Civil/commercial fraud, fraudulent misrepresentation and the tort of deceit

What is fraudulent misrepresentation?

Civil or commercial fraud commonly means a fraudulent misrepresentation, which can lead to a claim under the Misrepresentation Act 1967 or the common law tort of deceit.

Fraudulent misrepresentation is where a false statement is dishonestly made to a person upon which that person relies and, as a consequence of relying on that statement, suffers some damage.

Tort of deceit

The tort of deceit provides a civil remedy for an individual who has relied on a false representation to their detriment and requires the following elements to be proven:

  • an individual has made a representation to another party which is false;
  • the individual knows it to be false or was reckless as to the truth of the statement;
  • there is an intention to deceive and it is acted upon;
  • loss is suffered as a consequence.

Example of deceit

An example of when the tort of deceit will come into play is where an individual has made a false insurance claim to their insurer in the case of a motoring accident. If, for example, they claim that another party has damaged their vehicle in a collision, but it in fact was their own fault and the original statement has caused the insurance company to pay out, then that individual would be liable to the insurance company under the tort of deceit.

Elements of the claim

False representation

There must be a statement (written or oral) or conduct amounting to a representation which is false. A statement would obviously involve something being said or written, whereas conduct consisting of wearing a uniform or dress of some kind would be included.

Mere silence would not be considered a false representation.

Of a fact

The misrepresentation must be in relation to a specific fact, ie, the facts of the motoring case. Statements of opinion or intention therefore do not fall within the definition of a false misrepresentation.

Knowing or reckless as to whether the statement is false

For the tort of deceit to be actionable it is not enough that the defendant was negligent as to whether the statement was false (that there was a lack of reasonable grounds to believe the statement was true). The defendant has to know the statement was untrue or be reckless as to the truthfulness. Anything less than this is not enough.

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For more information on:

  • There was reliance upon the representation
  • Damage
  • Remedies
  • What relief can be provided in a claim for deceit?