Warranties And Representations Distinguished

The High Court has considered whether warranties in a share purchase agreement were also representations and could, therefore, found an action for misrepresentation under the Misrepresentation Act 1967.

Background

A representation is a statement of fact by a person which induces another to enter a contract. If the statement proves to be false, the party who entered the contract in reliance on it may have a claim for misrepresentation and the contract may be voidable. A warranty is a contractual promise. If the warrantor breaches that promise, the other party to the contract may have a claim for breach of contract.

Facts

The claimant bought from the defendant and one of its subsidiaries the entire issued share capital of a company.