Misrepresentation in Contract Law in Trinidad and Tobago
A misrepresentation is a false statement of existing fact — not opinion, not a promise about the future, and not a statement of law — made by one party to a contract that induces the other party to enter into that contract. In Trinidad and Tobago, this area of law is principally governed by the Misrepresentation Act, Chapter 82:35 of the Laws of Trinidad and Tobago, which supplements the common law rules inherited from English contract law and gives the courts expanded power to award damages and to rescind contracts where one party has been misled.
Understanding misrepresentation matters in everyday transactions — buying or selling land, entering a lease, purchasing a business, or agreeing to an employment contract. When a seller tells you the property has no encumbrances, when a developer promises amenities that never materialise, or when a vendor conceals a defect by making a misleading positive statement, you may have a claim in misrepresentation. This article explains what the law requires, the three types of misrepresentation, the remedies available, and how the courts of Trinidad and Tobago have applied these principles.
Elements of Misrepresentation
Four elements must all be present before a court will find that a misrepresentation has occurred. The absence of any single element is fatal to a claim.
1. A Statement
There must be a statement — made in words or by conduct. A representor's deliberate concealment of a defect by covering it up physically can amount to a statement by conduct. However, silence alone is generally not actionable as misrepresentation. If a party simply fails to volunteer information, that is not, without more, a misrepresentation. The principal exceptions arise where:
- There is a duty to disclose (as in contracts uberrimae fidei, such as insurance contracts);
- A statement, though true when made, becomes false before the contract is concluded and the representor fails to correct it; or
- A half-truth is uttered — a statement that is literally true but gives a misleading overall impression.
2. A Statement of Existing Fact
The statement must be one of existing or past fact. Three important exclusions apply:
- Statements of opinion are not representations of fact. In Bisset v Wilkinson [1927] AC 177 (PC), the Privy Council held that a vendor's statement that land could carry two thousand sheep was not a misrepresentation because it was merely his opinion about land that had never been used as a sheep farm. Both parties knew the basis on which the statement was made.
- Statements of future intention are not statements of existing fact. A promise to do something in the future may give rise to a breach of contract if incorporated as a term, but it is not a misrepresentation. (However, if a person states an intention they do not actually hold, the statement of that existing state of mind can be a misrepresentation.)
- Statements of law — the old rule that a misstatement of law could never ground a misrepresentation claim has largely eroded, both at common law and through the Misrepresentation Act. Where a statement of law is also a statement of fact, it may found a claim.
3. The Statement Was False
The statement must have been false at the time it was made. A statement that was true when made but becomes false before contract execution may also ground a claim if the representor fails to correct it.
4. The Statement Induced the Claimant to Enter the Contract
The false statement must have induced the other party to enter the contract. It need not be the sole inducement — it is sufficient that it was one of the inducing causes and that it was material. A representee who did not rely on the statement at all — for example, because they carried out their own independent investigation and formed their own view — cannot claim they were induced. Equally, a person who knew the statement was false cannot claim to have been deceived by it.
The Three Types of Misrepresentation
The law distinguishes three types of misrepresentation, and the classification determines the remedies available. The following table provides an at-a-glance comparison.
| Type | Test | Burden of Proof | Rescission | Damages |
|---|---|---|---|---|
| Fraudulent | Made knowingly false, without belief in truth, or recklessly | Claimant must prove fraud | Yes — available | Yes — tort of deceit; all consequential loss including unforeseeable |
| Negligent | Representor cannot prove reasonable grounds for belief | Burden REVERSED — representor must disprove | Yes — available | Yes — same measure as fraud under s.2(1) |
| Innocent | Representor had reasonable grounds to believe statement true | N/A once other types ruled out | Yes — available | No damages as of right; court may award damages in lieu under s.2(2) |
Fraudulent Misrepresentation
The classic definition of fraudulent misrepresentation comes from Derry v Peek [1889] 14 App Cas 337 (HL), where Lord Herschell held that fraud is proved when it is shown that a false representation has been made: (i) knowingly, (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false.
The key rule: a statement made recklessly — without caring whether it is true or false — is legally equivalent to a deliberate lie.
Fraudulent misrepresentation is the most serious category. Its consequences for the representor are correspondingly severe:
- The representee may rescind the contract and also claim damages in the tort of deceit.
