Misrepresentation by whom?

Where a misrepresentation by a third party induces the claimant to enter a contract with the defendant then, as a general rule, the claimant has no claim against the defendant.

Foote v Hayne (1824) 1 C & P 545, 171 ER 1310

Action for breach of promise of marriage. In his defence, D said his promise of marriage had been induced by misrepresentations by C’s father. It was alleged that C had left London to give birth to her second child, of whom one Colonel Berkeley was the father, But that C’s father, Mr Foote, wrote to D saying that C had left London because of a pulmonary complaint.

Abbott CJ said that C was not answerable for her father’s statements. C was awarded damages of £3,000.

But a claim may lie where against the defendant where he had notice of the third party’s misrepresentation or where the third party acted as his agent.

Barclays Bank plc v O’Brien [1994] 1 AC 180

A husband and wife executed a second mortgage in favour of Barclays to secure overdraft facilities extended by the bank to a company in which the husband, but not the wife, had an interest. The husband induced the wife to execute the charge by misrepresenting its nature and extent.

The House of Lords held that the misrepresentation gave rise to an equity in the wife as against the husband to set aside the charge. Further, the wife’s equity/right to set aside was enforceable against the bank as it had constructive notice of the circumstances giving rise to the equity: the bank had failed to take reasonable steps to ensure that the wife’s agreement to stand as surety had been properly obtained.

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