Measures in Misrepresentation: Recent Steps in Awarding Damages

Abstract

Claims under the Misrepresentation Act 1967 are probably dealt with very effectively in practice, but nobody could realistically maintain that the interaction of the remedies available under the Act and at common law is notable for simplicity or clarity. Even though the Act is now a quarter of a century old, some of its intricacies are still being disentangled by the courts; indeed, three recent decisions on damages for misrepresentation demonstrate well the complexity of the remedies and the artificiality of the wording of the Act. To make sense of the provisions of the Act requires some understanding of the background and of the way in which the remedies for misrepresentation were developed. As is well known, at common law the courts had only allowed damages for fraudulent misrepresentation in the tort of deceit'; the only remedy for innocent or negligent misrepresentation was rescission of the contract, if it was available, together with a limited payment an indemnity in some cases. By 1963, the need for an effective action for negligent misrepresentation had become so apparent that the courts introduced the remedy in the case of Hedley Byrne v Heller2 which has since proved so potent. Almost simultaneously, parallel developments resulted in the Misrepresentation Act 1967. Section 2(1) of the Act went a long way towards providing an effective general remedy for misrepresentation, but although it might in certain circumstances replace or supplement the common law remedies in tort Hedley Byrne for negligent and the tort of deceit for fraudulent misrepresentation it has not removed the need for them. For the plaintiff, however, the statutory remedy does have the advantage over both common law alternatives to the extent that it reverses the burden of proof in his favour, so that he need do no more than show that the defendant (who must be a party to the contract) has made a misrepresentation on which he, the plaintiff, has relied and thereby suffered a loss. Although liability under the Act is relatively easy to establish, in other respects the statutory remedy is far from simple, partly because of the 'filction of fraud'3 used as the basis of liability and also because of the intricacy of the remedies available to plaintiffs. In view of this complex interaction, a brief reminder of the remedies for misrepresentation may be useful as an introduction. The plaintiff will probably Elrst consider whether the statement was intended as a term of the contract. If he can establish this, he may recover contractual ('loss