Unclear Words Insufficient as Representation
A purchaser claimed to have entered into the contract in reliance on the truth of a misrepresentation by the seller. The plaintiff claimed damages for deceit through having been induced to buy shares in an iron company by false representations in a prospectus as to the output of the iron works.
Held: His claim failed because the critical words of the prospectus were ambiguous, and the plaintiff had failed to show that he understood them in a sense which was false.
An inference of inducement can be made or rebutted on evidence. Lord Blackburn, said: ‘I think if it is proved that the defendants with a view to induce the plaintiff to enter a contract made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into a contract, and it is proved that the plaintiff did enter into the contract, it is a fair inference of fact that he was induced to do so by the statement.’
. . and ‘In Pasley v Freeman, 2 Smith’s Leading Cases 66, 73, 86 (8th ed), Buller J says: ‘The foundation of this action is fraud and deceit in the defendant and damage to the plaintiffs. And the question is whether an action thus founded can be sustained in a court of law. Fraud without damage, or damage without fraud, gives no cause of action, but where these two concur an action lies, per Croke J, 3 Bulst 95.’
Whatever difficulties there may be as to defining what is fraud and deceit, I think no one will venture to dispute that the plaintiff cannot recover unless he proves damage. In an ordinary action of deceit the plaintiff alleges that false and fraudulent representations were made by the defendant to the plaintiff in order to induce him, the plaintiff, to act upon them. I think that if he did act upon these representations, he shews damage; if he did not, he shews none.’
Lord Selborne LC said: ‘My Lords, I conceive that in an action of deceit, like the present, it is the duty of the plaintiff to establish two things; first, actual fraud, which is to be judged by the nature and character of the representations made, considered with reference to the object for which they were made, the knowledge or means of knowledge of the person making them, and the intention which the law justly imputes to every man to produce those consequences which are the natural result of his acts: and, secondly, he must establish that this fraud was an inducing cause to the contract; for which purpose it must be material, and it must have produced in his mind an erroneous belief, influencing his conduct.’
Lord Blackburn, Lord Selborne LC
(1884) 9 App Cas 187, (1883-1884) 9 App Cas 187, [1884] UKLawRpAC 4
Commonlii
England and Wales
Cited by:
Cited – Assicurazioni Generali Spa v Arab Insurance Group (BSC) CA 13-Nov-2002
Rehearing/Review – Little Difference on Appeal
The appellant asked the Court to reverse a decision on the facts reached in the lower court.
Held: The appeal failed (Majority decision). The court’s approach should be the same whether the case was dealt with as a rehearing or as a review. . .
Cited – Spice Girls Ltd v Aprilia World Service Bv ChD 24-Feb-2000
Disclosure Duties on those entering into contract
The claimants worked together as a five girl pop group. The defendants had signed a sponsorship agreement, but now resisted payment saying that one of the five, Geri, had given notice to leave the group, substantially changing what had been . .
Cited – St Paul Fire and Marine Insurance Co (UK) Ltd v McConnell Dowell Constructors Ltd CA 1995
The court discussed the general principles as to the meaning of ‘inducement’ in the context of insurance contract.
Held: If the three underwriters who gave evidence had been told the truth, on no view would they have underwritten the insurance . .
Cited – Mundi v Lincoln Assurance Ltd ChD 24-Nov-2005
The defendant life insurance company sought to avoid payment alleging non-disclosure. At first they suggested first one then a second and then a third reason for non payment as each previous reason looked like failing. They relied now on . .
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.
Contract, Insurance, Torts – Other
Updated: 19 January 2022; Ref: scu.187266