TORT OF DECEIT
Dr. B. J. Bulama
MEANING
• Deceit is a type of tort that occurs when “a person
intentionally and knowingly deceives another person into an
action that results in damages or losses to the person”.
• Deceit occurs when one person intentionally deceives
another, leading to damage(s) or loss(es). It is also known
as fraudulent misrepresentation, and it requires that the
deceiver knowingly makes a false representation, which the
victim relies upon to their detriment.
The tort of Deceit in its modern form is traceable to the case of Pasley v.
Freeman (1789) 3 TR 51. Here, the defendant said that a third party was
creditworthy to the claimant, knowing he was actually broke. The
claimant, acting on the defendant’s representation, loaned the third party
money and lost it. He sued the defendant and got judgement. The court
held that to successfully bring an action for deceit, the plaintiff must
establish that the tortfeasor or defendant:
i. made a factual representation,
ii. knowing that it was false, or reckless or indifferent about its veracity,
iii. intending that another person relies on it,
iv. who then acted in reliance on it, to that person's own detriment
ELEMENTS OF DECEIT
• i. That the defendant made a false representation of facts
(either by words or conduct);
• ii.
That the defendant intended that the representation
be acted upon by the plaintiff;
• ii. That the plaintiff relied on such false representation;
• iv. That the plaintiff has suffered damages as a result.
I. FALSE REPRESENTATION OF FACT
• There are 3 aspects to this requirement, namely:
• i. The false statement may be by words (spoken & written).
See the Nigerian case is that of James V. Mid-motors
(Nig) Co. Ltd.
• ii.
It may be by conduct. Such conduct must be such that
is designed to deceive another to believe that a certain
fact exists.
Note: Generally, silence does not normally constitute deceit. This
principle is clearly exemplified in the context of sales of goods, by the
Latin Maxim “caveat emptor” which implies, let the buyer be aware.
• However, silence will constitute deceit in the following circumstances:
A. Where it distorts a positive representation.
In Dimmock v Hallet (1866) LR 2 App. 21, it was held that where silence
distorts a positive representation, it could be regarded as partial
concealment of truth. The action of such a person in concealing partly the
truth in silence and making a false representation amounts to falsehood
and thus can make a defendant liable to the plaintiff.
B. Where there is active concealment of fact
In Peek v. Gurvey (1873) LR 6 HL 377 at 403, it was held that active
concealment of fact relating to a matter amounted to deceit.
C. Where a duty of disclosure is imposed by statute
• This is common in insurance business where the law imposes
obligation on the insured to disclose materials facts about
themselves. In Roselodge Ltd v Castle [1966] 2 Lloyd’s Rep 113,
the failure by the insureds to disclose that they had previous
convictions when of taking up an insurance policy with the
insurers was held to be fatal.
2. INTENTION THAT THE STATEMENT SHOULD BE RELIED
UPON
• The defendant must have intended that the plaintiff relies
on his statement. It is also sufficient that the statement was
addressed to a third party with the intent that it be
communicated to the plaintiff.
• In Langridge V. Levy (1837) 150 ER 863, the defendant sold
a gun to the plaintiff’s father, representing that the gun was
made by a well-known manufacturer and thus safe to use.
The plaintiff’s son used the gun which exploded wounding
his hand. It was held that the defendant was liable for deceit.
3. RELIANCE BY THE PLAINTIFF
• The plaintiff must show that he relied or acted on the
defendant’s false representation to his detriment as seen
in Smith v Chadwick (1882), 20 Ch. D 27. If the loss suffered
by the plaintiff was due to some cause other than reliance
upon the defendant’s misstatement, then the defendant will
not be liable in deceit.
4. DAMAGES SUFFERED
• Deceit is not actionable per se. So the plaintiff must prove that
he has suffered some actual damages.
• InDenton v. G.N. Ry. Co 854 S.W.2d 885 (Tenn. Ct. App.
1993), a train that had been taken off the track was
announced as still running in a railway company’s current
timetable. This was a misrepresentation and a person had
missed an appointment by relying on it and a loss incurred.
The railway company was held liable for deceit.
DEFENSES
• 1.Where the party that made representation made so
in good faith & honest belief in its truth.
• 2.
That the plaintiff actually knew the truth of the
matter and so could not have acted on it.
• 3. That the plaintiff did not rely on the
misrepresentation in taking the action that caused the
damages.
TYPES OF MISREPRESENTATION
• There are three types of misrepresentation: fraudulent, negligent and
totally innocent
• (A) FRAUDULENT MISREPRESENTATION
• Fraudulent misrepresentation was defined by as a false statement that is made (i)
knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless as to whether it be
true or false. Therefore, if someone makes a statement which they honestly believe is
true, then it cannot be fraudulent.
• (B) NEGLIGENT MISREPRESENTATION
• This is a false statement made by a person who had no reasonable grounds for
believing it to be true. There are two possible ways to claim: either under common law
or statute.
• (C) WHOLLY INNOCENT MISREPRESENTATION
• This is a false statement which the person makes honestly
believing it to be true.
REMEDIES
• (A) RESCISSION
• Cancellation or termination, it is possible in all cases of
misrepresentation. The purpose of withdrawal is to put the
parties in their original position, as if the contract had not been
done.
under
•. (B) INDEMNITY
• Thecourt may order compensation, i.e., a payment of money
by misrepresentor for expenses created under the terms of the
contract and is different from damage.
• (C) DAMAGES
• The injured party may claim damages for false statement. The
purpose of damages is to restore the victim to the position it
occupied before the misrepresentation was made. The test of
remoteness in deceit is that the injured party may recover all
damages suffered as a direct result of a fraudulent statement,
regardless of ability to predict.
• In addition, damages may include lost opportunity costs such as
lost profits.
D. RESTITUTION
• Restitution
