Contract » Contract Formation
Misrepresentation in Construction Contracts
Site investigation reports that turn out to be wrong. Planning consents that do not actually exist. Utility records that omit half the services. When pre-contract information is materially false and the contractor relies on it, the basis of the contract may be fundamentally undermined.
5 min read · Updated 21/04/2026
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By Basel Al Najjar Civil Engineering Consultant, DIAC Arbitrator, Tribunal Chairman and Accredited Expert Witness. Over two decades advising UAE contractors, developers and law firms on FIDIC, claims and arbitration. |
In this article
Key takeaway
A party induced to enter a contract by a false statement of fact may rescind the contract and claim damages under the Misrepresentation Act 1967. The remedy available depends on whether the misrepresentation was fraudulent, negligent, or innocent. Misrepresentation can succeed where a contractual claim — limited or excluded by the drafting — cannot. It is often the last viable route for a contractor induced to tender on false information.
1. Where misrepresentation arises in construction
Misrepresentation in construction arises most commonly in connection with pre-contract information provided by the employer. The most litigated category is ground conditions. Employers routinely provide ground investigation reports, borehole logs, and geotechnical surveys during the tender period. Where these are incomplete, outdated, or inaccurate — and the contractor encounters materially different conditions on site — the question of whether the employer made a false representation (and whether it did so fraudulently, negligently, or innocently) becomes central to the recoverability of the resulting loss.
Other scenarios that produce misrepresentation claims include: misrepresentation of existing structure conditions in refurbishment contracts; false statements about the status of planning consents or environmental approvals; inaccurate information about underground utilities or services; and misleading scope descriptions that cause the contractor to under-price the works.
2. The three categories under the Misrepresentation Act 1967
Under the Misrepresentation Act 1967, a party induced to enter a contract by a misrepresentation may rescind the contract and/or claim damages. The remedy depends on the category of misrepresentation.
| Category | Standard | Damages basis |
|---|---|---|
| Fraudulent | Statement known to be false or made without belief in its truth | Tortious basis — recovery of all losses caused by entering the contract |
| Negligent | Statement made without reasonable grounds for belief in its truth | Under s.2(1) of the Act — same basis as fraud |
| Innocent | Statement genuinely believed to be true when made | Tribunal may award damages in lieu of rescission under s.2(2), or rescission alone |
3. The remedy of rescission — and its limits
Rescission — the unwinding of the contract — may be refused where third party rights have intervened (for example, where the works have been substantially incorporated into a building sold to a purchaser); where the parties cannot be restored to their original positions (common in construction, where works cannot easily be undone); or where the misrepresentation was relatively minor, in which case the tribunal may award damages in lieu under s.2(2).
In UAE construction practice, rescission is rarely the primary remedy sought. The commercial reality of works already performed, materials already installed, and third-party rights already created usually makes damages the more practical outcome.
Were you induced to tender on false information?
Misrepresentation claims require careful evidential preparation — tender documents, clarifications, site visit records. The sooner the file is reviewed, the stronger the case.
4. Practical application for contractors and employers
For contractors
If you believe you were induced to contract on the basis of materially false pre-contract information, the three key questions are: was the information a statement of fact (not opinion or future intention); did you actually rely on it in tendering; and was it false when made? Preserve all pre-contract communications — tender documents, pre-bid meeting minutes, site visit records, email clarifications — as evidence. The misrepresentation claim may sit alongside contractual claims (for example, a claim under FIDIC Clause 4.12 for unforeseeable physical conditions) or may be the primary route if the contract excludes or limits the contractual remedy.
For employers
Ensure all information provided during tendering is accurate to the best of your knowledge. Where information may be incomplete, say so clearly and include appropriate disclaimers — though be aware that a disclaimer attempting to exclude liability for misrepresentation may itself be subject to reasonableness review under applicable consumer protection and unfair contract terms legislation.
5. Risks and mitigation
Misrepresentation claims expose employers to potentially significant damages, including all losses flowing from the contractor entering the contract at an artificially low price. The prospect of rescission, unwinding the contract and requiring accounting for works already performed, is commercially disruptive and can be more damaging than a straightforward damages claim.
Employers should be transparent and accurate in pre-contract information, flag known limitations in site investigation data clearly, and avoid making representations about conditions or circumstances they have not verified. Contractors should conduct their own site investigation where possible, avoid relying uncritically on employer-provided information, raise pre-contract queries about information that appears incomplete, and record the answers formally. See our construction claims practice for how we support these claims through the evidential stage.
6. Conclusion
Misrepresentation is a powerful remedy for a party induced to contract on a false basis. It requires careful evidential preparation and specialist legal advice, but where the misrepresentation is established, it can provide recovery that is unavailable through the contract alone — particularly where exclusions, caps, or time-bars have compromised the contractual route. On ground conditions claims in the UAE, where FIDIC unforeseeable-conditions relief is often heavily amended in the Particular Conditions, the misrepresentation route is sometimes the only viable one.
Related reading
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Contract Entire Agreement Clauses — The Limits of Prior NegotiationsWhy entire agreement clauses alone do not exclude misrepresentation claims without specific language. |
Contract Implied Terms — What the Contract Did Not SayWhen a tribunal will imply a term to fill a gap — and when an alternative route may be preferable. |
Contract Contract Interpretation — The Objective ApproachHow the objective meaning of pre-contract documents is assessed by a tribunal. |
When the ground does not match the report
Ground conditions claims are a core part of our practice. Where contractual relief is constrained by the drafting, a misrepresentation route may still be open — but only if the pre-contract file is preserved and reviewed promptly.
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