Misrepresentation

the courts have developed to decide the level of damages to be awarded for

breach of contract are arbitrary and no consistent principle can be discerned

from the decisions made by the courts.’ Discuss.

When discussing the damages a

claimant can claim in court, these can take a wide variety of forms. Tangible

assets, which includes actual hard cash, are clearly included, being easily

replaced by a cash insertion from the defendant under order of the court. Other

injuries can also be covered by damages, such as loss of feelings, reputation,

suffering inconvenience and stress and even other mentally recognised disorders

or discomforts by damages (Archer v Brown [1985] QB 401). Further

damages can include other side-effects which may have been caused by entering

into the contract. These include, loss of the contract which was entered into

on the basis of the misrepresentation, loss of money paid to any third party

involved, loss of profits (Barley v Walford (1846) 9 QB 197),

appointments or earnings or injury to property, expenses or any detriment which

would offer pecuniary compensation can also be (Mullett v Mason (1866) LR 1

CP 559). Further, and finally, if the claimant’s mere belief in a

representation causes any physical or mental damage, then this can also be

considered by the court in the calculation towards damages (Wilkinson v

Downton [1897] 2 QB 57).

The claim under

fraudulent and negligent misrepresentation are tortious claims. A tortious

claim, subject to the damage for deceit, can exist based on a duty to care,

independent of any contractual or fiduciary duties (Le Lievre v Gould [1893]

1 QB 491, CA). In order to establish a duty of care, a causal connection

needs to be established between the loss that was suffered by the claimant and

a breach of duty of care engaged in by the defendant. The breach of duty must

have directly caused the loss suffered. The remoteness of the damages suffered

also plays a role, as if the damages are too far removed from what would have

come from the misrepresentation made, then the losses in question would not

qualify as being compensated (Hedley Byrne & Co Ltd v Heller & Partners

Ltd [1964] AC 465, Derry v Peek (1889) 14 App Cas 337 at 359). Often this

is again a question for the courts and is often left to their interpretation of

previous case law as to whether the loss qualifies. Not only are the

calculation of actual damages left to the discretion of the court but also the

causal connection. This allows a huge room for error on part of the court and

individual interpretation by judges. The judicial system in the UK provides

some check on this by allowing an appeals system to work. One court is under

the scrutiny of another, excepting of course when a claimant reaches the House

of Lords which is the final point of judgment.

Various defences exist for the

defendant to minimise or annihilate any liability. The claimant’s knowledge of

the truth is one, as a defendant who knows the truth is not being deceived and

so does not suffer from misrepresentation (Eaglesfield v Marquis of

Londonderry (1878) 26 WR 540 at 541, HL).This knowledge of claimant

must be wholly complete and not partial, a fragmentary knowledge of the true

facts is not enough and would not qualify as such, relieving the defendant. The

knowledge must also be actual and not implied, meaning the claimant must have

direct access to the knowledge and it must be shown that the claimant actually

knows it rather than be deduced to know it because the information was

available. The claimant will not suffer from not retrieving information that

was available.

The general rules applied in

quantification by the courts is to return the claimant to the position he would

have been in had the representation not been made. Although the loss need not

be foreseeable, it must have been directly caused by the misrepresentation so a

causal connection is often important to obtain as was outlined earlier (Smith

New Court Securities Ltd v Citibank NA [1997] AC 254 at 267). The claim for

deceit, which is the tortious claim under which negligent and fraudulent

misrepresentation both fall, is a measure of equitable damages under which

damages are payable to compensate the entire loss sustained, regardless of

returning the claimant to the position in which they would have been had the

misrepresention not occurred. This loss that is sustained, is calculated

according to the entire loss sustained in the past and the loss sustained by

the claimant in the future, clearly an estimation and to the discretion of the

courts once again.

When the court assess damages

where property or assets have been lost by the claimant, which are not

recoverable due to the nature of the asset, then the calculation of the sum due

under damages, is done via addition of present values. If a claim is made under

contract and the situation exists where the claimant paid monies and in return

for this payment did not receive anything, then the claimant will receive the

monies returned in full. Interest, business reputation, time lost and effort

inserted are all aspects which are not included in the calculation and so are

lost to the claimant.

The court is free to decide how

much is awarded, what is awarded and allowed to be awarded under the

established causal connection found by the court. This total discretion gives

the court much room to play, and could result in a plethora of outcomes both

capable of surprising the claimant and the defendant. However, the court is

regulated and the system would not function is certain rules, especially those

set in precedence were not followed. The award of damages, however, varies from

case to case as the evidence adduced and presented is always so variant.

Ultimately, the courts attempt be fair and equitable and in doing so will apply

all the facts of the case to the outcome granted.

References:

• Angus v Clifford [1891] 2 Ch 449at 470, CA
• Appleby, G. (2001). Contract Law. Sweet and Maxwell:London.
• Archer v Brown [1985] QB 401
• Barley v Walford (1846) 9 QB 197
• Bell v Lever Bros Ltd [1932] AC161, HL,
• Bisset v Wilkinson ([1927] AC 177, PC
• Candler v Crane, Christmas & Co [1951] 2 KB 164
• Derry v Peek (1889) 14 App Cas 337 at 359
• Eaglesfield v Marquis of Londonderry (1878) 26 WR 540 at541, HL
• Edgington v Fitzmaurice (1885) 29 ChD 459 at 483, CA
• Esso Petroleum Co Ltd v Mardon [1976] QB 801, [1976] 2 AllER 5, CA
• Fenton v Browne (1807) 14 Ves 144
• Halsburys Law Online: www.butterworths.co.uk/halsburys.
• Hedley Byrne & Co Ltd v Heller & Partners Ltd[1964] AC 465
• Le Lievre v Gould [1893] 1 QB 491, CA
• McKeown v Boudard-Peveril Gear Co (1896) 65 LJ Ch 735, CA
• Misrepresentation Act 1967, HM Stationery Office online.
• Mullett v Mason (1866) LR 1 CP 559
• Re Ambrose Lake Tin and Copper Mining Co, ex p Taylor, exp Moss (1880) 14 ChD 390 at 396-397, CA
• Re Metropolitan Coal Consumers’Association Ltd, Karberg’s Case [1892] 3 Ch 1 at 11, CA
• Smith, J.C. and Thomas, (2000). A Casebook on Contract.Sweet and Maxwell: London.
• Smith v Land and House Property Corpn (1884) 28 ChD 7 at15-16, CA, per Bowen LJ
• Smith New Court Securities Ltd v Citibank NA [1997] AC 254at 267
• Stikeman v Dawson (1847) 1 De G & Sm 90 at 104
• Taylor v Ashton (1843) 11 M &W 401 at 415
• Wilkinson v Downton [1897] 2 QB57