Document Type

Journal Article


A misrepresentation is a statement of fact made with the intention of inducing another party to enter into a contract, and relied on by that person to their detriment. This article is concerned with the application of the doctrine of misrepresentation to contracts of guarantees which are perhaps the most common form of security used in the commercial world today. Thus, misrepresentation by the creditor, for example, of material facts to a surety or guarantor to induce the latter to enter into the guarantee will entitle the guarantor to set aside the contract. The misrepresentation must be of fact rather opinion - a somewhat difficult distinction to make. The proliferation in the number of cases decided under s 52 of the Trade Practices Act 1974 (Cth) has transformed the doctrine of misrepresentation to such an extent that the legislation has taken over much of this area of the law. tt is nevertheless 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 limitations.