A fraudulent misrepresentation made in the course of pre-contractual discussions by a shareholder in a company. He was subsequently authorised by the other shareholders to continue the negotiations as their agent, and in due course a contract was concluded.
Held: The shareholders were held liable in damages to the other contracting party, notwithstanding that the representation had been made by the shareholder before he began to negotiate on their behalf. Where there is an interval between the time when the representation is made and the time when it is acted on, and the representation relates to an existing state of things, the representation is deemed to be repeated throughout the period. However, a representor can modify or withdraw a prior representation at any time before the agreement is concluded and ‘If false when made but true when acted upon there is no misrepresentation.’
Lord Reid said: ‘The misrepresentations were continuing representations intended to induce the other party to make the contract, and when that party made the contract to his detriment, a cause of action arose, and in my opinion it arose against both the agent and the principal. The agent continued to be fraudulent after he was appointed. It was his duty, having made false representations, to correct them before the other party acted on them to his detriment, but he continued to conceal the true facts.’
Lord Tucker said: ‘the duty of the agent, who has made the misrepresentation, to correct it cannot be regarded as only a personal obligation. If he has in the meantime been appointed agent with authority to make representations for the purpose of inducing a contract he, in his capacity as agent, is by his conduct repeating the representations previously made by him.’
and ‘The tort of fraudulent misrepresentation is not complete when the representation is made. It becomes complete when the misrepresentation – not having been corrected in the meantime – is acted upon by the representee. Damage giving rise to a claim for damages may not follow or may not result until a later date, but once the misrepresentation is acted upon by the representee the tortious act is complete provided that the representation is false at that date.’
Judges:
Lord Reid, Lord Tucker
Citations:
[1954] AC 333
Jurisdiction:
England and Wales
Cited by:
Cited – Lindsay v O’Loughnane QBD 18-Mar-2010
The claimant had purchased Euros through a foreign exchange dealer. The dealer company became insolvent, causing losses to the claimant, who sought to recover from the company’s managing director, the defendant, saying that he was aware of the . .
Cited – Diamond v Bank of London and Montreal Ltd CA 1979
Fraudulent and negligent misrepresentations were made by telephone and telex in Nassau to Mr Diamond in London. Donaldson J had held that the tort of fraudulent misrepresentation was committed in Nassau when the telexes were sent and from where the . .
Cited – Cramaso Llp v Ogilvie-Grant, Earl of Seafield and Others SC 12-Feb-2014
The defenders owned a substantial grouse moor in Scotland. There had been difficulties with grouse stocks, and steps taken over years to allow stocks to recover. They had responded to enquiries from one Mr Erskine with misleading figures. Mr Erskine . .
Cited – Hayward v Zurich Insurance Company Plc SC 27-Jul-2016
The claimant had won a personal injury case and the matter had been settled with a substantial payout by the appellant insurance company. The company now said that the claimant had grossly exaggerated his injury, and indeed wasfiully recovered at . .
Lists of cited by and citing cases may be incomplete.
Torts – Other
Updated: 06 May 2022; Ref: scu.430076