that "re tions" apart from contract. more than one class of decisions in the Court of Chancery, suggested by deif not actually involved in some of these decisions, is that cisions in under certain conditions a representation which is not equity, operative as part of a contract, or by way of estoppel, or presenta as amounting to an actionable wrong, may still be binding have a on the person making it. If, having induced a contract, legal value the statement turns out to be untrue, the contract may be being elevoidable, or specific performance of it may be refused ments in a without affecting its validity in other respects; if, without any contract, the party to whom it is made is prejudiced by acting upon it, the party from whom it proceeded may be bound to "make his representation good." As regards the first branch of this proposition, assuming that to some extent it is correct, a doubt remains whether, consistently with the authorities, any general rule can be laid down, or there are only a set of generically similar rules applicable to certain special kinds of contracts. Such rules are beyond question established in several cases, in which a more or less extensive duty of giving correct information is imposed on one of the parties. The authorities neither invite nor forbid a generalization. The Indian Contract Act (s. 18) does generalize the rule (a), and the same course was taken, with a caution that it went beyond positive authority, in the foregoing editions of this book (b). As to the second branch, the supposed equitable doctrine of "making representations good" has been too often asserted for a text-writer to say on his own responsibility that it does not really exist as distinct from the more simple principle that people must perform their contracts. The present writer formerly felt bound to accept it with an indication of its difficulties (c). A recent judgment to be presently mentioned has cleared the way to greater freedom of criticism. When we consider on principle this kind of doctrine and Criticism language as to the effect of representations, the follow- view. ing reflections occur. To say that a man is answerable for of this (a) See Note M. (b) P. 464, 2nd ed. (c) P. 497, 2nd ed. al cases. the truth of statements made by him in good faith is to say that it is his legal duty to see that they are borne out or to make compensation for their not being borne out. Whence and of what nature is this duty? If the statement is of a fact, and made as an inducement to another person to enter into a contract, the substance of the duty is no other than this, that the person making the statement undertakes that it is true. In that case must not his undertaking be a term in the contract? For if not, why should it bind him? As to estoppel, a statement may be binding by way of estoppel quite apart from any promise or agreement; but where it is part of the transactions constituting a contract, it seems needless to assume an estoppel. The estoppel is merged in the contract. If, on the other hand, the statement is of something to be performed in the future, it must be a declaration of the party's intention unless it is a mere expression of opinion. But a declaration of intention made to another person in order to be acted on by that person is a promise or nothing. And if the promise is binding, the obligation laid upon its utterer is an obligation by way of contract and nothing else. There is no middle term possible. A statement of opinion or expectation creates, as such, no duty. If capable of creating any duty, it is a promise. If the promise is enforceable, it is a contract. And a promise is none the less a promise, a contract is none the less a contract, for being described in a cumbrous and inexact manner. Exception- The cases in which a special duty of giving correct information exists may on this view be treated as positive exceptions to the common rule, introduced on special grounds of policy. But they may also be treated, and I venture to think better treated, in another way. However different their character in other respects, they have this one feature in common. The nature of the contract is such that the one party must in the ordinary course of business take from the other, wholly or to a great extent, the description of the thing contracted for; and the statements in which completeness and accuracy are in various degrees required are really part of that description. of misre ducible to tion what The result of this view, therefore, is that the true ques- Questions tion is in every case what were the terms of the contract. presentaBut this statement is subject to the qualification that in tion reparticular classes of cases there are fixed rules as to what kind of statements shall be deemed part of the contract; the conand in one or two cases this rule is extended so as to make tract really it an essential term not merely that the information given shall be true, but that all material information shall be fully as well as truly given. is. views re It may be well to state as concisely as may be the rules The two given by the two different theories now in question. The stated. rule suggested by the tendency of decisions and dicta in equity may be thus expressed (subject to qualifications which need not be dwelt upon at this