Measures in Misrepresentation: Recent Steps in Awarding Damages

Publication Date01 Sep 1992
DOIhttp://doi.org/10.1111/j.1468-2230.1992.tb02843.x
AuthorJoan Wadsley
The
Modern
Law Review
[Vol.
55
Measures in Misrepresentation: Recent Steps
in
Awarding Damages
Joan
Wadsley"
Claims under the Misrepresentation Act
1967
are probably dealt with very effectively
in practice, but nobody could realistically maintain that the interaction of the remedies
available under the Act and at common law is notable for simplicity or clarity. Even
though the Act is now a quarter of a century old, some of its intricacies are still
being disentangled by the courts; indeed, three recent decisions on damages for
misrepresentation demonstrate well the complexity of the remedies and the artificiality
of the wording of the Act.
To
make sense of the provisions of the Act requires some understanding
of
the
background and of the way in which the remedies for misrepresentation were
developed. As is well known, at common law the courts had only allowed damages
for fraudulent misrepresentation in the tort of deceit'; the only remedy for innocent
or negligent misrepresentation was rescission of the contract, if it was available,
together with a limited payment
-
an indemnity
-
in some cases. By
1963,
the
need for an effective action for negligent misrepresentation had become
so
apparent
that the courts introduced the remedy in the case of
Hedley Byrne
v
Heller*
which
has since proved
so
potent. Almost simultaneously, parallel developments resulted
in the Misrepresentation Act
1967.
Section
2(
1)
of the Act went a long way towards
providing an effective general remedy for misrepresentation, but although it might
in certain circumstances replace or supplement the common law remedies in tort
-
Hedley Byrne
for negligent and the tort of deceit for fraudulent misrepresentation
-
it has not removed the need for them. For the plaintiff, however, the statutory
remedy does have the advantage over both common law alternatives to the extent
that it reverses the burden of proof in his favour,
so
that he need do no more
than show that the defendant (who must be a party to the contract) has made a
misrepresentation on which he, the plaintiff, has relied and thereby suffered a loss.
Although liability under the Act is relatively easy
to
establish, in other respects
the statutory remedy is far from simple, partly because of the 'fiction of fraud'3
used as the basis of liability and also because of the intricacy of the remedies available
to
plaintiffs. In view of this complex interaction, a brief reminder of the remedies
for misrepresentation may be useful as an introduction.
The plaintiff will probably first consider whether the statement was intended as
a term of the contract. If he can establish this, he may recover
contractual
('loss
*Faculty of Law, University of Bristol.
1
2
[I9641
AC
465.
3
Derry
v
Peek
(1889)
14
App Cas
337.
s
2(
I)
reads: 'Where a person has entered into a contract after a misrepresentation has been made
to
him by another party thereto and as a result thereof he has suffered
loss,
then,
ifthe person making
rhe misrepresentation would be liable in damages in respecr thereof had rhe misrepresenration been
made fraudulently, thar person shall be
so
liable norwirhsranding that rhe misrepresentation was
not
mudefraudulenrly,
unless he proves that he had reasonable ground to believe and did believe up to
the time the contract was made that the facts represented were true.' (The words in italics are often
known as the 'fiction
of
fraud.') Atiyah and Treitel, in an article in (1967)
30
MLR 369, commented
that some of the reforms were enacted in a manner which
is
'quite extraordinarily tortuous and obscure,'
criticising the fiction of fraud in particular (at p 371). The fiction did have precursors: a similar liability
had been imposed
on
company directors after
Derry
v
Peek
in the Directors Liability Act 1890,
s
3.
698

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT