Royscot Trust Ltd v Rogerson

Damages under section 2(1) of the Misrepresentation Act 1967 are assessed as if the misrepresentation were fraudulent.

Citation
[1991] 2 QB 297
Court
Court of Appeal
Year
1991
Subject
Contract Law
Topic
Misrepresentation

Facts

Mr Rogerson agreed to buy a second hand Honda car from a car dealer on hire purchase, at a price of £7,600 with a deposit of £1,200. The finance company, Royscot, would only lend up to 80 per cent of the price, so the dealer told Royscot, falsely, that the price was £8,000 and the deposit £1,600, so that the balance to be financed was still £6,400. Royscot bought the car from the dealer and let it to Mr Rogerson on hire purchase. Mr Rogerson later dishonestly sold the car to a private buyer, who acquired good title, and stopped paying the instalments. Royscot sued the dealer under section 2(1) of the Misrepresentation Act 1967.

Legal principle

The Court of Appeal held that the dealer was liable for Royscot's full loss of £3,625, including the loss caused by Mr Rogerson's dishonest sale. Section 2(1) makes a person liable as if the misrepresentation had been made fraudulently, and Balcombe LJ held that this meant that damages must be assessed in the same way as damages for fraud, so the dealer was liable for all loss flowing directly from the misrepresentation, whether foreseeable or not. In any event, the court held that Mr Rogerson's dishonest sale was foreseeable. The fiction of fraud reasoning has been widely criticised, but it has not been overruled.

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