An individual purchased plots of land after being exposed to television advertisements and representations made during meetings with the sellers, according to which the plots were being sold at a discounted price and were ready for construction. Following the purchase, the buyer discovered that the reality was far from the advertisements and sought to cancel the transaction despite a contractual provision stipulating that the pre-contractual representation are not obligating.
The Court order the cancelation of the contract due to the pre-contractual representations presented to the buyer. In certain cases, pre-contractual representations may be deemed part of the terms of the contract itself, especially in consumer contracts. A pre-contractual misrepresentation can serve as a basis for a defect in consent (mistake or misrepresentation) or for a lack of good faith in negotiations. A waiver clause in the sale agreement, which invalidates pre-contractual representations, does not necessarily negate these claims, as Courts utilize principles such as good faith to protect the weaker party. Here, the sellers created a narrative of guaranteed success through pre-contractual misrepresentations and sought to evade their liability for these representations via a contractual clause invalidating pre-contractual representations. Hence, the duty of good faith overrides the contractual restriction and because this constituted a misrepresentation, the sellers are to refund the buyer and compensate it.