Final answer:
A pre-contractual representation is a statement made before a contract is formed, while a contractual term is a provision included in the contract. The distinction is important as misrepresentation can lead to contract rescission, while breach of a contractual term can result in remedies.
Step-by-step explanation:
A pre-contractual representation refers to a statement or information that is made by one party to another before a contract is formed. It is not considered as a legally binding term of the contract, but rather as a statement of fact or opinion that induces the other party to enter into the contract. For example, if a seller of a car states that the car has never been in an accident in order to entice the buyer to enter into the contract, that statement would be a pre-contractual representation.
On the other hand, a contractual term is a provision or condition that is included in the contract and forms part of the legally binding agreement between the parties. It sets out the rights and obligations of each party and is enforceable in a court of law. For example, in a sale of goods contract, the price and delivery date would be contractual terms.
The distinction between a pre-contractual representation and a contractual term is important because it determines the legal consequences of each. A misrepresentation of a material fact in a pre-contractual representation can give the innocent party the right to rescind the contract or seek damages. However, a breach of a contractual term can also give rise to remedies such as termination, specific performance, or damages. Therefore, understanding the difference between the two helps parties to know their rights and obligations under the contract.