Confusion on Liability and Evidential Burden
The most common mistake that a person would make is confusing between the difficulty in proving and whether liability exists. How often do we come across someone who says,
'There is no contract because its my words against his'
That should not be the focus because whether a contract exists or not is factual. Whether it can be proven or not is another point. Words can form a contract but the problem is proving it. The party that does not wish to be burdened with a contractual liability will deny that a contract exist and that is an evidential burden. That is why a lawyer will always advise someone to have their contracts reduced to writing. The writing itself does not create a contract, but it proves that a contract exists.
Can Liability Exist Prior to Contract
A contract is only formed when all the ingredients of contract exists. The parties must have the capacity to enter into a contract, there must be an offer and acceptance, parties must furnish consideration and the terms must be unequivocal. Therefore, as a general rule, there cannot be any imposition of liability before a contract is formed.
However the law imposes obligation in this scenario:
Jewellery Store
A woman walked into a jewellery store and was impressed with an Emerald that look antique. The shop owner upon seeing some kind of interest immediately impressed on the woman that the Emerald was in fact a relic from the Ottomon Empire and dates back a few centuries. The woman not having the necessary expertise relied upon the representation and paid a hefty price for it.
The shop owner when the sale is entered told the woman that he will not be liable for any representation he made prior to the contract. But nevertheless he will remain liable for a pre contractual statement which turned out to be untrue.
This is what we call an actionable misrepresentation. This happens when one party has special knowledge and expertise and the other does not. The law expects parties to deal fairly.
When this happens, the law can return the parties to their original position as if the contract was never entered into. The party in receipt of money will have to make the refund and the party receiving the goods will also have to return the same.
Understanding Mere Puff
The above liability has to be balanced with what we normally call as 'mere puff' which is nothing more than sales talk. One must reasonably expect that a salesman will be a bit over the top with his assertion in order to seal the deal. So if a salesman tells you the following:
'Sir, you can be rest assured that our product is of the highest quality and you will be guaranteed of a very satisfying experience'
The above would qualify as mere puff. This is a balance of the assurance given by the sales person. A mere puff can transcend and become a pre contractual liability if more reassuring statements which are factual is made.
_'Sir, our cars are of the best quality. If you are aware in 2018, our car won the European Safety Standards Award and we are the only company that has 3 consecutive wins in the safety segment'
The above is actionable misrepresentation.
