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Contract

England & Wales

Misrepresentation

The rule

A pre-contractual statement of fact (or, exceptionally, opinion or intention) made by one party that induces the other to enter the contract and turns out to be untrue may give rise to rescission and damages, measured by reference to whether the misrepresentation was fraudulent, negligent, or innocent.

Mandatory cases

Curated chronological

1. 01

   Smith v Land and House Property Corp · 1884

   (1884) 28 Ch D 7 · Court of Appeal Procedural posture

   Appeal from a decree of Kay J in the Chancery Division dismissed; rescission was upheld.

   An opinion can amount to a representation of fact where the speaker is in a better position to know the true position.

   What cuts the other way

   The asymmetric-knowledge framing is fact-sensitive; opinions exchanged between equally informed commercial parties are usually not actionable as misrepresentations.

2. 02

   Edgington v Fitzmaurice · 1885

   (1885) 29 Ch D 459 · Court of Appeal Procedural posture

   Appeal from the Chancery Division; the directors' appeal was dismissed and damages for fraud were upheld.

   A statement of present intention can be a misrepresentation, the state of a person's mind is itself a fact.

   What cuts the other way

   Edgington requires proof of the defendant's actual intention at the time of the statement; future intentions held in good faith and later abandoned are not misrepresentations.

3. 03

   Derry v Peek · 1889

   (1889) 14 App Cas 337 · House of Lords Procedural posture

   Appeal from the Court of Appeal allowed; the directors' appeal succeeded and the action in deceit failed.

   Defined fraudulent misrepresentation, knowledge of falsity, recklessness, or absence of belief in truth.

   What cuts the other way

   The strict fraud standard means many negligent statements escape the deceit measure of damages; claimants typically must rely on s2(1) of the Misrepresentation Act 1967 instead.

4. 04

   Royscot Trust Ltd v Rogerson · 1991

   [1991] 2 QB 297 · Court of Appeal Procedural posture

   Appeal from the Queen's Bench Division dismissed; the finance company recovered the full deceit measure.

   Damages under s2(1) Misrepresentation Act 1967 are assessed on the tort-of-deceit measure, wide reach for negligent misrepresentation claims.

   What cuts the other way

   The 'fiction of fraud' reading of s2(1) has been widely criticised; first-instance judges sometimes confine Royscot, applying a tighter remoteness test on a negligence measure.

Run a real argument through LexCases

A buyer entered a sale of a hotel after the seller described the existing tenant as 'most desirable'. The tenant was in arrears at the time. Build the case for rescission.

LexCases will run the argument against current case law and rank the cases, including these foundations and any later cases that have built on or pulled away from them.

Curated for England & Wales. Always verify each case before relying on it in formal work. Citations are accurate at the time of publication, but the law moves.