- Damages in deceit cover all direct loss flowing from the transaction, including losses that were unforeseeable at the time of contracting. This is more generous than the ordinary contractual measure of damages (which covers only foreseeable loss).
- There is no defence of contributory negligence in deceit — the representee's own carelessness does not reduce the award.
Negligent Misrepresentation — Section 2(1) and the Reversed Burden
Before the Misrepresentation Act, a claimant who could not prove fraud had no remedy in damages for a pre-contractual misrepresentation unless the statement had been incorporated as a contractual term. The Act changed this fundamentally.
Under section 2(1) of the Misrepresentation Act, Chapter 82:35, where a person has entered into a contract after a misrepresentation has been made to them by another party to that contract, they are entitled to damages as if the representation were made fraudulently — unless the representor proves that they had reasonable grounds to believe, and did believe up to the time the contract was made, that the facts represented were true.
The reversed burden of proof is the critical feature of s.2(1): the representor must disprove negligence, not the representee prove it.
This is a point that is frequently misunderstood and underexplored. Once a claimant establishes that a false representation was made and that they relied on it, the representor must come forward with evidence that they genuinely and reasonably believed the statement to be true. If they cannot, damages follow automatically at the same generous measure as fraud in deceit.
In Smith v 7 Hills Estate Development Ltd (2019, HC), the Trinidad and Tobago High Court applied these principles in the context of a property transaction. The defendant made representations about the title and condition of land that were found to be false. The court applied the Derry v Peek test and found that the representor could not demonstrate the reasonable grounds required under s.2(1), resulting in an award of damages and an order for rescission of the contract.
Innocent Misrepresentation
An innocent misrepresentation arises where the representor made a false statement but had reasonable grounds to believe it was true — and did so believe — right up until the moment of contracting. In this category, no damages are available as of right. The primary remedy is rescission of the contract. However, the court retains a discretion under section 2(2) to award damages in lieu of rescission (discussed in the next section).
Section 2(2) — The Court's Discretion to Award Damages in Lieu of Rescission
Section 2(2) of the Misrepresentation Act, Chapter 82:35 provides that where a person would otherwise be entitled to rescind a contract by reason of a misrepresentation, the court may, if it considers it equitable to do so having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, declare the contract subsisting and award damages in lieu of rescission.
The rule: where rescission would be disproportionate to the wrong suffered, the court has power under s.2(2) to award damages instead and keep the contract alive.
This provision fills an important gap in the law. Rescission is an all-or-nothing remedy — it unwinds the entire transaction. In some circumstances, this would be unjust. Factors the court considers include:
- Whether the misrepresentation was minor or peripheral rather than central to the transaction;
- Whether the contract has been substantially performed and the parties have restructured their affairs accordingly;
- Whether third-party rights (such as a mortgagee's security) have arisen and would be prejudiced by rescission;
- Whether the loss caused by the misrepresentation, if the contract continues, is capable of being adequately compensated by a monetary award.
Trinidad and Tobago courts have applied this discretion in property contract disputes, recognising that the conveyancing context — with subsequent transactions, financing, and development — makes full rescission particularly disruptive. Where a purchaser has already built on land or a vendor has already expended sale proceeds, the court is more likely to reach for s.2(2) and award a monetary remedy rather than attempt to restore the parties to their original position.
Rescission — The Primary Remedy
Rescission is the primary remedy for all three types of misrepresentation. It sets aside the contract and returns both parties to the position they were in before contracting — the legal concept of restitutio in integrum. The misled party gives back what they received under the contract and recovers what they gave.
The governing rule: rescission is available for fraudulent, negligent, and innocent misrepresentation alike, but the right can be lost in four ways.
The Four Bars to Rescission
(a) Affirmation
If, with knowledge of the misrepresentation, the representee elects to continue with the contract — expressly or by conduct — they affirm the contract and lose the right to rescind. For example, if a purchaser of land discovers that the seller misrepresented the property's boundaries but continues to pay instalments, make improvements, and take possession without complaint, a court may find they have affirmed the contract and cannot later seek rescission.
