damages for not calculated on the basis that the misrepresentation was true.

In an assessment of damages, the claimant bears the burden of proof on the balance of probabilities to show:

  • causation of loss , and
  • that the loss suffered is not too remote, aka  remoteness of loss .

Those principles apply to reduce the amount of compensation which may be awarded.

The defendant bears the burden of proof to show that the claimant has not mitigated its loss. 

Difference between a representation and a term of a contract

In negotiations which lead to an oral contract, there can be some doubt whether something said or communicated was intended to be a representation or a term of the contract. (If it is a term of the contract, the false statement will lead to a breach of contract , rather than a claim for misrepresentation).

Firstly, it’s a question of law (and decided by a judge), and not fact whether a statement made before a contract is a representation or a term of the contract.

There are a series of factors at work to decide whether it's a misrepresentation or a term of contract:

  • challenges to verify: whether the receiver of the statement challenges the person making it, to check the accuracy of the statement. The challenge ordinarily gives weight to its credibility and importance to the person relying on it. The request to verify the truth of the statement may involve third parties, such as an independent valuer, surveyor, architect, depending on the facts of the case
  • effect of the statement: a statement designed to prevent the receiver from discovering a flaw in the subject matter of the agreement
  • importance of the statement: when a statement is made which is of significant importance to the claimant, such as a special requirement or performance capability
  • written agreements: the parties have reached in an oral agreement and the term is later reduced to written form. Statements incorporated into the written version are likely to be terms of the contract. Those not includes are probably representations
  • skill and expertise: where one party has a technical expertise or special knowledge on the subject matter of the contract and the other party does not.

In contrast, where the expertise levels are about equal or the receiver of the statement has a greater knowledge, the statement is more likely to be a representation.

Misrepresentation in contract law is a cause of action geared to address misleading statements, whether innocent, negligent or made by fraudulent intention. 

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3 Types of Misrepresentation and Why They Matter

Types of Misrepresentation and Why They Matter

A contract largely depends on the honesty and goodwill of those who have agreed to it. If a party to a contract makes a misrepresentation of fact without suffering any repercussions for that misrepresentation, then few people would feel comfortable binding themselves to that contract. Misrepresentation is an important concept in the contract laws of England, Wales, and certain other Commonwealth countries. There are three main types of misrepresentation : 

Below is a brief overview of each type and the remedies for them.

But first…

Before talking about the three types of misrepresentation , however, it’s important to first define what misrepresentation means in the context of contract law. A misrepresentation is an untrue statement of fact that induces a party to enter a contract. Furthermore, to pursue a claim against the person who made the misrepresentation , the claimant must show that he or she relied on the untrue statement of fact when deciding to enter the contract and that the misrepresentation led to damages to the claimant. An opinion, it is important to keep in mind, even if considered false, is not the same as a fact and generally does not figure in cases surrounding misrepresentation. With that in mind, it’s time to look at the three types of misrepresentation .  

Misrepresentation and Why They Matter

Fraudulent misrepresentation  

Fraudulent misrepresentation is very serious. Fraudulent misrepresentation occurs when a party to a contract knowingly makes an untrue statement of fact which induces the other party to enter that contract. Fraudulent misrepresentation also occurs when the party either does not believe the truth of his or her statement of fact or is reckless as regards its truth. A claimant who has been the victim of alleged fraudulent misrepresentation can claim both rescission, which will set the contract aside, and damages.

Negligent misrepresentation

A party that is trying to induce another party to a contract has a duty to ensure that reasonable care is taken as regards the accuracy of any representations of fact that may lead to the latter party to enter the contract. If such reasonable care to ensure the truth of a statement is not taken, then the wronged party may be the victim of negligent misrepresentation . Negligent misrepresentation can also occur in some cases when a party makes a careless statement of fact or does not have sufficient reason for believing in that statement’s truth. As with fraudulent misrepresentation, claimants can pursue both damages and a rescission of the contract.  

Innocent misrepresentation  

In innocent misrepresentation , a misrepresentation that has induced a party into a contract has occurred, but the person making the misrepresentation had reasonable grounds for believing it was true at the time the representation was made. A claimant who has been the victim of innocent misrepresentation can still pursue damages, but he or she cannot pursue rescission. Again, to pursue damages it must be shown that the claimant suffered a loss because of the misrepresentation.

