Deceit The Lie of the Law




6.1 The tort of deceit ordinarily contemplates that the misrepresentation will have been made by the claimant to the defendant. It is, however, possible that the representation is made through third parties. The representation may have been made by a third party to the claimant in such circumstances as to render the defendant liable for deceit. The representation may have been made by the defendant to a third party and thereby induced the claimant to act to his or her detriment in circumstances where the defendant is liable to the claimant. It may be, as is often the case in commercial transactions, that third parties, that is, persons other than the claimant or the defendant, have made and received the representation. 6.2 In such cases, there may yet be an actionable deceit. The fact that the representation is channelled through third parties is no bar to liability. Indeed, in some circumstances, the third parties may themselves be liable for the deceit in addition to the defendant. In considering the impact of third parties on the question of liability for deceit, the matter is to be examined first from the perspective of a third party making the representation and then from the perspective of the third party receiving the representation.


6.3 The representation need not be communicated directly by the defendant to the claimant.1 It is therefore possible, for example, that the fraudulent misrepresentation is made by a third party to a contracting party in order to induce that party to enter into the contract with a person other than the third party.2 In that event, of course, the third party will be, or at least should be, responsible in deceit.3 That third party’s fraud will not be attributed to the other contracting party unless either the contracting party in some way procured, sanctioned or engineered the misrepresentation by the third party or the representation was made by an agent for whose conduct the principal is vicariously liable. In Cargill v. Bower,4 Fry, J said that:

“I conceive the general law to be this, that the persons responsible for a fraud are of two classes. First, the actual perpetrators of the fraud, the authors of it, the agents who commit it, the parties to it; those who concur in it, who either do something, to produce the fraudulent result, or abstain from doing something which they are under an obligation to the deceived person to do in order to prevent fraud. Secondly, the principal for whom an agent in the performance of his duties as agent commits the fraud is also responsible.”

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