Deceit
Defendant must make a fraudulent misrepresentation-derry v peak.
A statement of opinion would be actionable when indeed that opinion is not held-west London commercial bank v kitson. The defendant’s directors of a company accepted a bill of exchange and represented to one Ashdown that by the private acts of parliament by which the company was formed they had the authority to do so. This representation was false. The plaintiffs who acted on it suffered loss. It was held that the misrepresentation was on fact and not law and so they were liable.
It is also actionable to state half-truths and ambiguities-schneider v heath.
The defendant described the ship as clever, useful vessel for general purposes and that the vessel and her stores are to be taken with all faults. The plaintiff bought the vessel and later found out that the bottom was worm eaten, her keel was broken and she was unseaworthy. The plaintiff therefore refused to continue with the purchase and demanded back her deposit. The defendant knew of these faults and kept the vessel afloat so the faults would be concealed. It was held that it was fraud to take steps to conceal the truth and that although the vessel was to be sold with all faults the defendant could not avail himself to such stipulation if he knew of the secret faults and used means to prevent the buyer from discovering them or made a fraudulent representation of her condition at the time of the sale.
The representation need not be made to the plaintiff but there must be an intention that the plaintiff should rely on it-Landgridge v levy.
The plaintiff’s father bargained with the defendant for the purchase of a gun for his own use and that of his sons. The defendant stated that it had been made by a custom manufacturer and that it was good, safe and secure. In reliance of what was told the father used the gun but it burst and injured him. It was later found out that the gun was badly made and was made by a manufacturer of inferior quality from that represented.
Where representation is made to a limited class then there is no liability to those outside the class-peek v gurney.
A prospectus for an intended company was issued by promoters who were aware of the disastrous liabilities of the business of Overend & Gurney which the company was to purchase. The prospectus made no mention of a deed of arrangement under which those liabilities were, in effect, to be transferred to the company. The appellant bought shares in the company and, when it was wound up, he was declared liable as a contributory and had to pay almost £100,000. He sought an indemnity against the directors, alleging misrepresentation and concealment of facts by the directors in the prospectus. It was held that his claim would fail because the statement was intended to mislead only the original allottees and as he was a bought the share from a shareholder he was not a member of that class
The plaintiff must rely on the statement-smith v chadwick.
The plaintiff sued the accountants and promoters of a company. The plaintiff claimed he took shares in the company due to a certain misrepresentation that one Grieves was a director of the company whereas this was not true. The plaintiff did not know nor have he heard of this man. The plaintiff could not recover as he could not have relied on that statement if he neither knew the man nor have heard of him.
The plaintiff must suffer damage-kusi v kusi.
The plaintiff, a licensed moneylender, lent a certain sum of money to the defendant. The defendant offered as security for the loan several farms and an uncompleted house. Upon the defendant’s failure to pay the loan, the plaintiff exercised his right of sale. The defendant’s family later sued the plaintiff and set aside the sale on the ground that the properties which the defendant mortgaged were family properties, whereupon the plaintiff sued the defendant for the recovery of the unsatisfied balance of the loan and N¢590.00 damages for fraud and deceit. to sustain the tort of fraud the plaintiff had to prove not only that the defendant made representations as to existing facts which were false to his knowledge but also that he intended that the plaintiff should act on the false representations and be deceived by them. There must be proved an actual intention to deceive the plaintiff. Then the plaintiff must go on to establish that he was influenced by the misrepresentation, to his detriment. What was required was proof that he suffered damage as a result of the misrepresentation: that is, that the one event caused the other and that he relied upon the truth of the representation.
Negligent Misstatements
A duty of care in making non-negligent statements would be imposed whenever a special relationship exists between the parties and responsibility is not disclaimed-hedley byrne v heller partners
A special relationship exists when-mcnaughton v hicks. The plaintiff was negotiating with a third party about a takeover bid. The third party instructed the defendant, their accountants, to prepare accounts as quickly as possible. The plaintiff relied on the accounts which were carelessly drawn up to make a bid. The plaintiff subsequently made a loss. The Court of Appeal found that the defendant did not owe a duty of care to the plaintiff. There was insufficient proximity for a special relationship as the defendant did not know the accounts would be sent to the bidder for the particular transaction. Account given by the defendants was in general terms and accordingly it was not fair, just and reasonable to impose on the defendants a duty of care to the plaintiffs:
The advice was required for a purpose made known to the defendant
The defendant knew that the advice would be communicated to the plaintiff for the purpose made known
The defendant knew that the advice was likely to be used without independent inquiry
The advice is so acted upon to the plaintiff’s detriment
Duty would arise if adviser gains financially from the reliance by the advisee on the advice-anderson v Rhodes.
In that case the plaintiffs and the first defendants operated as wholesalers in the vegetable and fruit market. The first defendants, a company of good standing sometimes acted as commission agents for other buyers. The practice in this business was that payment came later after delivery. The second defendant was employed as salesman and buyer for the first defendants. The third defendant was the first defendant’s manager. As a result of the fact that the accounts of the first defendants were net regularly brought up to date, they did not realize that a principal for whom lie second defendants placed certain orders was in arrears. The second defendant, when he placed some orders on behalf of the principal (Taylors Ltd) with the plaintiffs, represented to the plaintiffs that T Ltd. (i.e. the principal) was creditworthy. They took delivery of the potatoes sold to them thereby but were unable to pay for them having become insolvent. The plaintiffs brought the action for damages against the defendants on the ground of negligence in representing to them hat T Ltd were credit-worthy, and without which representation they would not have entered into the transactions.
Held by Cains J that they were liable: “the representation here concerned a business transaction whose nature made clear the gravity of the enquiry and the importance and influence attached to the answers.” There was in the circumstances a duty to exercise care in the representation which was not done. If first defendants had kept their accounts reasonably carefully they would have realised that they had evidence which made the credit-worthiness of T Ltd doubtful.
A Lawyer can be sued for negligent misstatement –fordwuoh v law chambers