The three types of misrepresentation described above are fundamental to understanding contract law in England and many Commonwealth countries. Claims based on allegations of misrepresentation help ensure that contracts are ultimately honored and that unscrupulous or negligent behavior does not go unpunished. To learn more about misrepresentation, check out Misrepresentation vs. Fraud: What’s The Difference?  

This article contains general legal information but does not constitute professional legal advice for your particular situation. The Law Dictionary is not a law firm, and this page does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

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to sell, supply, transfer or export, directly or indirectly, equipment which might be used for internal repression as listed in Annex I, whether or not originating in the Union, to any natural or legal person, entity or body in Russia or for use in Russia;

to provide technical assistance or brokering services related to the equipment referred to in point (a), directly or indirectly to any natural or legal person, entity or body in Russia or for use in Russia;

to provide financing or financial assistance, including in particular grants, loans and export credit insurance, as well as insurance and reinsurance, related to the equipment referred to in point (a), directly or indirectly to any natural or legal person, entity or body in Russia or for use in Russia.

By way of derogation from paragraph 1, the competent authorities may authorise the sale, supply, transfer, export or provision of the assistance or services referred to therein after having determined that this is necessary for:

the functioning of diplomatic and consular representations of the Union and of the Member States or partner countries in Russia, including delegations, embassies and missions, or international organisations in Russia enjoying immunities in accordance with international law;

the provision of electronic communication services by Union telecommunication operators, for the provision of associated facilities and services necessary for the operation, maintenance and security of such electronic communication services, in Russia, in Ukraine, in the Union, between Russia and the Union, and between Ukraine and the Union, and for data centre services in the Union.

By way of derogation from paragraphs 1 and 2, the competent authorities may authorise the sale, supply, transfer, export, or provision of the services referred to therein, under such conditions as they deem appropriate, after having determined that this is necessary for:

the provision of electronic communication services by Union telecommunication operators necessary for the operation, maintenance and security, including cybersecurity, of electronic communication services, in Russia, in Ukraine, in the Union, between Russia and the Union, and between Ukraine and the Union, and for data centre services in the Union.

Unless the competent authority of the relevant Member State has given prior authorisation in accordance with Article 3(1), it shall be prohibited to:

provide, directly or indirectly, technical assistance or brokering services related to the equipment, technology and software listed in Annex II, related to the installation, provision, manufacture, maintenance, repair and use of the equipment and technology listed in Annex II, or related to the provision, installation, operation or updating of any software listed in Annex II to any natural or legal person, entity or body in Russia or for use in Russia;

provide, directly or indirectly, financing or financial assistance related to the equipment, technology and software listed in Annex II to any natural or legal person, entity or body in Russia or for use in Russia;

provide any telecommunication or internet monitoring or interception services to, or for the direct or indirect benefit of, Russia’s government, public bodies, corporations and agencies or any person or entity acting on their behalf or at their direction.

Annex IV shall include natural or legal persons, entities or bodies that:

are responsible for serious violations or abuses of human rights or the repression of civil society and democratic opposition, or whose activities otherwise seriously undermine democracy or the rule of law in Russia;

provide financial, technical, or material support for, or are otherwise involved in, acts set out in point (a), including by planning, directing, ordering, assisting, preparing, facilitating, or encouraging such acts;

are associated with the natural or legal persons, entities or bodies referred to in point (a) or (b).

By way of derogation from Article 6(1) and (2), the competent authorities may authorise the release of certain frozen funds or economic resources, or the making available of certain funds or economic resources, under such conditions as they deem appropriate, after having determined that the funds or economic resources concerned are:

necessary to satisfy the basic needs of natural or legal persons, entities or bodies listed in Annex IV, and dependent family members of such natural persons, including payments for foodstuffs, rent or mortgage, medicines and medical treatment, taxes, insurance premiums, and public utility charges;

intended exclusively for the payment of reasonable professional fees or the reimbursement of incurred expenses associated with the provision of legal services;

intended exclusively for the payment of fees or service charges for the routine holding or maintenance of frozen funds or economic resources;

necessary for extraordinary expenses, provided that the relevant competent authority has notified the competent authorities of the other Member States and the Commission of the grounds on which it considers that a specific authorisation should be granted, at least 2 weeks prior to the authorisation;

