The limit and boundaries of the application of the doctrine of misrespresentation: standing at the crossroads
A misrepresentation is a statement of fact made with the intention of inducing another party to enter into a controet, and relied On by that person to their detriment. This article is concerned with the application oj the doctrine oj misrepresentation to contracts oj guarantees which are perhaps the most common form of security used in the commercial world today. Thus, mi representation by the creditor, for example, oj material facts to a surety or guarantor to induce the lalter to enter into the guarantee will entitle the guarantor to set aside the contracL. The mi representation must be offact rather than opinion - a somewhat difficult ditinction to make. The proliferation in the number of cases decided under 52 of the Trade Practices Act 1974 (Cth) has tran!Jiormed the doctrine of misrepresentation to such an extent that the legislation has laken over much of this area of the law. It is nevertheles important to retain the old law which is still relevant in non commercial transactions. The article evaluates the doctrine of misrepresentation as applied to contracts of guarantee and assesses its breadth and limitation.
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