‘Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true.’
A customer agreed to buy a car on hire purchase for a cash price of £7,600, inclusive of a deposit of £1,200. The dealer sold the car to a finance company for £6,400 and represented that the customer had agreed a cash price of £8,000 inclusive of a deposit of £1,600. The customer defaulted on his payments to the finance company, which then sought to recover its losses from the dealer. The Court of Appeal held that the finance company could recover as damages the difference between what it had paid the dealer and what it had received in payments from the customer.
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