to be paid into or from an account of a diplomatic mission or consular post or an international organisation enjoying immunities in accordance with international law, insofar as such payments are intended to be used for official purposes of the diplomatic or consular mission or international organisation;

necessary for the functioning of diplomatic and consular representations of the Union and of the Member States or partner countries in Russia, including delegations, embassies and missions, or international organisations in Russia enjoying immunities in accordance with international law;

necessary for the provision of electronic communication services by Union telecommunication operators, for the provision of associated facilities and services necessary for the operation, maintenance and security of such electronic communication services, in Russia, in Ukraine, in the Union, between Russia and the Union, and between Ukraine and the Union, and for data centre services in the Union; or

necessary for the sale and transfer by 28 August 2024, or within 6 months from the date of listing in Annex IV, whichever is latest, of proprietary rights in a legal person, entity or body established in the Union where those proprietary rights are directly or indirectly owned by a natural or legal person, entity or body listed in Annex IV, and after having determined that the proceeds of such sale and transfer remain frozen.

By way of derogation from Article 6(1), the competent authorities may authorise the release of certain frozen funds or economic resources, provided that the following conditions are met:

the funds or economic resources are the subject of an arbitral decision rendered prior to the date on which the natural or legal person, entity or body referred to in Article 6 was listed in Annex IV, or of a judicial or administrative decision rendered in the Union, or a judicial decision enforceable in the Member State concerned, prior to or after that date;

the funds or economic resources will be used exclusively to satisfy claims secured by such a decision or recognised as valid in such a decision, within the limits set by applicable laws and regulations governing the rights of persons having such claims;

the decision is not for the benefit of a natural or legal person, entity or body listed in Annex IV; and

recognising the decision is not contrary to public policy in the Member State concerned.

By way of derogation from Article 6(1) and provided that a payment by a natural or legal person, entity or body listed in Annex IV is due under a contract or agreement that was concluded by, or an obligation that arose for, the natural or legal person, entity or body concerned, before the date on which that natural or legal person, entity or body was included in Annex IV, the competent authorities may authorise, under such conditions as they deem appropriate, the release of certain frozen funds or economic resources, provided that the competent authority concerned has determined that:

the funds or economic resources will be used for a payment by a natural or legal person, entity or body listed in Annex IV; and

the payment is not in breach of Article 6(2).

Article 6(2) shall not apply to the addition to frozen accounts of:

interest or other earnings on those accounts;

payments due under contracts, agreements or obligations that were concluded or arose before the date on which the natural or legal person, entity or body referred to in Article 6 was included in Annex IV; or

payments due under judicial, administrative or arbitral decisions rendered in a Member State or enforceable in the Member State concerned,

provided that any such interest, other earnings and payments are frozen in accordance with Article 6(1).

Natural and legal persons, entities and bodies shall:

supply immediately any information which would facilitate compliance with this Regulation, such as information on accounts and amounts frozen in accordance with Article 6(1) or information held about funds and economic resources within Union territory belonging to, owned, held or controlled by natural or legal persons, entities or bodies listed in Annex IV and which have not been treated as frozen by the natural and legal persons, entities and bodies obliged to do so, to the competent authority of the Member State where they are resident or located, and transmit such information, directly or through the Member State, to the Commission; and

cooperate with the competent authority in any verification of the information referred to in point (a).

Natural or legal persons, entities or bodies listed in Annex IV, shall:

report within 6 weeks from the date of listing in Annex IV funds or economic resources within the jurisdiction of a Member State belonging to, owned, held or controlled by them, to the competent authority of the Member State where those funds or economic resources are located; and

cooperate with the competent authority in any verification of such information.

No claims in connection with any contract or transaction the performance of which has been affected, directly or indirectly, in whole or in part, by the measures imposed under this Regulation, including claims for indemnity or any other claim of this type, such as a claim for compensation or a claim under a guarantee, in particular a claim for extension or payment of a bond, guarantee or indemnity, in particular a financial guarantee or financial indemnity, of whatever form, shall be satisfied, if they are made by:

natural or legal persons, entities or bodies listed in Annex IV;

any natural or legal person, entity or body acting through or on behalf of one of the natural or legal persons, entities or bodies referred to in point (a).

