CONTRACTS:

UNDERSTANDING YOUR RIGHTS

OBLIGATION: Misrepresentation in contracts, which happens often today, occurs when one party makes a false statement of fact to the other party to induce them to enter into an agreement…

By Grant Williams and Helen Westman

Misrepresentation in contracts is a common issue that can lead to legal disputes and financial consequences. Understanding what constitutes misrepresentation and how it affects contractual obligations is crucial for both parties involved.

What is misrepresentation in simple terms?

In the realm of contract law, misrepresentation occurs when one party makes a false statement of fact to the other party, inducing them to enter into a contract. This false statement can be made knowingly, recklessly, or innocently. Regardless of intent, if the false statement influences the other party’s decision to enter into the contract, it constitutes misrepresentation.

Although similar, representations and misrepresentations must be distinguished from warranties and breach of warranty. While a representation and a warranty are both seen as statements of fact that are often made during contract negotiations and found in contracts, a representation is a statement of fact made during the contractual negotiation that induced the other party to enter into the contract. The consequences of and remedies for misrepresentation and breach of warranty are different.

What are the remedies for misrepresentation?

When misrepresentation is established, the innocent party has several remedies available, including:

The innocent party may seek to have the contract rescinded or set aside, essentially undoing the agreement and returning both parties to the position they would have been in had the contract not been concluded. 

Rescission is often pursued when the misrepresented fact was material or of significant importance in influencing the contract’s formation, and the innocent party would not have entered into the contract had they known the truth. This remedy would not be available for a breach of warranty.

If the innocent party suffered financial losses due to the misrepresentation, they may seek monetary compensation from the party responsible for the misrepresentation.  Electing this remedy means that the innocent party acknowledges the contract, and generally claims the difference between the agreed contract price, and the actual value of the deliverables received.

The damages awarded aim to put the innocent party in the position they would have been in had the misrepresentation not occurred. This remedy would also be available for a breach of warranty.

In cases where damages are inadequate, the court may order specific performance, compelling the party responsible for the misrepresentation to fulfil their contractual obligations as originally agreed upon. This remedy would also be available for a breach of warranty.

In the event of a proven misrepresentation, the innocent party is entitled to elect the remedy that it prefers; bearing in mind that electing one remedy may result in the innocent party losing the right to claim under one of the other remedies – namely, if the innocent party elects to claim damages or specific performance, they cannot also claim rescission.

Most contracts include clauses that address representations made during negotiations. Whilst these clauses may limit liability for innocent or negligent misrepresentation, stipulate the timeframe for bringing claims, or require representations to be in writing and/or expressly set out in the contract to be enforceable, such clauses do not absolve a party of liability for fraudulent misrepresentation.

However, to succeed with an allegation of fraudulent misrepresentation, the innocent party would need to prove that the other party made reckless or intentional misrepresentation(s) of fact or opinion, with the intention to coerce a party into action or inaction based on the misrepresentation.

Consider a scenario where you’re purchasing a car, and you make it clear that you would not be willing to purchase a car that has been in an accident. The seller assures you that the car has never been in an accident. Relying on this statement, you agree to purchase the car, at the listed price.

Later, you discover the car was involved in a major accident, and the seller knew but did not disclose it. This constitutes fraudulent misrepresentation allowing you to take legal action to cancel the contract and recover any amounts paid by you for the car.

Misrepresentation can have serious implications for contractual relationships, leading to disputes and legal action.  By understanding the concept of misrepresentation and its consequences, parties can take steps to mitigate risks and protect their interests when entering into contracts.

Seeking legal advice before concluding any agreement can help ensure that your rights are safeguarded, and that you are aware of any potential misrepresentation issues.

*     Provided by Eversheds and Sutherland, which represents the coming together of two law firms with a shared ethos and commitment to client service excellence. Sourced from GoLegal

TIPS  TO HELP  CONSUMERS REDUCE ELECTRICITY CONSUMPTION

Control: Smart home technologies can help monitor, control and automate electrical appliances

By Thuli Zungu

The prepaid electricity prices which were increased by 12.74%, resulting in an average electricity tariff rise from around R1.84 per kWh to approximately R2.07 from April 1 –  compounded by rising inflation and potential fuel price hikes, are going to strain consumer budgets even further.

