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Legalese: Careful what you say

We regularly hear claims about what a product or service can or cannot do. A certain truck has more towing power, better mileage, more horsepower, and so on and so forth.


January 29, 2013
By Deryk Coward

Topics

We regularly hear claims about what a product or service can or cannot do. A certain truck has more towing power, better mileage, more horsepower, and so on and so forth. Most of the time individuals can tell where there is some permissible exaggeration happening, but what about when a person gives you some information, you rely on it, and you suffer damage as a result? This is known in law as a misrepresentation.

There are many different forms of misrepresentation, including but not limited to, fraudulent misrepresentations, negligent misrepresentations and innocent misrepresentations. There are different standards applicable to the different forms of misrepresentations, but there is not room here to describe those varying standards. Rather, I will focus on some of the more basic elements of misrepresentations in general. As always, if you feel that you have been misled or if you want guidance on how not to misrepresent your products and services, it is best that you consult your own legal counsel entitled to practise in your jurisdiction. No legal advice is being given in this article.

A misrepresentation could be as simple as your renting a hydraulic jack, with the salesman telling you that it can lift two tons. Your customer takes it back to work on a project, puts it under a two-ton object, crawls underneath the object and gets to work. Unfortunately for him (and you), the jack is really only rated to support one ton and he is crushed underneath the two-ton object. What are the widow’s legal options? She could sue the rental agency that told him that the jack could support two tons when it was in fact only capable of supporting half of that weight. 

There are several elements that must be proven in a claim based in misrepresentation, in order for a claimant to be successful:

  1. That a misrepresentation took place. This might seem obvious, especially in our simple example, but there can be issues that arise with respect to this first step. The salesman might simply say, “I told him it was rated for one ton.” This is where witnesses or a written agreement would be critical. If it is simply one person’s word against another’s, it will come down to credibility and it is often difficult for the court to determine who is telling the truth.
  2. There was reasonable reliance on the misrepresentation. Returning to our earlier example, if the customer was told that the jack could support two tons but in fact it could only support one, he cannot then use it to try and lift a five-ton object. That would not be reasonable reliance on the statement from the salesperson.
  3. The person relying on the representation suffered a loss as a result of their reliance.

Obviously, there is nothing to sue for if no one has suffered a loss. To fully make out a claim, the plaintiff will have to show that the first two factors have occurred and then demonstrate that he suffered a loss related to having relied upon the misrepresentation. In our earlier example, if the customer was told the jack could lift two tons but only used it to lift a one-ton object, his suit would not succeed because no loss occurred.

You should always strive to ensure your employees are not making any representations to your customers outside of their role with your company. You may have an employee who normally works the counter and is unfamiliar with scissor lifts. If one of your salespeople is away sick, that counter person should not be giving renters advice with respect to scissor lifts.

Customers are entitled to rely upon the information they obtain from your employees if you put them in a position to give such advice. In the example, your counter person should know the limits of his/her authority and seek out the advice of someone with knowledge when a situation falls outside of his/her expertise.


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