Museprime Properties Ltd v Adhill Properties Ltd (1991) 61 P & CR 111

Museprime bought three properties at auction. Information supplied in connection with the sale represented that aspects of rent review remained open to negotiation. In fact, notices already served under the leases and the absence of valid written counter-notices affected the rents differently. The buyer refused to complete and relied on misrepresentation. The seller disputed the effect of the information and the notices and sought to treat the buyer as in default. The court considered the rent-review machinery, the accuracy of the auction representations and whether they had induced Museprime to contract.

Did inaccurate information about the rent-review position materially induce the auction purchase, entitling the buyer to rescind despite the seller's attempted termination?

Scott J held that the buyer was entitled to rescind for misrepresentation. The auction information about the rent-review position was materially inaccurate and had induced the purchase. The legal effect of the notices mattered: the rent-review procedure required written counter-notices, and informal oral communications did not prevent the consequences of the trigger notices. The represented opportunity to negotiate rents therefore did not reflect the existing position. Inducement remained a factual requirement. A representation naturally capable of influencing a reasonable buyer can support an inference of reliance, but the court's task is still to establish that this buyer was induced, not to replace that inquiry with an abstract reasonable-person test.

An actionable misrepresentation must induce the actual transaction. Materiality can support an inference of inducement, but a statement's effect on a reasonable person is not a substitute for actual reliance. The legal consequences of existing notices may make sale particulars materially misleading.

Museprime is valuable for the relationship between materiality and inducement. It also demonstrates why a representation about legal or contractual circumstances must be tested against the relevant documents, not merely the parties' informal descriptions. The auction context did not remove the need for accuracy. In a problem, identify the representation, establish its falsity, then address reliance and any applicable contractual restriction. Where a statement appears unlikely to influence a reasonable person, evidence that it actually induced this claimant becomes especially important.