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Edgington v Fitzmaurice (1884) 29 Ch 459

Facts:

D issued prospectus inviting subscriptions for debentures, to complete alterations their buildings, purchase horses and vans; and to develop their fish trade. The real object of the loan was to enable the directors to pay off pressing liabilities.
C advanced money under erroneous belief that the prospectus offered a charge upon the property of the company, and stated in his evidence that he would not have advanced his money but for such belief, but that he also relied upon the statements contained in the prospectus.
The company became insolvent.
C sued.

Ratio:

Where a party has been induced both by his own mistake + a material misstatement by other party to do an act by which he receives injury, the speaking party may be made liable in an action for deceit.

A misstatement of the intention of one party in doing a particular act can amount to a misstatement of fact. If the other party was misled by it, an action of deceit may be founded on misstatement of fact.

Analysis:

Misstatement of the objects for which the debentures were issued was a material misstatement of fact, influencing the conduct of the C, and rendered the directors liable to an action for deceit, although the Plaintiff was also influenced by his own mistake.

To fulfil the requirement that one party relied on the statement, it is not necessary to show the misstatement was the sole cause of acting, so long as there was an influence.

Holding:

Court of Appeal:
Appeal dismissed in favour of Claimant.


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