This is the warning from Dr. Andrew Dickson, Engineering Executive at CBI-electric : low voltage.  With households averaging 350kWh per month, South African consumers are now expected to pay in the region of R724.50 monthly– up from R644.

This adjustment does not take into account municipal increases which typically come into effect from the beginning of July and range from 14% in eThekwini to 18% in Johannesburg. Worse still, the amount could be even higher depending not only on how much electricity is used, but when.

“With households already allocating around 14% of their income to electricity, proactive measures are essential to not only save money, but electricity too.

“Contrary to popular belief, homeowners do not  need to rewire their homes to enjoy the benefits of smart home technologies. Devices like smart plugs, isolators and controllers can easily be installed by an electrician without the need for additional wiring or hubs,” says Dickson.

With the cost of living set to increase over 2024, now is the time for South Africans to put the power in their hands and save in areas that they can control.

Dickson shares ten ways that can help consumers  by using smart home technologies to monitor, control and automate electrical appliances:

•     If you do not know how much electricity your appliances are using, you will not be able to reduce your consumption. For example, a poolpump uses approximately 0.75 kWh of electricity per hour. Leaving it on for 24 hours could cost homeowners R37.26 per day when the new rate per kWh is applied. Over the space of a year, pool pumps could exceed R13,500 in electricity costs. With smart home tech however, users can monitor how much connected appliances are consuming to identify areas for improvement.

•     The load management capabilities of some home automation systems can help users ensure that only one heavy load-consuming appliance is switched on at any given moment, thereby ensuring optimal energy distribution.

•     Users can specify the operating duration of appliances, like running the geyser for two hours to save electricity while ensuring a hot bath.

•     With consumers paying up to 703.73c/kWh during peak periods, smart home technologies give users the ability to schedule when appliances turn on or off. This can be done at specific times and on particular days. For example, electricity users would only pay 101.37c/kWh if they programmed their washing machine to switch on during off-peak times such as between 10pm and 5am on weekdays.

•     South Africans also pay more during the high demand season between June and August. Unsurprisingly, this coincides with winter when we consume more electricity by using heaters, electric blankets and underfloor heating. Smart home devices could be used to determine when they switch on as well as for how long. And while it can be hard to get out of bed on those icy winter mornings, a timer could be set to switch on a heater, so that your bedroom is warm even before you wake up.

•     Many of these technologies can react to environmental conditions such as weather or the setting and rising of the sun, enabling them to automatically switch specific loads on or off under these conditions. So, if a rainy day is detected for instance, one’s irrigation system can be preprogrammed to not switch on. This not only saves electricity, but water too, which can lower the total municipal bill.

•     Worried you left a device switched on? Smart home technologies allow users to turn connected appliances off from their smartphone and or tablet from anywhere in the world. They can also use this capability to switch items on. To illustrate, they could turn their lights on before they get home from work in the evening.

•     When in standby mode, electronic goods like microwaves, computers, televisions, coffee machines, gaming consoles and even garage door openers can consume even more electricity than when they are in use as they are only active for relatively short periods. While the obvious solution would be to unplug all non-essential appliances when inactive, smart home tech lets users switch off any items that are pulling power unnecessarily.

•     With some South Africans turning to rooftop solar to mitigate the impacts of load shedding (and possibly the electricity price increases too), smart home technology enables the effortless integration of these alternative power sources. For instance, the tech could be used to connect and disconnect from the grid as well as to ensure that the power produced by solar PV systems is used effectively and efficiently.

•     TrendER/infoQuest research reveals that three out of four South Africans experienced damage or destruction to at least one home appliance due to load shedding last year. To protect their appliances from voltage fluctuations that result from power outages, users can set a minimum and maximum ‘safe operating voltage range’.

       If the voltage is unstable, the technology will monitor voltage levels and only allow power to the appliance once this is within a safe operating range.