Have you bought a haunted house? Who you gonna call?
First, in the context of the formation of contracts, a misrepresentation is a false statement of fact made by one party, which causes another party to enter into the contract, and which gives that latter party the right to set the contract aside. So, if you were spooked enough to ask whether the house was haunted, and if the sellers were skeptical enough to say that it wasn’t, and if a court were to find that it was in fact haunted, then you would be able to set the contract aside for misrepresentation.
Second, whilst there is no general duty of disclosure, particular duties of disclosure can – exceptionally – arise; in such cases, a material non-disclosure by one party, which causes another party to enter into the contract, gives that latter party the right to set the contract aside. So, even if you didn’t ask whether the house was haunted, but if a court were to find that it was, that the sellers knew about it, that they chose not to tell you about it, and that they should have done, then you would be able to set the contract aside for this material non-disclosure.
Of course, both of these hypotheticals turn on the fact that the court would find as a fact that the house was haunted.…