SQE1 misrepresentation: what you must know and how it is tested

SQE1 misrepresentation questions ask you to decide whether a statement was an actionable misrepresentation, which type it was, and what remedy is available. The remedy depends on the type, so classify first. Read it with the wider Contract Law guide.

SubjectContract Law (FLK1)

Key lawMisrepresentation Act 1967

Question typeSingle best answer, five options

The rules to apply

A misrepresentation is a false statement of existing fact (or law) made by one party, or on their behalf, to the other, which induced the contract. Opinion and statements of future intention are not facts, unless the speaker does not hold the opinion or intention, or implies facts that justify it (Smith v Land and House Property; Edgington v Fitzmaurice). Silence is not misrepresentation, but a half truth is, as is a statement true when made that becomes false before the contract is made (With v O'Flanagan). Inducement need only be one cause, and the other party's failure to check is no defence (Redgrave v Hurd).

Fraudulent misrepresentation (Derry v Peek) is a false statement made knowingly, without belief in its truth, or recklessly. The remedies are rescission and damages in deceit, which cover all direct loss even if unforeseeable. Negligent misrepresentation: under s2(1) of the Misrepresentation Act 1967 the representee can claim damages unless the representor proves they had reasonable grounds to believe, and did believe, the statement true. Damages are assessed as if the statement were fraudulent. Innocent misrepresentation gives rescission only, but under s2(2) the court may award damages instead of rescission.

Rescission is lost by affirmation (including delay with knowledge), by impossibility of restoring the parties, and by third parties acquiring rights in good faith for value. In a business contract, s3 makes a clause excluding liability for misrepresentation effective only if it satisfies the reasonableness test in UCTA 1977. Clauses that try to do this indirectly, such as non-reliance wording, can also be caught. If the statement became a term of the contract, claim for breach of contract instead.

Traps examiners use

Calling a statement of opinion a misrepresentation without checking the speaker's knowledge.
Saying silence is a misrepresentation, without a half truth or change of circumstances.
Treating negligent and innocent misrepresentation as the same. The reasonable grounds burden is on the representor.
Awarding damages as of right for innocent misrepresentation. Only s2(2), discretionary.
Assuming an entire agreement or non-reliance clause always defeats a misrepresentation claim.

Worked question 1

Lena sells her bakery to Omar. She tells him the net profit last year was £90,000, relying on figures from her accountant. The true profit was £60,000, because of an error by the accountant. Lena can prove she had reasonable grounds to believe the figure was true. Which remedy is available to Omar?

A. Damages under s2(1) of the Misrepresentation Act 1967 as of right.
B. Damages in deceit, because the statement was false.
C. Rescission, and the court may award damages in place of rescission under s2(2).
D. No remedy, because the figure was a statement of opinion.
E. Damages for breach of contract, because every false statement is a term.

Answer: C. The profit figure is a statement of fact. Lena discharged the s2(1) defence, so the misrepresentation is innocent. Rescission is available, and s2(2) gives the court discretion to award damages in its place. A and B depend on negligence or fraud. D mislabels fact as opinion. E is wrong because a pre-contract statement is not automatically a term.

Worked question 2

A dealer falsely tells Neil that a painting is by a named artist, and Neil buys it. In March Neil learns the truth but keeps the painting on display, and in November he tries to sell it. He then sues to rescind. Which statement is correct?

A. Neil may rescind because the misrepresentation was fraudulent.
B. Neil has probably lost the right to rescind by affirmation, but may claim damages if the dealer is liable under s2(1).
C. Neil may rescind because rescission can never be lost.
D. Neil has lost all remedies for the dealer's statement.
E. Neil can rescind only if the dealer agrees.

Answer: B. After learning the truth Neil acted as owner for several months and tried to sell. That is affirmation, so rescission is lost. His claim for damages is unaffected, and under s2(1) the dealer must prove reasonable grounds to escape liability. A ignores affirmation. C and D overstate the rule. E is not the test.

Checklist before you move on

Fact, opinion, intention or silence?
Made by or for the other party, and did it induce the contract?
Fraud, negligence or innocent?
Remedy: rescission, damages under s2(1), damages instead under s2(2), deceit?
Any bar to rescission: affirmation, delay, impossibility, third party?
Check for exclusion clauses and s3.

Test yourself on more original questions in our SQE1 practice questions.

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Questions

What is the difference between a term and a representation?

A term is a promise forming part of the contract, and breach gives damages for breach of contract. A representation is a pre-contract statement of fact that induced the contract and gives remedies for misrepresentation.

Can I claim damages for innocent misrepresentation?

Not as of right. The court may award damages instead of rescission under s2(2) of the Misrepresentation Act 1967.

What do I need to prove under section 2(1)?

That a false statement of fact by the other party induced the contract and caused loss. The representor then must prove reasonable grounds to believe it was true.

Sources: SRA: SQE1 Assessment Specification (from 1 September 2026); Misrepresentation Act 1967; Unfair Contract Terms Act 1977. Checked 10 November 2026.