Fraud and Misrepresentation

13th December 2017
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Fraud and Misrepresentation

As London Litigation solicitors expert in fraud and misrepresentation we are often asked to advise individuals and business clients alike on the possibility of making a claim for fraudulent misrepresentation.

Where parties are induced to enter into a contract or commitment based on a statement that they later discover to be false, they will be looking for redress and legal remedies. This brief guide sets out the basics of fraudulent misrepresentation and the ingredients for a successful claim.

What is fraudulent misrepresentation? 

The accepted definition of fraudulent misrepresentation in English law was set out in the early case of Derry v Peek. In that case the House of Lords stated that fraud is proved where a false representation is made:

  1. with full knowledge of its untruth;
  2. without belief in its truth; or
  3. recklessly.

Proving fraud is not always straightforward, as it is often necessary to show that the alleged fraudster knew certain things or had a certain state of mind. But the remedies available to contracting parties who can demonstrate fraud include rescission of the contract and damages.

Claims for fraudulent representation

If you are seeking to make claims for rescission and/or damages based on fraudulent misrepresentation, you must be able to prove that:

  1. The alleged fraudster had no honest belief in the truth of what they were telling you, or was simply reckless and did not care whether it was true or false; and
  2. You wouldn’t have entered into the contract or agreement had they told you the truth.

It is crucial that the person inducing you to enter into the contract was aware that he was making a fraudulent misrepresentation. It isn’t enough to say that they made a mistake – in that case it may be an innocent or negligent misrepresentation, but not a fraudulent one. If they “honestly believe” what they are telling you is true, there is no claim for misrepresentation, although it may be sufficient for the party making the statement to know that they may not be giving you accurate information (thereby being reckless in their representation).

However, there isn’t a need to prove a motive on the part of the alleged fraudster.

If you can prove that you were induced into a contract by a fraudulent misrepresentation, you can rescind the contract and claim damages that would put you back in the financial position you would have been in had you never entered the contract.

You should seek legal advice if you think you have a fraud claim. South Bank Legal is a London law firm and you can contact an expert fraud or misrepresentation solicitor for a confidential discussion today.

Litigation & Dispute Resolution