The Commission and Member States shall inform each other of the measures taken under this Regulation and share any other relevant information at their disposal in connection with this Regulation, in particular information in respect of:

funds frozen under Article 6 and authorisations granted under the derogations set out in this Regulation;

violation and enforcement problems and judgments handed down by national courts.

The Council, the Commission and the High Representative of the Union for Foreign Affairs and Security Policy (the ‘High Representative’) may process personal data in order to carry out their tasks under this Regulation. Those tasks include:

as regards the Council, preparing and making amendments to Annex IV;

as regards the High Representative, preparing amendments to Annex IV;

as regards the Commission:

adding the contents of Annex IV to the electronic, consolidated list of natural and legal persons, groups and entities subject to Union financial sanctions and to the interactive sanctions map, both of which are publicly available;

processing information on the impact of the measures of this Regulation, such as the value of frozen funds and information on authorisations granted by the competent authorities.

Any information provided to or received in accordance with this Regulation shall be used only for the purposes for which it was provided or received.

This Regulation shall apply:

within the territory of the Union, including its airspace;

on board any aircraft or vessel under the jurisdiction of a Member State;

to any natural person inside or outside the territory of the Union who is a national of a Member State;

to any legal person, entity or body, inside or outside the territory of the Union, which is incorporated or constituted under the law of a Member State;

to any legal person, entity or body in respect of any business done in whole or in part within the Union.

This Regulation shall enter into force on the day of its publication in the Official Journal of the European Union .

This Regulation shall be binding in its entirety and directly applicable in all Member States.

List of equipment which might be used for internal repression as referred to in Article 2

List of equipment, technology and software referred to in Article 3

General Note

Notwithstanding the contents of this Annex, it shall not apply:

to equipment, technology or software which are specified in Annex I to Regulation (EU) 2021/821 of the European Parliament and of the Council ( 5 ) or the Common Military List;

software which is designed for installation by the user without further substantial support by the supplier and which is generally available to the public by being sold from stock at retail selling points, without restriction, by means of:

over-the-counter transactions;

mail order transactions;

electronic transactions; or

telephone order transactions;

software which is in the public domain; or

where Article 2a of Regulation (EU) No 833/2014 applies.

The sections A, B, C, D and E refer to the sections referred to in Regulation (EU) 2021/821.

List of equipment

‘Software’ for the ‘development’, ‘production’ or ‘use’ of the equipment specified in A above.

‘Technology’ for the ‘development’, ‘production’ or ‘use’ of the equipment specified in A above.

Equipment, technology and software under these sections fall within the scope of this Annex only to the extent that they fall within the general description ‘internet, telephone and satellite communications interception and monitoring systems’.

For the purpose of this Annex ‘monitoring’ means acquisition, extraction, decoding, recording, processing, analysis and archiving call content or network data.

(4)   IMSI stands for International Mobile Subscriber Identity. It is a unique identification code for each mobile telephony device, integrated in the SIM card and which allows identification of such SIM via GSM and UMTS networks.

(5)   MSISDN stands for Mobile Subscriber Integrated Services Digital Network Number. It is a number uniquely identifying a subscription in a GSM or a UMTS mobile network. Simply put, it is the telephone number to the SIM card in a mobile phone and therefore it identifies a mobile subscriber as well as IMSI, but to route calls through him.

(6)   IMEI stands for International Mobile Equipment Identity. It is a number, usually unique to identify GSM, WCDMA and IDEN mobile phones as well as some satellite phones. It is usually found printed inside the battery compartment of the phone. Interception (wiretapping) can be specified by its IMEI number as well as IMSI and MSISDN.

(7)   TMSI stands for Temporary Mobile Subscriber Identity. It is the identity that is most commonly sent between the mobile and the network.

(8)   SMS stands for Short Message System.

(9)   GSM stands for Global System for Mobile Communications.

(10)   GPS stands for Global Positioning System.

(11)   GPRS stands for General Package Radio Service.

(12)   UMTS stands for Universal Mobile Telecommunication System.

(13)   CDMA stands for Code Division Multiple Access.

(14)   PSTN stands for Public Switch Telephone Networks.

(15)   DHCP stands for Dynamic Host Configuration Protocol.

(16)   SMTP stands for Simple Mail Transfer Protocol.

(17)   GTP stands for GPRS Tunnelling Protocol.

