The tort of deceit - Commercial Law PDF

Preview

Summary

This document provides: The tort of deceit, and Negligent misstatement...

Description

The tort of deceit

It is well established that an agent can be liable to a third party if he engages in the tort of deceit. The classic definition of this tort was provided by Lord Herschell, who stated that:

in order to sustain an action in deceit, there must be proof of fraud, and nothing short of that will suffice … [F]raud is proved when it is shown that a false representation has been made, (1) knowingly, or (2) without belief in its truth, or (3) recklessly careless whether it be true or false.

It is also important to note that the principal’s knowledge or recklessness will not be projected onto the agent.

Negligent misstatement

The leading case on negligent misstatement, namely Hedley Byrne & Co Ltd v Heller & Partners Ltd, established that in order for negligent misstatement to arise, a duty of care needed to exist. Lord Morris stated that ‘if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise’.

It follows that an agent will only be liable if he owed a duty of care to the third party and, as Lord Morris’s statement indicates and as future courts have made clear, this will depend upon whether the agent has assumed a responsibility towards the third party.

As the courts will have regard to all the circumstances of the case, it follows that determining and predicting whether or not an agent has assumed a responsibility towards a third party is not always an easy task....