Tort of deceit

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The tort of deceit is a type of legal injury that occurs when a person intentionally and knowingly deceives another person into an action that damages them. Specifically, deceit requires that the tortfeasor

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Deceit dates in its modern development from Pasley v. Freeman. [1] Here the defendant said that a third party was creditworthy to the claimant, knowing he was broke. The claimant loaned the third party money and lost it. He sued the defendant successfully.

Relationship with negligence

The leading case in English law is Derry v. Peek , [2] which was decided before the development of the law on negligent misstatement. In Hedley Byrne & Co Ltd v. Heller & Partners Ltd it was decided that people who make statements which they ought to have known were untrue because they were negligent, can in some circumstances, to restricted groups of claimants be liable to make compensation for any loss flowing, despite the decision in Derry v Peek. This falls under the so-called "voluntary assumption of responsibility" test.

In Bradford Equitable B S. v Borders, [3] [4] it was held that in addition the maker of the statement must have intended for the claimant to have relied upon the statement.

Negligence and deceit differ with respect to remoteness of damages. In deceit the defendant is liable for all losses flowing directly from the tort, whether they were foreseeable or not. [5] In Doyle v. Olby (Ironmongers) Ltd, Lord Denning MR remarked, "it does not lie in the mouth of the fraudulent person to say that [such damages directly flowing from the fraudulent inducement] could not reasonably have been foreseen". [6] So where there is a sudden downturn in the property market, a person guilty of deceitful misrepresentation is liable for all the claimant's losses, even if they have been increased by such an unanticipated event. [7] This is subject to a duty to mitigate the potential losses. [8]

Contributory negligence is no defence in an action for deceit. [9] However proving deceit is far more difficult than proving negligence, because of the requirement for intention.

See also

Further reading

Related Research Articles

Negligence is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as negligence involves harm caused by failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of negligence is that people should exercise reasonable care in their actions, by taking account of the potential harm that they might foreseeably cause to other people or property.

A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishable by the state. While criminal law aims to punish individuals who commit crimes, tort law aims to compensate individuals who suffer harm as a result of the actions of others. Some wrongful acts, such as assault and battery, can result in both a civil lawsuit and a criminal prosecution in countries where the civil and criminal legal systems are separate. Tort law may also be contrasted with contract law, which provides civil remedies after breach of a duty that arises from a contract. Obligations in both tort and criminal law are more fundamental and are imposed regardless of whether the parties have a contract.

<span class="mw-page-title-main">English tort law</span> Branch of English law concerning civil wrongs

English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil law, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.

<span class="mw-page-title-main">Misrepresentation</span> Untrue statement in contract negotiations

In common law jurisdictions, a misrepresentation is a false or misleading statement of fact made during negotiations by one party to another, the statement then inducing that other party to enter into a contract. The misled party may normally rescind the contract, and sometimes may be awarded damages as well.

Economic torts, which are also called business torts, are torts that provide the common law rules on liability which arise out of business transactions such as interference with economic or business relationships and are likely to involve pure economic loss.

<i>Heilbut, Symons & Co v Buckleton</i>

Heilbut, Symons & Co v Buckleton [1912] UKHL 2 is an English contract law case, given by the House of Lords on misrepresentation and contractual terms. It held that a non-fraudulent misrepresentation gave no right to damages. This was decided decades before Hedley Byrne v Heller, where damages for negligent misrepresentation were introduced in English law, and, thus, it would today be regarded as wrongly decided under the tort of negligent misrepresentation.

<i>Derry v Peek</i>

Derry v Peek [1889] UKHL 1 is a case on English contract law, fraudulent misstatement, and the tort of deceit.

Ex turpi causa non oritur actio is a legal doctrine which states that a plaintiff will be unable to pursue legal relief and damages if it arises in connection with their own tortious act. Particularly relevant in the law of contract, tort and trusts, ex turpi causa is also known as the illegality defence, since a defendant may plead that even though, for instance, he broke a contract, conducted himself negligently or broke an equitable duty, nevertheless a claimant by reason of his own illegality cannot sue. The UK Supreme Court provided a thorough reconsideration of the doctrine in 2016 in Patel v Mirza.

In the English law of tort, professional negligence is a subset of the general rules on negligence to cover the situation in which the defendant has represented him or herself as having more than average skills and abilities. The usual rules rely on establishing that a duty of care is owed by the defendant to the claimant, and that the defendant is in breach of that duty. The standard test of breach is whether the defendant has matched the abilities of a reasonable person. But, by virtue of the services they offer and supply, professional people hold themselves out as having more than average abilities. This specialised set of rules determines the standards against which to measure the legal quality of the services actually delivered by those who claim to be among the best in their fields of expertise.

