In the sale and purchase of a flat, if any of the three parties, i.e., the vendor, the purchaser, or the agent, purposely provides false information causing losses to the other party(ies), then it may constitute an act of misrepresentation and may in turn invalidate the deal.
Mr Tseng was a car buff and very particular with his vehicle. He went everywhere in his own car. In looking for a flat, therefore, he stressed that the flat must come with a sheltered car parking space before he would consider it. Through an agent, Mr Tseng inspected a residential unit, the owner of which possessed a number of units and parking spaces in the building. Mr Tseng liked one car parking space that was well-situated and sheltered, and told the owner that the flat must be sold together with that car parking space. The owner said no problem. Thereupon the parties signed a provisional agreement for sale and purchase, in which it was stated that the flat was to be sold with a car parking space, but without specifying which one.
When it came to the stage of signing a formal agreement for sale and purchase and when Mr Tseng's solicitor wanted to ascertain the car parking space with the owner's solicitor, it was discovered that the car parking space favoured by Mr Tseng did not belong to the flat owner. The car parking spaces that the owner could dispose of with the flats were neither well-situated nor sheltered. Mr Tseng thought that the owner had misled him and demanded to cancel the agreement. At first the owner refused, but when Mr Tseng threatened to take him to court, he consulted his solicitor and realized that the chance of his winning was slim. The owner finally agreed to cancel the agreement and return the deposit in full.
Misrepresentation refers to the situation where a person makes a false statement of facts which induces another person to enter into an agreement with him and the other person suffers loss as a result. In accordance with the Misrepresentation Ordinance (Cap. 284 of the Laws of Hong Kong), a person suffering losses due to misrepresentation has the right to apply to the court to rescind the agreement and/or for damages.
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