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neglifent misreporesentation - Coggle Diagram
neglifent misreporesentation
Hedley Byrne v Heller [1964] AC 465
The plaintiffs wanted to check a company's creditworthiness, so contacted the company's bankers (the defendant's) who provided a credit reference
• When the company defaulted on some payments, the plaintiffs sued the defendantbankers - although they lost because of a disclaimer by the bankers, the House of Lords said obiter that the defendants did owe a duty of care to the plaintiffs because there was a special relationship between the parties and that they were in breach of that duty by fialing tot ake rerasoanble care that the representation was correct
facts
• P asked their bank to give a view on the financial position of another firm.
• Bank gave positive report - P entered into contract.
• Firm went into liquidation.
• P sued bank - negligent misstatement.
• Held: (Bank protected by disclaimer). In absence of disclaimer - bank would have been liable - bank owed a duty of care and was thus liable for neglgient mistatements
Esso Petroleum v Mardon [1976] QB 801
An Esso sales representative assured the defendant about how much a petrol station would be able to sell.
• On the strength of this estimate, Mardon entered into a tenancy agreement with Esso.
• Petrol sales turned out to be much less than this forecast (as in the meantime the local
authority had stipulated changes to the plans of the site which would mean the sales potential would be less, but this change was never communicated to the representative).
With regard to Mardon's claim for damages for negligent misstatement, the court applied
the Hedley Byrne principle
Caparo v Dickman, 1990
Caparo v Dickman, 1990 limited the
• scope of this so that it has to be just and reasonable to impose a duty of care.
• This type of misrepresentation can cover statements of opinion though rather than just fact
Two types of negligent misrepresentation
Common law negligent misrepresentation
Statutory misrepresentation under the misrepresentation act 1967
To establish a claim in tort og negligence, c must show that D
owed him a duty of care (Donoghue v Stevenson [1932] AC 562, Lord Atkin's 'wide ratio'/'neighbour test')
breached that duty
breach caused cs damage that was not too remote, cuasaiton in fact, causation in alw
Representation - inducement/reliance
reliance-it must be reasonable for the representee to rely on the advice; the relationship does not exist unless the representor ought to have known that his advice would be relied on by a particular person for the purposes of a particular transaction
Measure of damages for negligent misrepresentation:
Hedley Byrne & Co Ltd.
he HL recognised a right to damages for negligent misstatements where there was a special relationship between the parties
CATEGORY: Negligent statements under the Misrepresentation Act 1967, s2(1)*
Howard Marine and Dredging Co Ltd v A Ogden and Sons (Excavations) Ltd (1978)
Howard Marine and Dredging Co Ltd v A Ogden and Sons (Excavations) Ltd (1978)
Owner of barge told potential hirer that it had capacity of 1,600 (figure was based on his
memory of an entry he had seen which stated 1,800 tonnes)
• Ships documents made it clear figure 1,055 tonnes.
• Charterers claimed damages under s.2(1)
• Held: CA - D failed to prove that he had reasonable grounds for belief in the truth of the
statement. Correct figure was in documentation in his possession
Measure of damages under s.2(1):
has been interpreted to mean that damages are determined in accordance with the principles applied to fraudlent
Royscot Trust Ltd v Rogerson [1991] 2 QB 297 (CA)
facts
Car dealer misrepresented to P finance company the deposit paid by a customer.
• Held: CA confirmed that in an action for misrep under s.2(1) Act damages should be
assessed in the same way as for fraudulent misrep - D liable for all losses flowing
from the D's misrepresentation (not simply those that were reasonably foreseeable).
Controversial decision as not fraudulent. Calls for reform (though since 2014 CPRs
won't apply to B2C)
• Interpreted to mean that damages are determined in accordance with the principles
applied to fraudulent misrepresentation