Company Law Essay

2117 words - 9 pages

Brian vs Nick: The Misrepresentation in the Law of Contract
    Misrepresentation of facts, that is statement of untrue or misleading information so as to induce parties into a contract, is acknowledged as one of the vitiating factors in contractual relationships. There are three possible forms of representation under English law of contract, namely: fraudulent misrepresentation, negligent misrepresentation and innocent misrepresentation. The locus classicus for fraudulent misrepresentation is to be found in the case of Derry v Peek[ (1889) 14 App. Cas. 337.], where the house of Lords asserted that a representation is fraudulent where : (i) a representation is made knowingly that it is untrue , or (ii) the representation is made reckless without caring as to whether it is true or false. Doyle v Olby[ [1969] 2 QB 158It] clarified further that fraudulent misrepresentation is characterised by a wilful intention to deceive. It was latter to be held in Hedley Byrne v Heller[ [1964] A.C. 465] that the second alternative to definition of fraudulent misrepresentation presented in Derry v Peek,[ (1889) 14 App. Cas. 337.] is a negligent misrepresentation, rather than fraudulent one. Thus, intention to deceive is not an element of negligent representation. Innocents misrepresentation arises where a party misrepresents statements, but with reasonable ground to be believe in its truth.[ Hedley Byrne v Heller [1964] A.C. 465]
    It is contended in wide range of cases that damages arising from misrepresentation are to be calculated as per the equivalent tortuous liabilities, because representations are not themselves terms of contract, and thus have no basis to attract contractual damages.[ Doyle v Olby [1969] 2 QB 158; Hedley Byrne v Heller [1964] A.C. 465; Esso Petroleum Co Ltd v Mardon [1976] Q.B. 801] Thus, precedents indicate that damages for fraudulent misrepresentation are to be liquidated as with the tort of deceit[ Doyle v Olby ], while those of negligent misrepresentation are to be assessed as torts of negligent misstatement.[ Hedley Byrne v Heller] The position in respect to negligent misrepresentation is now altered pursuant to the Misrepresentation Act 1967, which now allows damages for negligent misrepresentation to be assessed as equivalents of fraud, and so a party may either prove fraud or negligence (breach of duty of care that occasions damage), and the damages will be equal. This makes damages for negligent misrepresentation more lucrative, as damages for fraud in tort is typically higher than those of negligence. Further, under the Act, the representor has the burden to prove that the statement did not amount to a negligent representation. Section 2(2) Misrepresentation Act 1967 allows the court to award damages in lieu of recession, where it is equitable to take such action.
    For Brian to have a course of action under the Misrepresentation Act 1967, he will only need to prove that there was a misrepresentation in respect...

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