Oral Representations

A business may incur liabilities in circumstances where a representative of it has made inaccurate or misleading statements about its products.

Ultimately a court will decide if a statement is inaccurate or misleading and if they are contractually binding on the business, either as an additional term to what was agreed between the parties or as a collateral contract. Alternatively, the business may be liable in misrepresentation for such statements made.

A business may attempt to exclude or restrict liability in these circumstances by means of a clause which restricts the authority of its staff to make statements of this nature that will result in binding the business.

For practical purposes, businesses should ensure that all staff that are involved in sales are made aware of making inaccurate or misleading statements about the business’s products/services.

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