(b) Lapse of Time
Delay in asserting the right to rescind can bar rescission. This bar operates differently depending on the type of misrepresentation. For fraudulent misrepresentation, time runs from the date of discovery of the fraud. For innocent misrepresentation, time runs from the date of the contract itself, not from the date of discovery. A party who does not act promptly — even if they had no reason to suspect the misrepresentation — may find the remedy extinguished.
(c) Third-Party Rights
Where an innocent third party has acquired rights in the subject matter of the contract — for example, where a purchaser under a misrepresented sale has on-sold the property to a bona fide purchaser for value — rescission can no longer be ordered against that third party. The courts will not unwind a transaction at the expense of an innocent outsider.
(d) Impossibility of Restitution
If the subject matter of the contract cannot be restored to the representor in substantially its original condition — because it has been consumed, substantially altered, or destroyed — then restitutio in integrum is impossible and rescission will not be granted. For example, a purchaser who buys a business and then dissolves its assets cannot later seek rescission because there is nothing left to return.
T&T Case Law Reference Table
The following cases from the courts of Trinidad and Tobago illustrate the application of misrepresentation principles in this jurisdiction.
| Case | Court / Year | Subject | Key Principle Applied |
|---|---|---|---|
| Smith v 7 Hills Estate Development Ltd | HC, 2019 | Misrepresentation as to property title and land condition | s.2(1) reversed burden; Derry v Peek test; rescission and damages awarded |
| CV 16/01170 | HC, 2018 (Seepersad J) | Misrepresentation in property conveyancing transaction | Rescission analysis; affirmation bar examined; representor's conduct post-contract |
| CV 19/00403 | HC, 2023 | Misrepresentation as to apartment amenities and facilities | s.2(2) discretion considered; court weighed proportionality of rescission vs. damages |
Misrepresentation Compared to Related Doctrines
Misrepresentation is frequently confused with related legal doctrines. The table below sets out the key distinctions.
| Doctrine | What It Requires | Key Difference |
|---|---|---|
| Misrepresentation | False statement of fact inducing entry into the contract; pre-contractual | Statement need not be a contractual term; act gives statutory remedy |
| Breach of contract term | Statement incorporated as a term of the contract; term proved false or unfulfilled | Statement has contractual force; remedy is damages for breach, not rescission for misrepresentation |
| Non-disclosure / silence | Failure to volunteer information | Generally not actionable unless a duty to disclose exists (e.g., insurance contracts) |
| Undue influence | Improper pressure or exploitation of trust and confidence | No false statement required; focus is on the relationship and exercise of influence |
| Mistake | Fundamental error as to the subject matter going to the root of the contract | Both parties (common mistake) or one party (unilateral); no statement by the other party required |
What the Law Says — Statute and Key Cases
Governing Statute
| Statute | Provision | Effect |
|---|---|---|
| Misrepresentation Act, Chapter 82:35 | s.2(1) | Damages for negligent misrepresentation; reversed burden of proof |
| Misrepresentation Act, Chapter 82:35 | s.2(2) | Court discretion to award damages in lieu of rescission where equitable |
| Misrepresentation Act, Chapter 82:35 | s.3 | Restrictions on exclusion of liability for misrepresentation |
Key Cases
| Case | Court / Year | Principle |
|---|---|---|
| Derry v Peek [1889] 14 App Cas 337 | House of Lords | Definition of fraudulent misrepresentation: knowingly false, without belief in truth, or recklessly |
| Bisset v Wilkinson [1927] AC 177 | Privy Council | Statement of opinion not a statement of fact; context determines classification |
| Smith v 7 Hills Estate Development Ltd | HC T&T, 2019 | Application of s.2(1) and Derry v Peek in T&T property dispute |
| Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 | House of Lords | Negligent misstatement giving rise to tortious liability; duty of care in statements |
Frequently Asked Questions
What is misrepresentation in contract law?
Misrepresentation is a false statement of existing fact made by one party to a contract that induces the other party to enter into that contract. It must be a statement of fact — not an expression of opinion, not a prediction about the future, and not (in most circumstances) a statement of law. The statement must have been false, and the other party must have actually relied on it in deciding to enter the contract. In Trinidad and Tobago, the Misrepresentation Act, Chapter 82:35 governs the remedies available, supplementing the common law rules inherited from English contract law. The primary remedies are rescission of the contract and, depending on the type of misrepresentation, an award of damages.
