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Derry v Peek (1889) 5 T.L.R. 625

In a company prospectus the defendant stated the company had the right to use steam powered trams as oppose to horse powered trams. However, at the time the right to use steam powered trams was subject of approval of the Board of Trade, which was later refused. The claimant purchased shares in the company in reliance of the statement made and brought a claim based on the alleged fraudulent representation of the defendant.

Held:

The statement was not fraudulent but made in the honest belief that approval was forthcoming.

Lord Herschell defined fraudulent misrepresentation as a statement which is made either:

i) knowing it to be false,
ii) without belief in its truth, or
iii) recklessly, careless as to whether it be true or false.
 
Back to lecture outline on misrepresentation in Contract Law