Websites for information on the competent authorities and address for notifications to the Commission

https://diplomatie.belgium.be/en/policy/policy_areas/peace_and_security/sanctions

https://www.mfa.bg/en/EU-sanctions

https://fau.gov.cz/en/international-sanctions

https://um.dk/udenrigspolitik/sanktioner

https://www.bmwi.de/Redaktion/DE/Artikel/Aussenwirtschaft/embargos-aussenwirtschaftsrecht.html

https://vm.ee/sanktsioonid-ekspordi-ja-relvastuskontroll/rahvusvahelised-sanktsioonid

https://www.dfa.ie/our-role-policies/ireland-in-the-eu/eu-restrictive-measures/

http://www.mfa.gr/en/foreign-policy/global-issues/international-sanctions.html

https://www.exteriores.gob.es/es/PoliticaExterior/Paginas/SancionesInternacionales.aspx

http://www.diplomatie.gouv.fr/fr/autorites-sanctions/

https://mvep.gov.hr/vanjska-politika/medjunarodne-mjere-ogranicavanja/22955

https://www.esteri.it/it/politica-estera-e-cooperazione-allo-sviluppo/politica_europea/misure_deroghe/

https://mfa.gov.cy/themes/

http://www.mfa.gov.lv/en/security/4539

http://www.urm.lt/sanctions

https://maee.gouvernement.lu/fr/directions-du-ministere/affaires-europeennes/organisations-economiques-int/mesures-restrictives.html

https://kormany.hu/kulgazdasagi-es-kulugyminiszterium/ensz-eu-szankcios-tajekoztato

https://smb.gov.mt/

NETHERLANDS

https://www.rijksoverheid.nl/onderwerpen/internationale-sancties

https://www.bmeia.gv.at/themen/aussenpolitik/europa/eu-sanktionen-nationale-behoerden/

https://www.gov.pl/web/dyplomacja/sankcje-miedzynarodowe

https://www.gov.pl/web/diplomacy/international-sanctions

https://portaldiplomatico.mne.gov.pt/politica-externa/medidas-restritivas

http://www.mae.ro/node/1548

http://www.mzz.gov.si/si/omejevalni_ukrepi

https://www.mzv.sk/europske_zalezitosti/europske_politiky-sankcie_eu

https://um.fi/pakotteet

https://www.regeringen.se/sanktioner

Address for notifications to the European Commission:

European Commission

Directorate-General for Financial Stability, Financial Services

and Capital Markets Union (DG FISMA)

Rue Joseph II 54

1049 Bruxelles/Brussel

BELGIQUE/BELGIË

Email: [email protected]

List of natural and legal persons, entities and bodies referred to in Article 6

Α.    Natural persons

Β.    Legal persons, entities and bodies

( ) Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (OJ L 269, 10.10.2013, p. 1).

( ) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1).

( ) Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).

( ) Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).

( ) Regulation (EU) 2021/821 of the European Parliament and of the Council of 20 May 2021 setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items (recast) (OJ L 206, 11.6.2021, p. 1).

The Legacy of the Oil Industry in Tomsk Oblast: Contradictions Among Socio-Economic Development, Political Legitimacy and Corporate Profits

  • First Online: 01 January 2011

Cite this chapter

misrepresentation in contract law

  • David Dusseault 3  

Part of the book series: Studies in Human Ecology and Adaptation ((STHE,volume 6))

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The brunt of contemporary academic and media analysis regarding the Russian energy sector has fallen on the country’s uneasy relationships with the transit states of the Western CIS (Commonwealth of Independent States) and the Caucasus as well as the implications of the federation’s energy policy for the consumer states in the European Union. Considering the economic and political stakes involved in the reorganization of the European energy sector, such a geopolitical focus is justifiable.

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 The Western CIS is comprised of Ukraine and Belarus while the region referred to as the Caucasus refers to Georgia, Azerbaijan and Armenia.

 For a chronicled list of the relevant energy sector legislation from 1995 to 2008, please see Appendixes 1 and 2 at the end of this chapter.

 For more information, see http://www.rosneft.com/Upstream/ProductionAndDevelopment/western_siberia/tomskneft/

 The oil company YUKOS headed by former Oligarch Mikhail Khodorkovsky was formed back in 1993 as a part of one of the many controversial “loans for shares” deals between private Russian bankers and the Yeltsin government. At its peak, the company was responsible for 20% of Russia’s total oil production.

