Deceit The Lie of the Law
7
INDUCEMENT
INDUCEMENT AND THE RESULTANT DAMAGE: TWO TYPES OF CAUSATION
7.1 In 1941, in Bradford Third Equitable Benefit Building Society v. Borders,1 Viscount Maugham held that the claimant “must have acted upon the false statement and has sustained damage by so doing”. This simple statement, simply understood, belies deeper issues requiring disentanglement. The knot of confusion might grow tighter when the ingredients of the tort are repeated by the courts in slightly different terms: for example, that the representee “relied upon”,2 was “influenced by”,3 “acted upon”,4 or “acted in reliance on”,5 the misrepresentation, and yet Hobhouse, LJ in Downs v. Chappell,6 stated that reliance is not the “correct criterion”, although it has a similar meaning to inducement. 7.2 This reliance—inducement—is a critical ingredient of the cause of action in deceit. It is at that point of time that the constituent elements of the fraud must operate to impose a legal liability upon the fraudster.7 As Lord Tucker said in Briess v. Woolley:8“The tort of fraudulent misrepresentation is not complete when the representation is made. It becomes complete when the misrepresentation—not having been corrected in the meantime—is acted upon by the representee. Damage giving rise to a claim for damages may not follow or may not result until a later date, but once the misrepresentation is acted upon by the representee the tortious act is complete provided that the representation is false at that date. If false when made but true when acted upon there is no misrepresentation.”