stage): A contract (or at all events every contract included in any one of several important species) is voidable at the option of a party who has been induced to enter into it by a statement contrary to the fact made by the other party without reasonable grounds for believing it, though in fact he does believe it. The other doctrine, which has always been more or less distinctly implied in the treatment of these matters by Courts of common law, was enunciated with considerable clearness by the Exchequer Chamber in 1863 (a). This can be and has been regarded as the statement of a principle of common law which may be in conflict with the principles of equity, and in case of conflict must yield. But in 1880, after the Judicature Acts had been five years in operation, Mr. Justice Stephen took the same view in a considered judgment (b), reviewing at some (a) Behn v. Burness, 3 B. & S. 751, 32 L. J. Q. B. 204; fully quoted in Sir W. R. Anson's Law of Contract, p. 133. (b) Alderson v. Maddison, 5 Ex. D. 293: revd. in C. A. April 13, 1881 (29 W. R. 566), without discussing this question, on the ground that K K Judgment J. in length the leading authorities in equity on the topic of making representations good." The general principles are defined as follows: "It seems to me that every representation false when of Stephen, made or falsified by the event must operate in one of three Alderson v. ways if it is to produce any legal consequences. First, it Maddison. may be a term in a contract, in which case its falsity will, according to circumstances, either render the contract voidable, or render the person making the representation liable either to damages or to a decree that he or his representatives shall give effect to the representation. Secondly, it may operate as an estoppel preventing the person making the representation from denying its truth as against persons whose conduct has been influenced by it. Thirdly, it may amount to a criminal offence. The common case of a warranty is an instance of a representation forming part of a contract. Pickard v. Sears (a) and many other well-known cases are instances of representations amounting to an estoppel. A false pretence by which money is obtained is an instance of a representation amounting to a crime." There are also representations which, though neither part of a contract nor amounting to crimes, may be actionable as wrongs (b). We shall have to recur to these hereafter. Doctrine of "making representations good." The particular case before Mr. Justice of a promise to make a provision by will. Stephen was one Promises of this kind, and promises on the faith of which marriages have been contracted, have been the chief but not the only occasions of those judicial statements which appear to ascribe some kind of peculiar force to representations which are not exactly contracts. There are likewise cases of "representations" accompanying undoubted contracts; and here the questions occur whether the state of facts regarded by equity judges as showing a representation which the party was bound to make good might not (a) 6 A. & E. 469. (b) Pasley v. Freeman, 3 T. R. 51; and in 2 Sm. L. C. equally well in every case-or would not in all probability, by minds trained in the more analytical methods of common-law procedure-have been treated as establishing a collateral promise or warranty, and also whether the judges who used this language really meant anything different. This is not directly connected with the question of the avoidance of contracts for misrepresentation; nor is that question discussed by Mr. Justice Stephen. But if it can be maintained that in the one class of cases the socalled "representation" which has to be "made good" is a promise in the strict sense, as an element in a true contract, or is nothing, there will evidently be much less difficulty in treating the other class, with which we are here immediately concerned, on similar principles. A fresh examination of the authorities on the subject of "making representations good" has accordingly been undertaken, and has led the writer to the conviction that, notwithstanding the difficulties presented by the form in which many statements of more or less authority have been made, the view propounded by Mr. Justice Stephen is the correct one. A review of the cases, the insertion of which in this place would delay us too long in proceeding to the main subject, will be found in the Appendix (a). tation, not lent, affect ing contract, must be On the whole then we shall say that a representation which Represen. induces a contract, and is not true in fact, but which is not fraudusuch as to create a liability ex delicto, can affect the validity or operation of the contract only in the following cases: 1. If it is itself a term in the contract; that is, if the party making it has promised, as part of his promises con- 1. Part of stituting the contract undertaken by him, that it shall be found true. Here, if it proves untrue, the contract is not avoided, but broken: and the other party may be, according to the nature of the case and circumstances, discharged, or may have a claim for damages. the pro 2. If the contract is made conditional on its truth; that 2. Condition. is, if the parties mean to contract only on the footing of its (a) Note L. |