 Through its subsidiary company, Tomskneft, YUKOS was very active in supporting regional medical services by supplying training and technology to the staff of local hospitals and policlinics. The company was also involved in sponsoring employment fairs for local students in an attempt to fill the company’s ranks with home-grown talent that would eventually make up the next generation of the company’s leadership cadre.

 Taxation of corporate profits is only one aspect of the relationship between YUKOS and Tomsk Oblast. The roles taken on by the companies and the socio-economic needs of the region were manifold. Subsequently, in early1998, the regional administration determined that relations among Tomskneft VNK, the company’s owner YUKOS and Tomsk Oblast needed to be coordinated by a special committee. See Appendix 1 : Legislation in Tomsk Oblast’s Gas and Oil Sector 1995–2001 at the end of this chapter.

 According to YUKOS’ executive board, following the arrest of Khodorkovsky, the company continued its normal business activities. At the time, Tomskneft contributed 20 mt of oil. Based on these numbers, the company was able to provide close to 3.1b RR in socio-economic support for the regions where the company worked. This total represented a doubling of the company’s social contributions over a 4-year period. See YUKOS will not Surrender its Position Tomskaya Neft 6 March 2004.

 In an interview granted to the Strezhevoi newspaper, Tomskaya Neft, the Governor of Tomsk Oblast, Viktor Kress outlined the primary structural challenge facing the region. While producing the highest rate of industrial growth in the Siberian Federal Region, the Tomsk economy was too dependent upon the energy industry for production and economic growth. At the same time, the majority of proceeds acquired from the exploitation of the region’s resources were sent to Moscow (10b out of 25b RR). See When We Talk About Success, We Mean Oil Tomskaya Neft 7 February 2004 .

 While serving as head of the former oil giant YUKOS, Mikhail Khodorkovsky was arrested under less than clear circumstances. While most analysts perceived Khodorkovsky’s incarceration as politically motivated by the new Kremlin elite under President Putin, additional evidence points to YUKOS’ behavior as a predatory company that through a system of offshore accounts and daughter companies was siphoning off Russia’s oil, embezzling the proceeds from the sales and refusing to pay the relevant taxes to the Russian government.

 Discussions in the local press to assuage employees for Tomskneft were published with regularity. The mayor of the city of Strezhevoi where Tomskneft’s production facility is located spoke publically about the uncertainties presented by the YUKOS bankruptcy at the local Duma. See About YUKOS, a Bridge and a Jubilee Tomskaya Neft 5 August 2006 . These concerns spread to the regional gas sector as well. The Tomsk Parliament was so concerned about the overall state of the regional energy sector after the bankruptcy of YUKOS that representatives composed a letter to then Prime Minister Fradkov and the head of Gazprom, Aleksei Miller, requesting financial aid to explore new resources and develop infrastructure for the region. See Appendix 2 : legislation in Tomsk Oblast Gas and Oil Sector 2002–2008 at the end of this paper.

 Big Ambitions for Tomsk Oil Kommersant Business Guide No. 154 29 August 2008 .

 In order to keep the region’s oil and gas industry profitable and the economy in balance, the region’s producers need to recover 18–20 mt of oil and gas (oil equivalent) annually. See Expert Siberia ( 2007a ).

 It is interesting to note that while the process of exploration was initiated by the federal authorities, the bulk of financing for the seismological surveys came from the private sector. Drilling in Tomsk Expert Siberia No. 9 (61) Expert on Line 2.0 7 March 2005 .

 OAO Tomskneft VNK is currently owned by federal monopolies Rosneft (50%) and Gazprom (50%) (Expert Online 2008a , b ). The company, once owned by YUKOS, controls over 80% of the region’s producing fields, holds 17 production licensing agreements in Tomsk Oblast, along with a further nine licenses for developing unexplored blocks in the region. In 2008, the company is expected to extract close to 8.5 mt of oil in Tomsk Oblast.

 Kommersant 29.08. 2008 .

 Tomsk Oblast is dissected almost down the middle of its territory by the Ob River. To the west and north of the river lie the bulk of the region’s oil and gas reserves already under production. These fields form the base for the region’s oil and gas production. However, due to the steady decline in these fields’ production, the local administration and sector interests have begun to look towards the right bank of the Ob to replace and significantly increase the region’s falling production (Kommersant 2008 ; Expert Siberia 2007a , b , c ).

