Museprime Properties Ltd v Adhill Properties Ltd [1991]

Museprime Properties Ltd v Adhill Properties Ltd [1991] 61 P & CR 111 dealt with issues related to misrepresentation and the consequential impact on a contract. The central principle established in this case is that if a misrepresentation would have induced a reasonable person to enter into the contract, the burden of proof shifts to the representor to demonstrate that the representee was not, in fact, induced by the misrepresentation.

The factual background of the case involved the purchase of three properties at an auction by Museprime. The representations made by the auctioneer, acting as an agent for Adhill, led Museprime to believe that revised rents were yet to be agreed upon with the tenants. Contrary to this, it was later revealed that revised rents had already been settled, and for two of the properties, the rent was deemed unacceptable to Museprime. Seeking rescission of the contract, Museprime argued that the misrepresentations induced them to enter into the sale.

In the High Court judgment delivered by Scott J, the court granted rescission on the grounds that the misrepresentations had indeed induced Museprime to enter into the sale. Scott J established a test for materiality and inducement, stating that a representation is material if it is something that induces the person to contract on the terms they do. Moreover, he outlined the burden of proof for inducement: if a misrepresentation would have induced a reasonable person to enter into the contract, the onus is on the representor to prove that the representee was not induced. Conversely, if the misrepresentation would not have induced a reasonable person to contract, the onus is on the representee to demonstrate that they were induced.

In the specific circumstances of Museprime v Adhill, even if it was deemed unreasonable for Museprime to expect higher rents through negotiation, the court held that Museprime's evidence had sufficiently discharged the burden of proof to establish that they were induced by the misrepresentation.

This case marked a departure from the previous legal understanding, where materiality and inducement were considered separate requirements. The ruling clarified the relationship between the two, emphasising the pivotal role of inducement in cases of misrepresentation and providing a clear framework for burden of proof based on reasonableness.
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