Causation in English law concerns the legal tests of remoteness, causation and foreseeability in the tort of negligence. It is also relevant for English criminal law and English contract law.

Loss of chance in English law refers to a particular problem of causation, which arises in tort and contract. The law is invited to assess hypothetical outcomes, either affecting the claimant or a third party, where the defendant's breach of contract or of the duty of care for the purposes of negligence deprived the claimant of the opportunity to obtain a benefit and/or avoid a loss. For these purposes, the remedy of damages is normally intended to compensate for the claimant's loss of expectation. The general rule is that while a loss of chance is compensable when the chance was something promised on a contract it is not generally so in the law of tort, where most cases thus far have been concerned with medical negligence in the public health system.

Breaking the chain refers in English law to the idea that causal connections are deemed to finish. Even if the defendant can be shown to have acted negligently, there will be no liability if some new intervening act breaks the chain of causation between that negligence and the loss or damage sustained by the claimant.

In the English law of negligence, the acts of the claimant may give the defendant a defence to liability, whether in whole or part, if those acts unreasonably add to the loss.

In English law, remoteness between a cause of action and the loss or damage sustained as a result is addressed through a set of rules in both tort and contract, which limit the amount of compensatory damages available for a wrong.

Economic loss is a term of art which refers to financial loss and damage suffered by a person which is seen only on a balance sheet and not as physical injury to person or property. There is a fundamental distinction between pure economic loss and consequential economic loss, as pure economic loss occurs independent of any physical damage to the person or property of the victim. It has also been suggested that this tort should be called "commercial loss" as injuries to person or property can be regarded as "economic".

<i>Royscot Trust Ltd v Rogerson</i>

Royscot Trust Ltd v Rogerson[1991] EWCA Civ 12 is an English contract law case on misrepresentation. It examines the Misrepresentation Act 1967 and addresses the extent of damages available under s 2(1) for negligent misrepresentation.

<i>Doyle v Olby (Ironmongers) Ltd</i>

Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 is an English contract law case concerning fraudulent misrepresentation. It illustrates and emphasizes the differing measures of damages for deceit and breach of contract.

<span class="mw-page-title-main">Law Reform (Contributory Negligence) Act 1945</span> United Kingdom legislation

The Law Reform Act 1945 is an Act of Parliament of the United Kingdom, which allows a judge to apportion liability for compensatory damages as he feels to be "just and equitable" between a tortfeasor and an injured person who was partly to blame. Section 1(1) of the Act provides:

"Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person(s), a claim in respect of that damage will not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage."

Dishonest assistance, or knowing assistance, is a type of third party liability under English trust law. It is usually seen as one of two liabilities established in Barnes v Addy, the other one being knowing receipt. To be liable for dishonest assistance, there must be a breach of trust or fiduciary duty by someone other than the defendant, the defendant must have helped that person in the breach, and the defendant must have a dishonest state of mind. The liability itself is well established, but the mental element of dishonesty is subject to considerable controversy which sprang from the House of Lords case Twinsectra Ltd v Yardley.

<span class="mw-page-title-main">Floodgates principle</span>

The floodgates principle, or the floodgates argument, is a legal principle which is sometimes applied by judges to restrict or limit the right to make claims for damages because of a concern that permitting a claimant to recover in such situations might open the metaphorical "floodgates" to large numbers of claims and lawsuits. The principle is most frequently cited in common law jurisdictions, and in English tort law in particular.

References

  1. Pasley v. Freeman, (1789) 3 TR 51
  2. Derry v Peek [1889] UKHL 1 , (1889) LR 14 App Cas 337(1 July 1889)
  3. Bradford Equitable B S. v Borders, [1941] 2 All ER 205, HL
  4. Horace Russell (1939). "The Borders Case". The Journal of Land & Public Utility Economics. 15 (2): 225–227. doi:10.2307/3158131. JSTOR   3158131.
  5. Smith New Court Securities Ltd v. Scrimgeour Vickers (Asset Management) Ltd [1996] UKHL 3 , [1997] AC 254(21 November 1996); Clef Aquitaine SARL v. Laporte Materials (Barrow) Ltd Archived 21 February 2014 at the Wayback Machine [2000] 2 All ER 493
  6. Doyle v Olby (Ironmongers) Ltd [1969] EWCA Civ 2 at p. 167, [1969] 2 QB 158(31 January 1969)
  7. Slough Estates Ltd v. Welwyn-Hatfield District Council [1996] 2 PLR 50
  8. Downs v. Chappell [1997] 1 WLR 426, where a conned car buyer only recovered losses up to the time he should have sold the car on
  9. Alliance and Leicester BS v. Edgestop Ltd [1993] 1 WLR 1462