Can Silence Amount To A Fraudulent Misrepresentation?

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The Ontario Court of Appeal recently dealt with the issue of what sort of representations amount to fraud, and what representations survive an "entire agreements" clause. The Court held that when, during the pre-contractual negotiations for the sale of a building, a vendor delivers plans to a purchaser, there is no implied representation that the building was built according to the plans. The court held, however, that the vendor is liable in fraudulent misrepresentation for statements that there had never been problems with the basement of the house, notwithstanding the "entire agreements" clause. The court awarded damages.

The decision will likely be relied upon in the future for the proposition that silence does not amount to fraud, and that when something like plans or specifications are delivered during the negotiation of a contract, that conduct does not amount to a representation, or at least not a fraudulent representation.

This decision will also be relied upon by those asserting that entire agreement clauses can never apply to fraudulent misrepresentations, at least in Ontario.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Heintzman, Arbitration Place | Attorney Advertising

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