Basis for common law claims - Building Contract Claims - page 82

'3. If a contract contains a term which would exclude or restrict -
(a) any liability to which a party to a contract may be subject by reason of any
misrepresentation made by him before the contract was made; or
(b) any remedy available to another party to the contract by reason of such a
misrepresentation that term shall be of no effect except in so far as it
satisfies the requirement of reasonableness as stated in section 11(1) of the
Unfair Contract Terms Act 1977; and it is for those claiming that the term
satisfies that requirement to show that it does.'

Indeed, such a statement may convert the representation into a misrepresen-
tation 250 . In many instances the representation is made in the preliminaries
section of bills of quantities or specification, as a statement about the subsoil,
underground services or aspects of the site. When the contract is executed,
such representations become terms of the contract and if they are incorrect,
the contractor may have a claim for damages for breach of contract.
If the representation is fraudulent, i.e. 'knowingly, without belief in its
truth, or recklessly, careless whether it is true or false' 251 , the contractor may
be able to recover more substantial damages under section 2(1) of the 1967
Act, which probably entitle him to recover all losses even those which are
unforeseeable so long as they are not too remote. A very clear example of
fraudulent misrepresentation is to be found in the old case of Pearson v.
Dublin Corporation 252 . This concerned a complex project for the construction
of an outfall sewer and associated works for a lump sum price. A key point
was that an existing wall continued to a depth of 9 feet below a datum. This
was shown on information provided by the employer's engineers. The true
situation was that the wall scarcely reached 3 feet in depth. This caused the
contractor considerably more expense than expected. It emerged that
the engineers had carried out no proper survey and themselves doubted
the accuracy of the information they provided. The court held that this
amounted to fraud. The contract required the contractor to satisfy himself
regarding the dimensions of the existing works and stated that the employer
was not responsible for the accuracy of statements it had made about the
existing structure. However, none of this was enough to provide a defence
to the allegation of fraud. Had it not been fraud, it might have then suc-
ceeded. Whether such a defence would be enough now is doubtful.
The second possibility was originally suggested by Dr John Parris in
relation to contracts in JCT 80 form where clause 2.2.2.1 provided that 'the
Contract Bills . . . are to have been prepared in accordance with SMM6'.

'This seems to require the employer to provide the contractor with infor-
mation in his possession about potentially difficult site conditions. Other
provisions require the employer to provide specific information. The
contractor may have a claim against the employer, should site conditions
not be as assumed . . . SMM7 states that information regarding trial pits or
bore holes is to be shown on location drawings under 'A. Preliminaries/

250 Cremdean Properties Ltd v. Nash (1977) 244 EG 547.
251 Derry v. Peek (1889) 14 App Cas 337.
252

[1907] AC 351.