Odger's English Common Law

Chapter XI.
FRAUDULENT MISREPRESENTATION.
u A mere lie, thrown out at random without any intention
of hurting anybody, but which some person was foolish
enough to act upon," will not support an action of deceit, for
the intention with which the misrepresentation was made is an
essential part of the right of action. 1 But any conscious mis-
representation, whether of fact or of law, will be sufficient, if
the person to whom it was made was intended to act upon it
and did so to his loss. Simple fraud gives no cause of action,
unless the plaintiff can show that he has thereby suffered
damage. It is immaterial whether the defendant has benefited
by his fraud or not.
Negligence is not fraud. Hence, if a statement be made
which is in fact untrue and the jury are satisfied that its
assertion was the result of inadvertence and not of fraud, no
action for damages will lie at common law
- ;
2 though the
directors of a projected company have by statute been made
liable for false statements, which they have negligently
inserted in a prospectus and thereby induced the public to
take shares in the company. 3
In order, then, to succeed in an action for a fraudulent
misrepresentation, the plaintiff must prove :—
(i.) that the defendant made representations as to some
existing fact
(ii.) with the intention of inducing the plaintiff to act
upon them
;
(iii.) that such representations were false in fact
(iv.) to the knowledge of the defendant
1 Per Ashurst, J., in Pasley v. Freeman (1789), 2 Sm. L. C, 12th ed. at p. 84.
2 Demi v. Peek (1889), 14 App. Cas. 337 ; Le Lievre v. Gould, [1893] J
491.
Q. B.
3 Companies (Consolidation) Act, 1908 (8 Edw. VII. o. 69), s. 84, re-enacting
the Directors' Liability Act, 1890 (53 & 54 Vict. c. 64).
;
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