What is the difference between fraudulent and negligent misrepresentation?
Fraudulent misrepresentation requires proof that the false statement was made knowingly, without belief in its truth, or recklessly — per the test in Derry v Peek [1889] 14 App Cas 337. The representor knew the statement was false or simply did not care whether it was true or false. Negligent misrepresentation, by contrast, does not require dishonesty: the representor may have believed the statement was true, but they had no reasonable grounds for that belief. The distinction matters because the burden of proof is reversed for negligent misrepresentation under s.2(1) of the Misrepresentation Act — the representor must prove they had reasonable grounds, rather than the claimant proving they did not. Both fraudulent and negligent misrepresentation carry the same generous damages measure (all consequential loss, including unforeseeable loss).
Who bears the burden of proof for negligent misrepresentation?
Under section 2(1) of the Misrepresentation Act, Chapter 82:35, the burden falls on the representor, not the claimant. Once the claimant establishes that a false representation was made and that they relied on it in entering the contract, it is for the representor to prove that they had reasonable grounds to believe, and did believe up to the time the contract was made, that the statement was true. If the representor cannot discharge this burden, they are liable in damages as if the misrepresentation were fraudulent. This reversed burden of proof is one of the most significant features of the Act and one that is frequently overlooked.
What is rescission of a contract for misrepresentation?
Rescission is the setting aside of a contract so that it is treated as if it never existed. Both parties are restored to the position they were in before the contract was made — the legal principle of restitutio in integrum. The representee returns what they received under the contract and recovers what they paid or transferred. Rescission is available as a remedy for all three types of misrepresentation — fraudulent, negligent, and innocent — and is the primary remedy in cases of innocent misrepresentation where no damages are available as of right. However, the right to rescind can be lost in certain circumstances (see below).
What can prevent me from rescinding a contract for misrepresentation?
Four circumstances — known as bars to rescission — can extinguish the right to rescind. First, affirmation: if you continue with the contract after learning of the misrepresentation, you lose the right to rescind. Second, lapse of time: excessive delay in seeking rescission will bar the remedy; for innocent misrepresentation, time runs from the date of the contract, not from the date you discover the misrepresentation. Third, third-party rights: if an innocent third party has acquired rights in the subject matter of the contract (for example, a bona fide purchaser of land), the court will not order rescission at their expense. Fourth, impossibility of restitution: if the subject matter of the contract cannot be returned in substantially its original condition — because it has been consumed, destroyed, or fundamentally altered — rescission is no longer available.
What is the section 2(2) discretion to award damages in lieu of rescission?
Section 2(2) of the Misrepresentation Act, Chapter 82:35 gives the court the power to declare the contract subsisting and award damages instead of rescission, where it would be equitable to do so. This discretion is exercised where rescission would be disproportionately harsh compared to the wrong actually suffered. Relevant factors include whether the misrepresentation was minor, whether the contract has been substantially performed, whether third parties would be prejudiced, and whether a damages award can adequately compensate the claimant. Trinidad and Tobago courts have applied this discretion in property and commercial disputes — particularly where conveyancing transactions have already generated subsequent dealings that would be unravelled by full rescission.
Does silence count as misrepresentation in Trinidad and Tobago?
As a general rule, silence is not a misrepresentation. A party to a contract is not obliged to volunteer information to the other side, even if they know that information would affect the other party's decision to contract. However, there are important exceptions. Silence can be actionable where: (a) there is a duty to disclose, as in contracts uberrimae fidei (of the utmost good faith), such as insurance contracts; (b) a statement that was true when made becomes false before the contract is executed, and the party who made it fails to correct it; or (c) a statement that is literally true nonetheless creates a false overall impression because it omits a material qualification — a "half-truth". In those situations, what appears to be mere silence may be treated as an actionable misrepresentation.
Written by Martin George, Attorney-at-Law. Martin George is the founder and principal attorney of Martin George & Company, with more than 35 years of active legal practice in the courts of Trinidad and Tobago. He is a former Commissioner on the Law Reform Commission of Trinidad and Tobago and a member of the Prime Minister's Constitutional Committee for Internal Self-Government for Tobago. This article is published for general information and public legal education. It does not constitute legal advice. For advice on your specific situation, contact Martin George & Company.
Last reviewed: April 2026