It is generally no defence for the representor to say that the addressee could and should have discovered the falsity of the statement before entering the contract.
C advertised to take a partner into his law practice who would also purchase his house. C told D that the practice brought in from £300 to £400 a year and produced business summaries which showed an annual income of almost £200. D also produced various letters and papers which he said related to other income.
D agreed to buy the house and paid a deposit. However, D refused to complete having discovered in the meantime that the business was, as he put it, worthless.
Fry J granted C’s application for specific performance and dismissed D’s counterclaim for rescission. Fry J found that D had not examined the letters and papers, and that had he done so he would have seen evidence of a further annual income of around £5. Fry J held that D had either not relied on the statement as to income or if he had relied on it had been guilty of such negligence as to deprive him of any right to relief.
The CA allowed D’s appeal.
‘The mere fact that a party has the opportunity of investigating and ascertaining whether a representation is true or false is not sufficient to deprive him of his right to rely on a misrepresentation as a defence to an action for specific performance. The person who has made the misrepresentation cannot be heard to say to the party to whom he has made that representation, “You chose to believe me when you might have doubted me, and gone further.” The representation once made relieves the party from an investigation, even if the opportunity is afforded.’
Baggallay LJ at 22-23.
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