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Doyle v Olby [1969] 2 QB 158

The claimant, Doyle, purchased a business from the defendant, Olby, as a result of a several fraudulent misrepresentations relating to the profitability and operations of the business. The trial judge assessed damages on contractual principles as to what position the claimant would have been in had the statements been true and awarded a sum of £1,500. However, the claimant had suffered loss to the extent of £5,500 as a result of entering the contract. The claimant appealed on the assessment of damages.

Held:

Contractual damages are not applicable to misrepresentation since a representation is not a term of a contract. Where there has been a fraudulent misrepresentation damages should be assessed in the tort of deceit.


Lord Denning MR stated:

"On principle the distinction seems to be this: in contract, the defendant has made a promise and broken it. The object of damages is to put the plaintiff in as good a position, as far as money can do it, as if the promise had been performed. In fraud, the defendant has been guilty of a deliberate wrong by inducing the plaintiff to act to his detriment. The object of damages is to compensate the plaintiff for all the loss he has suffered, so far, again, as money can do it. In contract, the damages are limited to what may reasonably be supposed to have been in the contemplation of the parties. In fraud, they are not so limited. The defendant is bound to make reparation for all the actual damages directly flowing from the fraudulent inducement"
 
Back to lecture outline on misrepresentation in Contract Law