Negligent Misrepresentation Case Study

Damages for negligent misrepresentation under MA 1967 s. (2 (1)

MA 1967 s. 2 (1):

“Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true.”

The burden of disproof is quite onerous, cf in example Howard Marine & Dredging Co Ltd v A. Ogden & Sons Ltd (1978)

2 (1) is to be assessed in the same way as damages for fraudulent misrepresentation.

This understanding of MA 1967 s. 2 (1) was given critique in Smith New Court Ltd v Scrimgeour Vickers (Asset Management) Ltd (1997). It was stated by Lord Steyn that fraud and negligence should be treated differently. In his opinion fraudulent misrepresentation should allow recovery for all losses resulting from having entered into the contract and negligent misrepresentation should be limited to recovery of losses resulting from the negligent statement.

However, the principle in Royscot Trust Ltd v Rogerson (1991) has not been overruled and it must therefore considered to be the current law, cf Yam Seng Pte Ltd v International Trade Corporation Ltd (2013).

A will therefore be able to recover of “out-of-pocket loss”. The general rule is that the misrepresentee is to be put back into the position he would have been if the misrepresentation had not been made, cf Derry v Peek (1889).

According to Pankhania v Hackney London Borough Council (Damages) (2004) the duty to mitigate loss does also apply to claims fra damages under MA 1967 s. 2

MA 1967 s. 2 (2) applies to all non-fraudulent misrepresentations. MA does not apply to fraudulent misrepresentation. This is because fraud hardly can be considered as trivial.

I følge Jill Poole skal er det tre vurderingstemaer:

The nature of the misrepresentation, including its seriousness, cf William Sindall plc v Cambridgeshire County Council (1993)

Whether the representee will suffer greatly if not allowed to rescind

Whether the representor would suffer unduly if rescission where allowed, cf William Sindall plc v Cambridgeshire County Council (1993)

According to Salt v Stratstone Specialist Ltd (t/a Stratstone Cadillac Newcastle) (2015) the rescission must be available at the time the court is to use its discretion.

The measure of damages under MA 1967 s. 2 (2) must be viewed in the light of its purpose, namely to compensate the loss of the right to rescind. It will therefore be adequate to give the difference in value with and without misrepresentation in compensation.

Indemnity side 656

Contributory