Misrepresentation
A signed contract may be set aside for misrepresentation at common law. This means that where you are led to enter a contract because of a false statement of fact (not opinion or law) and the statement is untrue, you are entitled to have the contract set aside (the legal term for this is ‘rescinded’). A misstatement of fact may be deliberate, negligent or innocent, but if the statement is untrue and induces you to enter a contract, then a remedy will exist in law. A court can order that a contract is rescinded and may also award damages where there has been financial loss. In practice, a supplier may be prepared to cancel a contract if there has been a misrepresentation rather than face legal proceedings. In most cases, the sums involved are £10,000 or below, the level for the small claims court procedure (see Chapter 14). A similar rule applies to written contracts where the terms of the contract you are presented with by the seller are false or misleading. If a signature is obtained from you because the nature or contents of the agreement are wrongly described, then it is not considered binding.
Regulations also ban traders in all sectors from using unfair commercial practices towards you that prevent you from making free and properly informed buying decisions. The Consumer Protection from Unfair Trading Regulations 2008 apply to sales of electricity and gas.1Reg 2 CPUT Regs These prohibit misleading actions whereby traders supply false information or omit to provide certain information. False information includes statements which are untrue or where the overall presentation of information in any way deceives or is likely to deceive the average consumer. Liability can also attach where the commercial practice omits material information, hides information or provides information in a manner which is unclear, unintelligible, ambiguous or untimely, or the commercial practice fails to identify its commercial intent.
The test is whether because of the misleading information or omission the commercial practice ’is likely to cause the average consumer to take a transactional decision s/he would not have taken otherwise’ – eg, you are misled into deciding to purchase the product or service.2Regs 5(2)(b) and 6(1)(a) CPUT Regs Offences under the regulations may be prosecuted by trading standards departments and liability may attach to both energy suppliers and subsidiary companies that act on their behalf when selling energy products.3R (on the application of Surrey Trading Standards) v Scottish and Southern Energy plc [2012] EWCA Crim 539