 The investments in the right bank from the federal government alone total 1b RR. Administrative Drilling Apparatus Expert Siberia No. 4 (146) Expert On-line 2.0 29 January 2007a .

 Kommersant 2008 .

 Administrative Drilling Apparatus Expert Siberia No. 4 (146) Expert On-line 2.0 29 January 2007 .

 In 2008, the ownership of Tomskneft VNK was again in question. Once owned fully by the federal oil company Rosneft, half of Tomskneft’s stock package was put up for sale with Gazprom’s affiliate Gazpromneft offering 3.4–3.6b RR for the deal. Behind the very public sale swirled concerns over the company’s falling oil recovery rates and growing tax debt of 9b RR. See Tomskneft in Half Expert Siberia No. 1–2 (191) Expert On-line 2.0 14 January 2008 .

 Tomskneft ( 2008b ).

 Russian–British Conflict Approaches Nadir Gazeta.ru 5 August 2007 .

 Tricky Licensing Expert Siberia No. 36 (178) Expert On-line 2.0 1 October 2007d .

 ( 2007 ) Strategia Razvetija Tomskoi Oblasti do 2020: 4

 First Step for the State Expert Siberia No. 40 (227) Expert Online 2.0 13 October 2008 .

Construction on the new SevSib rail link is scheduled to begin in 2010 with initial capital investment (500b RR) garnered from both public and private sources. See Investors Reach tentative Agreement on New SevSib Railway European Daily Monitor Vol. 5 No. 47 Jamestown Foundation 12 March 2008 .

The Road Determines the Journey Expert Siberia No. 40 (227) Expert On-line 2.0 13 October 2008 .

For 2008, it was expected that Tomsk would consume 8.5b kw/h while producing only 4.08b kw/h (approximately 48% of the total). See Atomic Plans Expert On-line 9 July 2008 .

Already in 2003, plans were set for a propane–butane plant in Tomsk Oblast, which would ­produce 72 tt of liquid hydrocarbons. The plant’s expected production would have covered the Oblast’s annual demand and dropped prices for heating isolated localities outside of the capital, Tomsk by half. See Liquefied Gas to Reduce Costs of Heating Expert Siberia No.9 (9) Expert On-line 6 October 2003 .

This investment program is tied into the Federal Strategy to build up to 11 new nuclear power plants by 2020. As part of the federal plan, Tomsk would receive one new plant in addition to the existing facilities already in the region, which were once part of the country’s military industrial complex. See Atomic Plans Expert On-line 9 July 2008 , Atomic Seversk Expert On-line 21 March 2007 & Peaceful Seversk Expert No. 44 (538) Expert On-line 2.0 27 November 2006 .

Aalto, P., Dusseault, D., Kennedy, M., Kivinen, M. (2008). The social structuration of Russia’s energy policy. Paper given at Centre For East European and Russian Studies International Workshop - The Cultural Politics of European Union Energy Security 7th-11th May 2008.

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Gazeta.ru (2007). Russian-British Conflict Approaches Nadir 5 August 2007.

Kommersant Business Guide. (2008). Big Ambitions for Tomsk Oil No. 154 29 August 2008.

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Strategia RazvitijaTomskoi Oblasti do 2020 Goda Administratisija Tomskoi Oblasti Departament Ekonomii i OOO Deltaplan (2007).

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Acknowledgments

I would like to take the opportunity to thank Professor Alexei I. Sherbinin, Head of the Department of Political Science and Professor Evegenia Popova, Lecturer, at the Department of Political Science at Tomsk State University for their assistance and research that has contributed to this chapter concerning Regional Perspectives on the Russian Energy Sector.

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David Dusseault

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Sirkku Juhola

Appendix 1 Legislation in Tomsk Oblast Gas and Oil Sector 1995–2001

Appendix 2 legislation in tomsk oblast gas and oil sector 2002–2008, rights and permissions.

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Dusseault, D. (2011). The Legacy of the Oil Industry in Tomsk Oblast: Contradictions Among Socio-Economic Development, Political Legitimacy and Corporate Profits. In: Järvelä, M., Juhola, S. (eds) Energy, Policy, and the Environment. Studies in Human Ecology and Adaptation, vol 6. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-0350-0_5

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